Gateway Commerce Center breaks ground for expansion building

The Gateway Commerce Center is now expanding onto the east side of the interstate, with another $30 million warehouse under construction.

Officials with TriStar Properties, Madison County and the city of Edwardsville gathered Wednesday to break ground on a 717,060-square-foot distribution center. It will be the first building to be constructed on the east side of Interstate 255, where the Gateway Commerce Center’s enterprise zone was expanded a few years ago.

“It’s a muddy mess right now, but you can look across the road and see what it will look like,” Edwardsville Mayor Hal Patton said.

The expansion of the center puts more of its properties within Edwardsville’s jurisdiction and responsibility. Patton said this was part of the plan for the new east-side fire station to be constructed on the campus of Southern Illinois University Edwardsville, which will cut about seven minutes from response time to the new facility.

The $30 million building will develop 53 acres of former farmland into a tilt-up distribution facility with 80 truck docks. It can be expanded up to 1.2 million square feet. But that’s just the beginning; developer Michael Towerman said they could develop as much as 8 million square feet of warehouse and distribution space on the 700 acres on the east side, in addition to the 2,300 acres of existing Gateway Commerce Center development encompassing 10 million square feet of leased space.

Tenants thus far have included Unilver, Proctor & Gamble, Dial, Hershey and others seeking to locate large amounts of material that needs to be moved quickly. Towerman said the ideal location of the Gateway Commerce Center makes it attractive to large companies — for example, he said, Lowe’s home improvement stores warehouse large appliances at the center, because they can get those appliances to 122 stores within a four-hour drive. It eliminates much of the long-distance driving for truckers, which makes it more economical and easier for recruitment of truckers.

There are no tenants yet for the new building, but Towerman said the building they constructed on spec last summer was fully leased before completion, and the center has averaged 1 million square feet of new tenant space leased each year. “If history holds, we will have tenants within a year,” he said.

Towerman said Gateway Commerce Center has become a “safe bet” for corporations trying to manage the logistics of moving large quantities of material, due to its location at the intersection of I-255 and I-270.

That location and the commitment to public infrastructure helped spur development, according to state Sen. Bill Haine, D-Alton. He compared the focus on building highways to the expansion of the railroads in the late 1800s, as a way to create economic booms. “Now we see the highways causing those booms,” he said.

Frank Miles, director of Madison County Community Development, said the project was “another cylinder in the engine to drive economic growth” in the region.

While an economic impact study of Gateway Commerce Center is pending, he said they estimate it has brought more than 5,000 permanent jobs to Madison County as well as the construction jobs. “Instead of corn and horseradish, this ground is now growing jobs,” Miles said.

Gateway Commerce Center is located in an enterprise zone, which abates property taxes in full for seven years. Then for three years, the property taxes are slowly phased in, so that by the 11th year, property taxes are being paid in full. Developments also do not have to pay sales taxes on construction materials within the zone.

Some of the earliest properties in the western portion have begun to phase in their property taxes, according to TriStar consultant Greg Mudge. He estimated Granite City Community School District 9 received $1.3 million in new property tax revenue last year from the original buildings in Gateway Commerce Center.

Gateway East 717 is scheduled for completion in December, weather permitting.

This story was originally published July 8, 2015 at 12:18 PM with the headline "Gateway Commerce Center breaks ground for expansion building."