Illinois Business Journal - Lambert, developers, Missouri officials make big push for air cargo industry

With empty gates, underused runways, a thousand acres of industrial park land and some of the biggest names in commercial real estate, Lambert-St. Louis International Airport is poised to make a run at the international air cargo business.

In April, Missouri leaders returned from a trip to China with a Memorandum of Understanding to mutually analyze the feasibility of using Lambert as a hub for air cargo to and from China.

"Lambert does have extra capacity," said Tim Nowak, executive director of the World Trade Center Saint Louis. "And when you throw in the fact of the central location of St. Louis and the excellent access to all modes of transportation, we have a real viable option for the Chinese or others to look at it as a central commercial hub."

Times have changed. In 2000, Lambert officials announced that they would not take any additional air cargo - and that they would send cargo companies interested in expanding their St. Louis facilities or starting new operations in St. Louis over to MidAmerica St. Louis Airport in Mascoutah, Ill. At that time, Lambert was a major hub for American Airlines and had limited runway options. That year, Lambert had 481,000 airplane operations (take-offs and landings of all types of aircraft), according to Lambert spokesman Jeff Lea. This was also prior to construction of the new runway, W1W, and Lambert was landlocked, surrounded by all types of development.

The pronouncement that cargo companies should look east to MidAmerica, however, was pretty harshly received by the cargo industry, according to news stories at the time. In fact, Glenn Streibig, a retired air division manager for UPS, was quoted in a St. Louis Post-Dispatch story in September 2000:

"I think we all kind of laughed at it at the time when they were building this huge facility over there, which would have been great for us if it had been located someplace else," Streibig said. "[Among] the people that I knew doing cargo business at Lambert, I didn't know anyone who wanted to be over there."

Since then, however, W1W has been built, large residential areas have been cleared and American Airlines has dropped St. Louis as a hub, drastically reducing the number of flights Lambert hosts. According to Lea, Lambert had just 240,000 airplane operations in 2007, less than 50 percent of the 2000 level, and has 33 empty gates. Today those in and around Lambert are aggressively working to develop the air cargo business.

Some of the biggest names in industrial real estate in the country are working on - or already offering - space for lease near Lambert.

Duke Realty Corp. has a new 528,000 square-foot building called the Lindbergh Distribution Center that's currently available for occupancy. It's located at the intersection of N. Lindbergh Blvd. and McDonnell Blvd. in the Airport Enhanced Enterprise Zone and boasts tax abatement and other state incentives. Duke is a publicly traded company that is one of the largest commercial real estate companies in the United States, with 142 million square feet of office and industrial properties in 24 cities.

Last month, Panattoni Development Co. announced its purchase of the Ford Motor Co.'s former St. Louis Assembly Plant on N. Lindbergh. Panattoni plans to demolish the existing structure and add new buildings totaling approximately 2.6 million square feet of warehouse, distribution and light industrial space on the 155-acre site. Panattoni is a commercial real estate company that develops, leases, owns and manages industrial, office and retail projects in more than 150 cities throughout the United States, Canada and Europe.

Further south on N. Lindbergh, McEagle Properties is developing the 150-acre Hazelwood Logistics Center. One 400,000-square-foot building is near completion; the park will eventually house up to two million square feet of space. McEagle is a St. Louis- based commercial real estate company that is also currently working on projects in Kansas City and Dallas. McEagle is also part of Trade Zone Partners LLC which has held the lease on the 50,000-square-foot warehouse building at MidAmerica St. Louis Airport for the past two years.

And on the other side of Lambert, at the intersection of I-70 and I-170, McEagle and Clayco Realty Group are co-developing a 550-acre business park called North Park. Clayco Realty Group is the real estate development arm of Clayco Inc., one of the largest construction firms in the St. Louis area. Ultimately, North Park will house up to 5.5 million square feet of office, manufacturing and distribution facilities.

Nowak said there were two reasons to focus on China. One, a path of communication had already been opened with Chinese officials. Paul McKee Jr., president and chief executive officer of McEagle Properties, had opened that door through a local attorney, Steve Stone, and his cousin, an expert in Chinese trade.

Two, said Nowak, the Chinese economy is booming - and Missouri's exports to China have been booming as well.

"We've seen a massive increase in Missouri goods going to China because of a number of things," he said. "China's middle class is growing; it has growing infrastructure needs; and, a lot of it is a result of its growth in the world market, in manufacturing and other areas. It's a real market for Missouri goods. In fact, China is Missouri's fourth-largest trading partner and the fastest growing market for Missouri goods," Nowak added.

The feasibility studies that both China and Missouri will be conducting, he said, will focus on two-way traffic. Nowak says a flight between China and Missouri can cost as much as $400,000, so it's important that the plane is filled traveling in both directions. While a lot of work still needs to be done, he estimates that there is $5 billion worth of exports going to China each year from the Midwest.

"What we're together focused on is demonstrating that within a catchment area of St. Louis, there's a reasonable chance to fill those planes with products from Missouri and the surrounding states," said Nowak. "That's the key. It's not just Missouri. The catchment area also includes Illinois and Iowa. It's roughly an area within a day's drive of St. Louis. Can we fill these planes going back? Our research is showing that yeah, we're pretty confident that it can happen."