Wanted: Warehouses in Butte

By Holly Michels, of The Montana Standard - 10/27/2007

Butte could have nearly 100 well-paying warehouse jobs if facilities existed to accommodate businesses wanting to locate here.

Lack of warehouses is one of the glaring omissions in the Mining City, Butte Local Development Co. Executive Director Jim Smitham said this week, and filling that void can boost the area economy.

“Right now, if Butte had at least a 10,000-square-foot warehouse that was open space with a truck dock there would be a company locating here right now,’’ Smitham said.

But the buildings companies want don’t exist.

“I see about four companies a month coming through our door looking for 30,000-square-foot-or-so warehouses,’’ Smitham said. “Distributors want to take advantage of our strategic location, with having the two rail lines and the Port of Montana. I’d like to be able to show them options that meet their needs.’’

What developers are looking for are newer facilities with truck bays and modern amenities like cement floors with drains and good power supplies, which make Butte’s historic warehouse district undesirable.

“Unfortunately the configuration and requirements of warehouses have changed since many of the old warehouses of Arizona Street were built,’’ Smitham said. “Now (companies) want to have racks 15 to 20 feet high for forklifts, cement floors and be able to accommodate a high volume in and out. They want truck docks, and new-sized trucks are different than even the trucks of 10, 15 years ago.’’

Companies looking to open distribution centers out of Butte warehouses are a mixed bunch, Smitham said, including Montana companies that out-grew their current locations and are drawn to the area by the low cost of doing business. Some are from other states and occasionally local companies are looking to upgrade.

Smitham said most warehouses companies are proposing they would employ from 25 to 30 people and pay on average $15 an hour.

“All the ones I’ve seen also have benefits,’’ he said.

Smitham said businesses are also drawn to the Tax Increment Financing Industrial District, west of Butte, because of incentives offered there and its proximity to rail and highway systems. In a TIFID, a portion of property taxes is diverted into a special account for economic development. This TIFID is adjacent to the Port of Montana.

“It’s an option,’’ he said. “It’s a great option for a warehouse district to be located.’’

Smitham said about half of potential companies want to locate in the TIFID.

“Some of them come in with an idea in their head already,’’ he said. “They’ll say ‘I hear your industrial park is a good location.’ We just see the location in general as being advantageous.’’

Charlie O’Leary, TIFID board member, said the TIFID is open for warehouse business but encouraged development in other parts of town as well.

“We’re looking to help industrial and light industrial type of business any way we can, but there's choices in Butte. If they come and find an existing warehouse that’s empty, that’s great.’’

O’Leary said a proposal for building a warehouse on speculation to rent in the TIFID would be “a little bit iffy’’ due to the nature of the district.

“When we do a deal with somebody it usually has the requirement (that) they have so many jobs going a year down the road,’’ he said. “Without some kind of business plan where they come to us and say this is what we’re going to do and how many jobs we'll create, I don't know how well that would fly.’’

O’Leary said the TIFID needs to focus its money on specific projects before it could consider funding or building warehouses for potential renters.

“The question is how many dollars do we have and what do we want to spend those dollars on? Our dollars are not unlimited and our high priority right now is the sewer and water system.’’

To deal with requests for warehouses, O’Leary recommended creating a database of available warehouses in the area.

“We need to inventory all the warehouses in Butte,’’ he said. “That’s something we should have in our tool box. If there’s a private sector business that has buildings for rent, we should steer people in that direction. The more traffic and people you can put in the core portion of town, the better it is for the surrounding businesses.’’

Smitham wants to create a list of developers interested in building new facilities to accommodate requests.

“It’d be nice to have a list of potential developers so that if we have a project come in the door we can call and say, ‘We’ve got a client here that needs a building X-size,’ or we can see if people would be willing to do it on a speculative basis. If we’re seeing three or four of these (warehouse requests) a month, the demand is out there.’’

O’Leary agrees speculating on warehouses could pay off big for developers.

“To anyone who takes a risk and has the working capital, I’d say go ahead and build it and rent it out. If you put the right look on the building and the right things inside it should be rentable. You might have to wait, and you might sit on a $30,000 building for a while, but it's always a gamble.’’

Reporter Holly Michels may be reached via e-mail at holly.michels@lee.net.