State Scuttles Plans for 1.2 Mil-SF Distribution Center

LEESBURG, FL-It was the sort of deal most land brokers pray for and then keep their fingers crossed that all components fall into place. This one didn’t.

Wal-Mart Stores Inc. is walking away from a 200-acre, $1.6 million deal from which it planned to build the second largest distribution center in Central Florida, a $50-million, 1.2 million-sf complex on the outskirts of this Lake County city, 45 miles northwest of Downtown Orlando.

The Florida Department of Environmental Protection killed the deal by decreeing it needed a year to test the dirt for contaminants that might pose a public health risk. Wal-Mart says it can’t wait that long. The retailer had planned to have the center up and running by 2002.

The state became involved in the deal only because the land is in the middle of the city’s sewage sprayfield, away from any immediate residential population but strategically near the Florida Turnpike and a proposed interchange at County Road 470 not far from the commercially-heavy US 27 Interchange.

Wal-Mart and the city have declined to confirm or deny over the past six months the retailer is the potential phantom land buyer, but Leesburg business interests and brokers familiar with the transaction tell GlobeSt.com Wal-Mart is the player.

Now Leesburg officials are scurrying to salvage the deal that would generate annual property taxes of $248,000. Leesburg was offering the 200 acres for $1.6 million or $8,000 per acre (18 cents per sf). Wal-Mart was planning to build the center for under $50 per sf. The city plans to suggest other privately-held sites to the retailer over the next few weeks.

But that may be too late, say industry observers. Wal-Mart already plans to build a $40-million, 952,380-sf distribution center that would employ 600 workers in Baker County, near Jacksonville, FL, 230 miles northeast of Downtown Orlando. Wal-Mart’s Leesburg plant would have employed 600 workers initially and another 600 over three years. The world’s largest retailer, based in Bentonville, AR, may still build in the metro Orlando market, industry observers say.

“You’ve got to remember that Florida is made up of three distinctly different geographic, cultural and business markets,” Robin L. Webb, vice president/managing principal of Arvida Realty Services Inc. in Winter Park, FL. tells GlobeSt.com. “If Wal-Mart wants to play in each of those markets, and they’re certainly into them at the moment, then they will need to have a distribution hub in each market to make their operation cost-effective.”

At the moment, though, Wal-Mart is walking away from a city-state economic incentives package valued at $6.4 million. It includes an exemption from $2.4 million in property improvement taxes to the sprayfield over the next 10 years. Straight cash gifts totaling $1.8 million would come from the city and state. Carter & Burger Inc. of Fort Worth, TX represents the potential buyer of the city-owned land.

Kmart has Central Florida’s largest distribution center, a 1.5 million-sf complex in Ocala, FL, 80 miles northwest of Downtown Orlando.