Thomas O. Pearson and Chris Teesdale, executive vice presidentsfor Colliers International in Dallas, confirms for GlobeSt.com thatcompanies are starting to reassess their strategies, which could bea windfall for Dallas/Fort Worth and third-party logisticsproviders. For some companies, their push in recent years towardcentralized distribution centers could fall victim to rising dieselfuel prices, driving a possible return to numerous locations tocombat fuel costs and keep wares within closer striking distancesof customers.

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"There is no question that there is change afoot with virtuallyevery company right now," Pearson says. "But, every company isdifferent. It will be based on business, where the goods are comingfrom and where the stores are located."

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The subject already has surfaced during Colliers' monthlyconference call for the multi-modal services group. "The consensusis a lot of the major distribution users are stepping back andre-evaluating their distribution models as a result of the price offuel," Teesdale says.

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[IMGCAP(2)]Jeff D. Thornton, senior vice president in Dallas forIndianapolis-based Duke Realty Corp., and Greg Fuller, COO ofDallas-based Granite Properties, say they haven't heard about anydistribution center break-ups or requests for multiple locations inone market, but that doesn't mean there isn't some change in theair. The developers sit at opposite ends of the spectrum in theregion: Duke with a one-million-sf box midway between Dallas andFort Worth and Granite with smaller, brand-new industrial buildingsin select high-demand suburban corridors.

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"I've had discussions with other real estate people that thetrend could reverse," Thornton says. "But the reality is as oftoday, I can't say I've heard it from a user. It does make sense tome, though. But, it would have to go up pretty high and we're justin the early stages of this."

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Fuller says the chief consideration will be whether or not thesavings is greater than the cost of leasing and staffing additionalwarehouses. He foresees national companies will rely more onrailroads and outsource to third-party logistics providers asalternatives whereas a local company is more likely to leaseseveral small locations to service daily runs for localcustomers.

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[IMGCAP(3)]Fuller says Houston already is starting to reflectthe change because it's more spread out than Dallas. "The bad newsis we've got high fuel costs. The good news is we're going tochange the way we do things," he says. "I don't know if it's justfuel costs, but it certainly is forcing them to look at it thehigher that goes."

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Pearson steadfastly believes Dallas/Fort Worth will be the chiefbenefactor if rising fuel prices force changes in distribution andsupply chain routes. "You'll see more companies that haven't beenhere, come here," he says. As for companies that are in the region,he says there are a lot of three-year renewals getting done thesedays to buy time to see what's going to happen.

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[IMGCAP(4)]Teesdale adds that the increased fuel cost couldcause companies to lower their threshold for shipping by rail.Today's watermark is 480 miles from the distribution point, but hesays he can see that dropping to 250 miles if fuel prices continueto skyrocket.

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Teesdale says the problem has been exacerbated because fuelcosts have risen so fast for so long. "If it was gradual, then itwould be a different story. You just can't, all of a sudden, passthat cost onto the customer," he says.

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All four professionals say the mood could change if dieselprices drop or at least hold at today's level of roughly $4.50 pergallon. "I don't know if there's a magic number because there areso many factors that go into the decision," Pearson says. "But, Ithink you're at a point that's causing everyone to look at itnow."

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Teesdale says companies, eyeing change, are faced with atwo-edged sword because they're being forced to evaluatedistribution and other operating costs during dire economic times."I don't think you're going to see any decisions until people getcomfortable with the economy," he says. "It doesn't make sense tochange your whole distribution model if the price is going to comeback down."

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