Cedar Rapids City Council to consider $109 million FedEx warehouse and distribution center

CEDAR RAPIDS — The Cedar Rapids City Council is slated Tuesday to consider financial incentives for an immense FedEx warehouse and distribution facility proposed for the fast-developing southwest quadrant — a $108.6 million investment that would create 434 mostly part-time jobs.

The council will review a proposed term sheet outlining the scope of the project and tax reimbursements on the approximately 479,000-square-foot warehouse, which developer Scannell Properties is looking to build at 1035 Commerce Park Drive SW. Construction would be expected to start by Aug. 1 and wrap up by Sept. 30, 2022.

“It’s very exciting, it’s a very large project — one of the largest projects in history in Cedar Rapids,” said City Manager Jeff Pomeranz. “ … We’re glad to welcome FedEx to the city of Cedar Rapids.”

This is the second project exceeding a $100 million investment that Cedar Rapids has pursued in the last year. Global aerospace company BAE Systems is building a $139 million, 200,000-square-foot classified defense aerospace facility at 76th Avenue SW and Sixth Street SW. BAE’s $1.9 billion acquisition of Collins Aerospace’s military Global Positioning System business means it will keep about 650 employees in town with the new facility.

According to the council documents, FedEx Ground Package System Inc. would create 359 part-time and 75 full-time new jobs with its new facility.

The city is proposing kicking in standard incentives — a 10-year, 50 percent reimbursement of increased taxes. Based on the proposed investment, city officials estimate this would generate $16.3 million in total taxes over a 10-year period, of which $6.1 million would be rebated to the company.

Under the agreement, Cedar Rapids would agree to make off-site improvements to the roads surrounding the development and seek cooperation with applying for state Revitalize Iowa Sound Economy grant funding.

The COVID-19 pandemic has driven rising e-commerce demand, pushing retailers and third-party logistics companies to expand their industrial real estate space, according to analysts with real estate company CBRE Group. The analysts predicted 250 million new square feet of warehouses coming online nationwide in 2021 as companies look to drive down transportation costs while reaching consumers to meet the growing demand.

Reflecting that trend, Cedar Rapids is showing tremendous growth in warehouse development, Pomeranz said.

“This is really a very strong area that cities are going after prospects, and these are the kinds of projects that are happening right now across the country,” Pomeranz said. “And for a variety of economic forces, there are some slowdowns in other areas, but this is an area that, for obvious reasons, is really growing. And we're pleased to have really a very strong company with not just U.S., but global reach that will have a significant presence in Cedar Rapids.”

David Westrick, external communications adviser for FedEx Ground, said in a statement the company does not publicly discuss specifics of a project until finalized. But “FedEx Ground is engaged in discussions with local officials for the potential leasing of a package sorting and distribution center in Cedar Rapids,” Westrick said. “A project of this size requires careful planning and close coordination with the developer, city, county and state officials.”

Mayor Brad Hart said this is another publicly traded international company choosing to invest in Cedar Rapids, which is remarkable for the city. He said this is a testament to the quality of the city’s workforce, amenities and infrastructure that companies want to locate here.

“I think that Cedar Rapids is a community that now, national, international companies know they can build here and that they’ll be welcomed here,” Hart said.

Council member Ashley Vanorny, who is on the council’s Development Committee and represents District 5, which includes southwest Cedar Rapids, said the proposal positions the city to be a central hub with several transportation companies and The Eastern Iowa Airport located nearby. The volume of cargo coming to the airport has been greatly increasing, and the airport and United Parcel Service partnered to add a $10.2 million facility.

“Not only is District 5 experiencing incredible growth right now, but having an entity like this come to Cedar Rapids offers a really great average wage and opportunity for people to earn a livable wage, and that’s really exciting,” Vanorny said.

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