February 12, 2020 Stonemont launches massive rail-served industrial park in El Campo, TX with first tenant in tow
Stonemont Financial Group, a real estate investment firm specializing in industrial development and net-lease assets, announced today the official launch of the Southwest International Gateway Business Park, a 540-acre rail-served industrial park purpose-built for cross-border shippers. Located 60 miles southwest of Houston in El Campo, Texas, the park is designed for up to 8 million square feet of industrial space, along with full intermodal and transload capabilities. Stonemont has acquired the first phase of the park and will commence site construction activities this quarter.
The first phase of construction will include two warehouses: a 125,000-square-foot distribution center for Vitro Chemicals and a 200,000-square-foot speculative warehouse. Vitro Chemicals, a subsidiary of Vitro, one of the world’s largest glass manufacturers, chose the park for the cost savings it will realize over its current distribution channel. The company stores product in multiple warehouses in Laredo, Texas and then distributes by truck from there.
“We couldn’t be happier about having Vitro as our first tenant,” said Zack Markwell, CEO and Managing Principal of Stonemont. “Vitro took the time to understand the park’s value proposition to cross-border shippers like themselves, and their lease commitment is a fantastic validation that the new “mousetrap” we’ve created is indeed better.”
That value proposition centers around tenants’ direct access to the Kansas City Southern Railway main line that fronts the park. The KCS rail network spans from the Pacific coast of Mexico to Illinois, and KCS’s Mexico-based affiliate controls a large portion of the rail traffic in the eastern half of Mexico. By connecting the development to the KCS rail line, Mexico-based manufacturers can use KCS for shipping from their factories in Mexico all the way to the park, whereas they currently largely depart the KCS line in Laredo, Texas, approximately 250 miles further from their distribution markets than El Campo. Tenants will also benefit from customs pre-clearance that enables users to bypass rail and highway back-ups at the U.S.-Mexico border crossing, as well as avoid a backlog of truck and rail traffic at existing regional parks and ports closer to the congested Houston metro area.
“To deliver product to the major Texas markets, many of the Mexico-based manufacturers currently switch to another railway in Laredo, pass through San Antonio and then deal with the rail and truck congestion of Houston,” said Zack Markwell, Managing Principal and CEO at Stonemont Financial Group. “Our park establishes a new inland port that avoids all three of these time and cost headaches, allowing companies to invest more dollars in core business activities that foster long-term growth and success.”
The unique access to KCS’s rail line will also provide tenants with the ability to take advantage of aggressive backhaul rail pricing for southbound products utilizing empty containers coming from Mexico to the United States. This should be a boon for plastic resin distributors, many of whom have had to find alternatives to the Port of Houston to ship the resins to Asia for manufacturing there. KCS’ rail line connects to the Port of Lazaro in Mexico, allowing for quicker access to Asia.
In addition, Southwest International Gateway lies within a designated federal Opportunity Zone, potentially enabling tenants to bypass capital gains tax payments on certain investments that qualify under the existing regulations. The park is also part of a Foreign Trade Zone, with additional local and state economic incentives available for tenants.
“Stonemont’s national portfolio of industrial developments gives us a unique understanding of where tenants need to be so they can minimize the cost of transporting goods and reach the end target faster,” said David Burch, Principal and General Counsel for Stonemont. “Our project team has carefully mapped out the logistical infrastructure and incentive packages that had to be in place to ensure this becomes the region’s leading inland port. We look forward to starting construction in the coming weeks and anticipate sharing more news on our progress in the near future.”
Ridgeline Property Group, an Atlanta-based commercial real estate development and investment firm, is partnering with Stonemont on development of the park. Watco Companies, one of the leading short line railroads in the country, will operate the short line railroad connecting the buildings to the KCS main line. Houston-based NAI Partners will oversee leasing at the park.
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