Jafza refocuses on debut of US project

By

Dan McCue on Sunday, August 30, 2009

Dubai-based Jafza International's American unit is refocusing its plans for the company's first-ever North American development.

The firm said it will initially build on just 200 acres of the 1,324 acres it bought in Orangeburg, South Carolina, two years ago.

Dubbed phase 1a, groundbreaking on this first stage of what is anticipated to be a 20-year build out is tentatively scheduled for the first quarter of 2010.

Jebel Ali Free Zone Authority (Jafza) Managing Director Chuck Heath said the initial development will focus on light manufacturing, some distribution and warehousing, and office space.

"We've also had a market-driven concept for this project, and of course, given the economic downturn we've all experienced, we thought it prudent to start small and grow as the economy strengthens," he said.

Meanwhile, project managers have taken another look at the more aggressive build-out and development plan unveiled last autumn and decided to refine the firm's approach to the site.

"It's not so much a rethinking of our plans as getting down to a new level of detail in our planning," said the Jafza managing director.

Last autumn, hundreds crowded into a theatre in Orangeburg, a few miles from the Jafza site, heard a presentation in which the $600 million (Dh2.2 billion) project was envisioned as being rolled out in five phases, culminating with total build-out in 2032.

Phase one was always envisioned as a mixed use development, while phase two, initially expected to be completed by 2016, would have added more warehouse and distribution space as well as a 63-acre intermodal yard.

Successive phases were to continue to add warehouse, distribution and light manufacturing, as sales and interest dictated.

But the preliminary master plan also anticipated intense activity on the site – with as many as 660,000 cargo containers passing through the park on an annual basis, generating about 50,000 daily truck trips.

Instead of maxing out the intensity of land use, Heath said Jafza will bring the project back into line with the "campus/office park" concept he promoted immediately after the Dubai World purchased the land in September 2007.

"We always said we wanted this project to complement the surrounding environment, and to do that I think you really have to consider not going in and tearing down every tree," he said.

According to Heath, the return to a more park-like approach to the development was influenced at least in part by studies Jafza undertook to determine the intensity of wetlands on the site.

Of the entire 1,324 acres, only about three acres proved completely undevelopable due to onsite wetlands. While the company could have chosen to fill some of them by undertaking regulator-approved mitigation efforts, Heath decided to leave the existing wetlands just as they are.

"When you are up in the air and see an aerial view of the site, it instantly becomes clear which areas will benefit from and be most cost-effective for development, and it is also clear which areas will be more beneficial to the project if left in a natural or wild state," he said.

As for the remaining phases of development, Heath said those will be entirely dictated by the strength and timing of the economic rebound. "For instance, right now we're not as concerned about the intermodal aspect of the project," he said.

"We'll set aside land for it, of course, but currently there is just not enough cargo movement to warrant its development now."

Heath also revealed that Jafza kicked off its North American marketing effort on June 23 at the sixth annual Third Party Logistics Summit in Atlanta. "We're actively soliciting clients, and we're about to do our first mailing, sending our new brochure to about 1,900 prospects across North America," he said.

A similar mail effort targeting companies in Jafza's massive Jebel Ali facility in Dubai will be undertaken in late September, after the conclusion of Ramadan.

"In a sense, we'll obviously be treading water [during Ramadan], but it will also give us additional time to prepare for a very orderly marketing effort in Dubai," Heath said.

"In any event, we currently have seven or eight prospects we're pursuing in the Americas and Europe, so it's getting very interesting," he added.

The other thing on Jafza America's plate is drafting the Request for Proposals (RFP) for the six civil engineering firms selected to potentially work on the project through a requests for qualifications (RFQ) that concluded in June.

"This is where we get down to details and provide them with a detailed scope of work, looking at roads, utilities, where the initial building pads will be, all the things you need to know to actually develop the site."

Each of the firms will be expected to then supply Jafza with a financial and technical proposal, which will then be rated by a committee.

"We'll be looking for both expertise and competitive pricing – of course that won't be going for the lowest bidder. What you're looking for is a combination of attributes," said Heath.