Nike, Inc. reached an agreement to acquire a 125-acre land parcel in Memphis, TN, known locally as Northridge, where it plans to build a new 1 million square foot footwear distribution center. The land purchase agreement was signed March 1, 2007, by Nike and Memphis-based Belz Enterprises.
In a related demonstration of confidence for the project, the Industrial Development Board (IDB) for Memphis and Shelby County also formally granted Nike's application for making Northridge eligible for Payments in Lieu of Taxes (PILOT) leases based upon the anticipated job creation and capital investment. The new facility, located in the Frayser area of Memphis, had already been designated as an “enterprise zone” targeted for a large employer to provide economic stimulus to the surrounding community.
The new facility is expected to house employees from both Nike's existing Winchester Road facility in Memphis, and employees relocating from a second distribution center based in Wilsonville, OR.
“Nike is pleased to increase its investment in the Memphis community with this state-of-the-art facility. This distribution center will be great for our employees, retail customers and consumers while expediting our time to market,” said Nick Athanasakos, VP, Nike Supply Chain.
A comprehensive business analysis projected several benefits to Nike and Nike retailer customers including: cost efficiencies totaling more than $200 million, reduced shipping times and increased service capabilities.
Belz Enterprises, the sellers of the Northridge site, also view this sale as more than a simple land transaction.
“We are fifth-generation Memphians and are very proud to add to the area's stature as the capital of U.S. distribution. Equally important, this project will provide further economic opportunity to the Frayser area in north Memphis that vitally needs additional jobs and commerce,” said Ron Belz, president of Belz Enterprises. “We are pleased to join with our city, county and state government in continuing the long term and strong presence of Nike as a major employer as well as important corporate citizen in our community.”
As a precursor to completing the Northridge purchase, Nike also announced reaching a sale-leaseback agreement on the Wilsonville, Ore., facility with CB Richard Ellis Investors, an institutional real estate investment manager that purchased the property on behalf of the Illinois State Board of Investment. The recorded sale-leaseback price was $27.6 million. This agreement will allow Nike's continued operations at the Wilsonville site through 2008. At the end of the Nike lease, the owner may seek proposals for new tenants that will capitalize upon the facility's premier product distribution site.
“The agreement was designed to continue to operate Wilsonville without disruption to our employees or our business,” Athanasakos said.
