CBJ Report: Midwest 3PL seeks incentives for big CR warehouse project

CBJ Report

Midwest 3PL seeks incentives for big CR warehouse project

Midwest Third Party Logistics of Cedar Rapids plans to invest $30 million to build three new warehouse facilities in the city's incentive quadrant, according to an incentive request reviewed by the city council Tuesday.

The company is proposing a three-phase project to build the new warehouses on 39 acres of land at 4545 20th Ave. SW, creating 800,000 square feet of warehouse and distribution space and 25 jobs. Site work has already begun on the first facility, which will have 227,500 square feet of space, on a site bounded by 20th Avenue, Wilson Avenue, Jacolyn Drive and city land.

The others, to be built in later stages, would be 192,500 square feet and 367,500 square feet, respectively.

The company owned by Rick and Marsha Stickle is seeking a tax increment financing package under the city's High Quality Jobs Program with a potential value of $2.3 million. The completed projects will have an estimated valuation of $18.75 million, Caleb Mason, the city's economic development analyst, told the city council.

Council member Scott Olson expressed concerns about using the job-based TIF incentives for warehouse and distribution-type operations, which don't customarily create a lot of high-paying jobs. Council member Ralph Russell shared some of those concerns. City staff was asked to work on an incentive deal structured based on jobs created in each phase of the project as completed.

Midwest Third Party Logistics predicts the creation of 10 or more jobs at each facility that will meet the wage threshold to qualify for incentives under the city's High Quality Jobs Program.

Gateway Center ownership consolidation to bring change in IC

The Gateway Shopping Center at 125 Highway 1 W. in Iowa City could be seeing some new tenants and upgrades after its ownership was consolidated recently.

Gerry Ambrose and Greg Apel of Gateway One Partners, who owned the center for two decades under a land lease, completed the acquisition of the land portion of the center on Oct. 4 from members of the Eleanor Green family.

Mr. Ambrose said plans call for the construction of an additional 2,200 square feet of space at the front of the center to accommodate a prominent coffee chain tenant that is expanding within the market. He also sees opportunities to improve the tenant mix with some upcoming lease turnover.

Enterprise Rentals will be leaving for another in-market location, Mr. Ambrose said, freeing up 2,200 square feet of space and additional parking. Caliente Night Club's lease will not renew at the end of the year, freeing up 7,700 square feet of leaseable space.

The center has excellent leasing potential because of its location at the city's busiest intersection, Mr. Ambrose said. He will seek tenants that complement the center's tenant mix, which includes Fin & Feather, Arby's, Dollar General and Auto Zone.

"We plan to redo the parking lot, and are hopeful Iowa City will provide additional land on the east side of the development," Mr. Ambrose said. "It's time for a facelift."

The center began its life more than half a century ago, when it was anchored by Mongtomery Ward, but was only 30 percent occupied with Eagle Foods as an anchor tenant when it was acquired by Gateway One Partners. It has been at full occupancy in recent years.

Squeezed by the big guys, CHOMP bites back

It’s a David-and-Goliath story that might only happen in a place like Iowa City. Then again, it might be one of the first salvos in a coming revolt against the giant food delivery companies controlling a $20 billion (and growing) market.

CHOMP, a locally-owned and operated restaurant delivery service that launched this month, was born almost as soon as Grubhub – the biggest player in food delivery – purchased all 27 markets served by Groupon subsidiary OrderUp in August. Rather than allow the Chicago-based delivery behemoth to steal their proverbial lunch money, Iowa City and Coralville-area restaurateurs set aside their competitive natures to create their own online delivery service.

“I think this is something we’re going to see a lot more of,” said Jon Sewell, who co-founded CHOMP and convinced 20 local restaurant owners to buy into the homegrown concept – literally – by each contributing capital to get it up and running. “Restaurant owners are getting pushed to the limit.”

Mr. Sewell, owner of D.P. Dough’s Iowa City franchise, said getting his competitors to sign on was an easy sell after Grubhub made its first order of business to the removal of OrderUp’s respected local management team.

“And then they raised their commission rates by 100 percent,” he said. “That’s what started the ball rolling for CHOMP.”

OrderUp, which had dominated Iowa City’s food delivery market, charged restaurants using their own delivery crews 7.5 percent on orders made through its app and 15 percent for orders delivered by OrderUp drivers, according to restaurateurs interviewed by the CBJ. When it took over the market, Grubhub informed former OrderUp clients it intended to double prices beginning in November, charging 15 percent for orders through its online service and app and up to 25-30 percent for orders delivered by its drivers.

Grubhub spokeswoman Katie Norris said in an email that restaurants using the company’s service worked with dedicated account advisors “to find a tailored, negotiable commission rate that works for that individual restaurant’s needs,” adding “there isn’t a standard commission rate for restaurants on Grubhub.”

Area restaurant owners said they saw little evidence Grubhub had an appetite for negotiation when they came to town.

“We were paying a reasonable commission, but as of Nov. 13, mine will over double from what it was before,” said Keith Brophy, owner of Sparti’s Gyros, one of the four restaurants open for orders during Chomp’s “soft opening” last week. Mr. Brophy’s commission rates are set to jump to 15 percent, “and that’s just for them to take orders; we have our own delivery staff.”

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