Port of Pensacola looks to diversify

Port of Pensacola looks to diversify

By Deborah Nelson
March 25, 2008

Photo courtesy Port of Pensacola

When a long-term tenant’s lease runs out this summer, the Port of Pensacola is poised to oversee a newly-vacant swath of land to redevelop. Officials say they’ll likely use the opportunity to begin diversifying Port commerce and industry, and tying it into the Downtown Pensacola area.

The Port is an ‘enterprise’ department of the City of Pensacola: like a business, it’s supposed to pay for itself. Port Director Clyde Mathis notes the Port has met that goal in the last five years; but now the facility’s mostly construction-related tenants are feeling the housing industry pinch.

In February 2005, City officials directed the Port to begin diversifying the facility’s commercial and industrial base. Since then, Port officials have been working on finding a mix of new, maritime-related commercial ventures for the area.

“We want the Port to be an economic engine for the area, creating jobs and industry and we want to do that in a manner that is compatible with the local community,” Mathis notes.

Mathis and Assistant Port Director Amy Miller spoke on the subject at a recent League of Women Voters forum.

Most of Port property is currently tied up in long-term leases – some extending until 2022. And most current leaseholders, Mathis points out, are tied to the construction industry.

“We all know where that stands right now,” he notes. “Business is way down.”

The Port also pulls in revenue from transient cargo traffic and short-term warehousing rental agreements, vessel revenues and various service fees. Currently, four companies hold long-term leases.

Pate Cold Storage, a poultry-export firm, holds a lease until February 22, 2009. Thereafter, the company holds mutual option renewals through February 2024.

Cemex, a road construction materials warehouse, holds three sole option lease renewals through December 2022.

Martin Marietta, an aggregate rock importing firm, holds a sole option lease that expires in November 2012. Thereafter, mutual option renewals run through November 2022.

But the last lease, held by Halcorp, expires July 8 of this year, with no renewal options. Halcorp deals in liquid asphalt from Louisiana and Texas. The current lease covers 10 acres in the Port’s northeastern zone.

Officials say they’re negotiating with Halcorp to renew the lease, but the terms will likely change.

“If we renew it, it will probably be on a short term basis,” says Mathis.

That would open up the land currently used by Halcorp for new development. The property’s northern edge abuts the Port’s boundary with Downtown Pensacola, making it an ideal location, say planners, to serve as a blending zone between the two areas.

Currently, Port leases generate $800,000 per year. Other vessel and cargo activities generate another $1.3 million.

That’s not enough to fully fund operating costs, debt service and needed facility improvements and maintenance, according to Port information.

“We’re going to need revenue from other sources,” says Mathis.

One place that’s not likely to happen any time soon is a Pensacola-based cruise ship.

Mathis says the current Gulf cruise market remains at a standstill. New tonnage is going to the Mediterranean and China, where emerging markets are opening up in the leisure industry. Nevertheless, Port officials aren’t closing that door entirely.

“The industry knows we’re here,” Mathis notes. “We’ll stay with it, and if the time is right, we’ll pursue it.”

In the meantime, he says, Pensacola’s proximity to I-10 and I-65 leave the port well-placed to act as a ‘feeder’ connection for New Orleans, northbound rail and truck networks, and Mobile cargo overflow.

And Mathis predicts worsening roadway congestion, combined with gas prices, will make water transport, generally, a more attractive option in coming years.

Port officials are focusing on blending current and future uses with existing Downtown commerce. In coming years, planners hope to draw in non-construction related commerce and industry.

“You have to have industries that let you sustain when one of your businesses is in a slump,” says Miller.

Miller hopes to see the Port’s northern perimeter eventually turned to ‘people friendly’ uses.

Halcorp’s lease renegotiation could be the starting point for that vision, say officials.

Shrinking the company’s footprint and shifting it south may potentially free up some 10 acres between Downtown Pensacola and Port operations for redevelopment, says Miller. The zone would serve as a crossover between Historic Downtown Pensacola’s commerce, parks and recreation and the Port’s operating wharves; potentially drawing more visitors to the waterfront.

In the short term, officials hope to see restaurants, retail business, offices, maritime-related commercial and other development run east to west along the Port’s northern perimeter.

Five to ten years down the road, the redevelopment vision includes maritime-related commercial, research and development and/or light manufacturing and assembly operations.

Eventually, planners envision the Port will host more extensive maritime-related commercial development; light manufacturing and assembly industry; retail, waterfront tourism and international trade activities; and perhaps even water taxi service and dinner cruises.

“There are a lot of things we can do to generate revenue,” Miller notes. “We have to be self-sufficient. We have to pay our bills.”