City leaders once envisioned a high-tech hub for their Thurston County industrial area, but there's been a boom among retailers for megawarehouses.

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The city of Lacey had high hopes for about 500 acres of flatland at Hawks Prairie near the southern tip of Puget Sound.

The leaders of this Thurston County city had visions of attracting high-tech jobs to balance the town’s heavy reliance on state-government employment. A decade ago, the land had been a contender for the Intel plant that ended up in DuPont.

But, over the next two years, Hawks Prairie industrial areaprobably will be filled with giant warehouses, fed by thousands of trucks each day roaring in off Interstate 5.

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The boom is the result of Christmas gifts that didn’t get to stores in time last year and even the price of steel.

Instead of factories, painstakingly planned industrial parks in the Puget Sound area are increasingly being devoted to storing and repacking toys and clothes made in Asia and destined for store shelves from here to Montana. Along I-5, industrial land from Kent to Centralia is filling up with warehouses as fast as developers can receive building permits.

Just a few years ago, the warehouse business seemed to be in slow, steady decline.

Through the 1990s, U.S. manufacturers focused on “just-in-time” logistics aimed at reducing their inventories of raw materials and spare parts. Retailers like Wal-Mart did the same thing, pushing suppliers to deliver new goods on a specific day. In theory, it should have meant fewer warehouses.

But the rise of Asian manufacturing has turned just-in-time on its head. Instead of being a day or two from factory to consumer, that new toaster or bathrobe is weeks away from store shelves, with numerous potential bottlenecks along the way.

“As much as you try to just-in-time it, if you’re buying it from overseas, you don’t know exactly the lead time,” said Tony Kusak, a broker who specializes in industrial real estate for Cushman & Wakefield.

Long Beach’s traffic jams

That uncertainty was driven home in 2002, when West Coast port operators locked out dockworkers in a contract dispute over new technology. Billions of dollars in ships and cargo sat unloaded for weeks.

Then last year, unexpectedly heavy shipments overwhelmed the nation’s biggest container port complex at Los Angeles/Long Beach, the biggest entry point for Asian merchandise.

As the California ports struggled to hire dockworkers and extended crane-operating hours, container ships filled with Christmas inventory were lining up to unload. The backlog was 94 by mid-October — almost as bad as during the 2002 lockout — and some retailers were frantic.

“There’s no market for the sugar-cane Santa Claus in April,” said Chris Corr, an industrial broker with GVA Kidder Mathews. “They’re out there just anchored until a dock opens up. I think those people have said, screw Long Beach, we aren’t going to have that happen to us again. Let’s go to a port that can take us right away.”

This year, incoming international shipments at the Port of Tacoma are up 25 percent over 2004 levels. At the Port of Seattle, the number of full containers arriving from Asia is up 35 percent. The difference represents hundreds of thousands of 40-foot containers.

“Some people say they don’t care what port, but they don’t want to be too vulnerable to problems at any one port,” Kusak said. “Basically, they’re looking to spread the risk.”

Inside the warehouses

The quantity of warehouse space being built in Western Washington is stunning. Since 2002 in King, Pierce and Thurston counties, more than 10 million square feet of warehouses has opened up. That’s the equivalent of 187 football fields under roof. Another 5 million square feet are in the works.

A decade ago a good-sized warehouse was 150,000 square feet, the size of a Costco store. But the new distribution centers are sometimes five times as big.

Home Depot, Fred Meyer and Target have all built megawarehouses south of Tacoma, and crafts retailer Michaels Stores is planning to follow. Ace Hardware, a cooperative based in Oak Brook, Ill., has a 400,000-square-foot import/export center in Sumner and is building an 800,000-square-foot distribution center near Yakima — which could expand to more than a million square feet.

“It’s exactly the same thing happening outside Savannah, Charleston, Houston, up and down the East Coast,” said Michael McGowan, an expert in real estate finance with Kensington Investment Group in Orinda, Calif.

The warehouses are serving several functions, McGowan says. The most basic is to stockpile imported merchandise to cut the risk of running out of popular items.

For example, Ace Hardware uses its network of 15 distribution centers to shift products around the country — generators to Florida after a hurricane, for example — said Ace spokeswoman Natalie Danaher.

But warehouses near ports are also used to repackage, or “transload,” goods from 40-foot marine containers into larger rail containers or 53-foot standard truck trailers for travel inland. The larger containers hold about a third more but cost about the same to move by rail or truck.

While expensive, transloading increasingly makes sense as the price of fuel and steel have both jumped.

More expensive steel makes shipping containers more valuable, so shipping companies are offering discounts to customers who return containers promptly. That creates even more incentive for transloading.

No jobs bonanza

The container boom is helping the Puget Sound-area economy, but how much is a question.

Dick Conway, co-publisher of the Puget Sound Economic Forecaster, says there is just not that much work created when goods are shipped from Tokyo to Chicago via Puget Sound.

“It’s just not clear that we reap great benefits from that,” Conway said.

Warehouses produce few jobs for their size. Brokers and retailers said a typical 750,000-foot distribution warehouse might employ 250 people. At that rate, 5 million square feet of planned warehouses in Lacey might create 1,700 jobs — at a cost of more than 300 acres of prime flatland.

On the other hand, as Conway points out, what’s the alternative? New high-tech or manufacturing plants are not being built these days, and they often don’t meet expectations. In the early ’90s, there were hopes that DuPont’s new Intel factory might someday employ 26,000 people — though today the total is closer to 1,300.

“Dreams come and go,” said Jerry Litt, Lacey’s community-development director. City leaders have mixed feelings about using so much land for relatively few jobs. But Litt says since warehouses are allowed in a light-industrial zone, the city can’t reject them outright.

The Lacey City Council has imposed a moratorium on warehouse construction, but that’s to study the one thing warehouses do produce a lot of — truck traffic. According to preliminary estimates, the planned Hawks Prairie warehouses could generate 1,200 to 4,000 truck trips a day, which would amount to a continuous stream of tractor-trailers from a single I-5 ramp.

Deputy Mayor Nancy Peterson says the increased traffic might interfere with the city’s efforts to develop retail and commercial businesses near Hawks Prairie.

“If these trucks go in, and the whole capacity of the interstate is used by this many trucks, then what do we do?” Peterson said.

“Everybody wants development and we want some type of development that will employ folks from our area,” she said. “But you can get something you never anticipated.”

Kusak, of Cushman & Wakefield, said the warehouse developers and retailers are waiting to see what happens in Lacey, but they’ll have to build somewhere.

“I think the hope is that Lacey figures out this moratorium and is able to lift it so that this surge in demand can be met partly in Lacey,” Kusak said. “Otherwise, to a certain extent, it’s back to the drawing boards a bit as the land in Sumner and Fife gets filled.”

Tom Boyer: 206-464-2923 or