Historic. Game changer. Thrilling. Those are some of the words local officials used to describe news that Gap Inc. will begin building an e-commerce fulfillment and distribution center starting as early as April in Longview’s North Business Park off U.S. 259.
The 850,000-square-foot facility will be constructed on 142 acres, with the expectation that it will be fully operational by August 2022.
Gap Inc., which serves as the parent company for retail brands including Gap and Old Navy, announced its plans Wednesday. The company said it will invest $140 million in the facility by 2023. The new center, which will initially serve Old Navy’s growing online business, will create more than 500 full-time jobs in Longview by the end of 2023 and will grow to more than 1,200 full-time jobs over the next five years.
Additionally, the company expects to create more than 1,000 part time seasonal jobs by 2026, Gap Inc. said in a statement.
Full-time hourly salaries will be $15 to $16 an hour with benefits, according to information from Longview Economic Development Corp.
“This is a big day for Longview,” Gregg County Judge Bill Stoudt said during a Wednesday news conference at City Hall about the announcement. “This is a game changer as we say in this business when you get the type of company that Gap Inc. is.”
The news conference followed a series of meetings Wednesday by LEDCO, Gregg County Commissioners Court and Longview City Council to seal a package of incentives for the business.
LEDCO agreed to a forgivable promissory note for $11.42 million for the purchase/sale of 142 acres in the North Longview Business Park, with forgiveness based on completion of the investment and employment goals over five years. LEDCO will hold a first lien deed of trust on the property where Gap Inc. will locate.
LEDCO also will pay to relocate certain water, sewer and gas lines that cross the property, at an estimated expense of $997,000.
In return, starting in 2022, the distribution center would be required to have an average of 255 full-time employees, ramping up to 1,222 by 2026. That would make the center Longview’s fourth-largest employer by today’s rankings, behind Christus Good Shepherd, Longview ISD and Eastman Chemical Co., according to LEDCO.
Gap Inc, would make a capital investment of $110 million in 2022 and $30 million in 2023 to complete the 850,000-square-foot building, with the first certificate of occupancy issued by Aug. 2, 2022.
Also, the city and Gregg County each agreed to 25-year tax abatements that would see those entities reimburse the company for its real and personal property taxes so long as the company maintained the employee and capital investment goals each year of the 25-year agreement.
They also agreed to reimburse Gap Inc. for up to 40% of local sales tax revenues associated with sales from the fulfillment center over the 25-year period.
The returnWayne Mansfield, president and CEO of LEDCO, said that while the length of time for the abatements is different from many projects, there are no projects of this magnitude in this area considering the sales tax revenue that will be generated. Those revenues are expected to pay back the community’s investment in the project within five years, he said, with a rate of return on investment of 29%.
The construction project also is expected to generate more than 500 hotel nights and benefit local restaurants and retailers.
District 1 City Councilman Ed Moore said, “Wayne sent me the full economic impact study of this project. I’ve looked it over, and for what it’s worth, I think these numbers that are projected over the next 25 years are very realistic, and we’re netting on average $3.2 million (per year) in additional income for the city.”
County officials said Gregg County would see $27 million in revenues over the course of its 25-year agreement with Gap Inc., officials said.
‘It really hooked us’
Gap Inc., which has retail brands Old Navy, Gap, Banana Republic, Athleta, Intermix and Janie and Jack, said the new center will become its latest facility to feature industry-leading technology and, when completed, will be able to process up to 1 million units per day.
“As we look to deliver on our three-year strategy and double our online business, we needed to expand our fulfillment network to provide a great experience for our customers today and ensure we have the ability to grow in the future,” Shawn Curran, chief operating officer of Inc., said in a statement. “We are thrilled to join the Longview community and look forward to developing a facility that will provide employment opportunities and job training to work alongside cutting-edge technology.”
Though the center will initially serve Old Navy’s online business, the company said many of its customer experience centers have the capability to seamlessly serve both online and retail orders in one facility.
”This is a different project, one that I see is certainly shaping as the future for industry in that this is not a typical distribution center although distribution is a component. It is an e-commerce fulfillment center,” Mansfield told the Longview council. “We’re excited about the opportunity that brings our community.”
Mansfield later said communication about the project began a few weeks before Thanksgiving when he received a call inquiring if a group of investors could meet to consider locating in an existing building in Longview. Mansfield met with them, and while the initial building — the Neiman Marcus facility in the Longview Business Park at the opposite end of U.S 259 near Interstate 20 — wasn’t the right fit, the investors agreed that Longview did meet their needs. A focus shifted to vacant land in the North Business Park, and Gap Inc. will locate its facility north and east of iClassPro, Mansfield said.
Gap Inc. didn’t choose the Neiman Marcus facility for a combination of reasons, Mansfield said, mainly related to the time frame it needed the building but also because of the costs associated with retrofitting and enlarging the building.
”For them, it didn’t make sense compared to building a new facility,” he said.
The company chose Longview following a multi-state search.
Kevin Kuntz, senior vice president of global logistics for Gap Inc., said Wednesday in Longview that the company’s e-commerce business is doubling as consumer shopping trends have changed during the COVID-19 pandemic. The company needed space quickly and became interested in Longview as it strives to more quickly reach its customers who live in the Southwest, Kuntz said.
“What we’ve really learned is that there’s a bunch of great people down here, a great employee base and great leaders, and it really hooked us and raised our interest,” Kuntz said.
The center, which is the first that Gap Inc. will build from the ground up, will use state-of-the-art technology, Kuntz said. The center, while ultimately employing more than 1,000 people, will use a significant amount of “crane technology,” Kuntz explained. The technology is capable of placing boxes on shelves, pulling boxes and using robotic arms to pick clothes and sort them for customers, he said.
At peak times, such as during the holiday season, the center will be capable of shipping as many as 1 million garments per day, Kuntz said. Employees will work shifts for about 20 hours per day, seven days a week, as the company strives to fulfill orders quickly for customers who shop at all hours.
“We are incredibly excited to welcome Gap Inc. to Longview,” Mayor Andy Mack said. “This significant investment by Gap Inc. will provide a large number of jobs for East Texans and is a continued diversification of our economy. We believe Gap Inc. will play a tremendous role in supporting economic growth and opportunity in our city, and we look forward to working together to deliver a lasting, positive impact on our community.”
He said this is probably the largest economic development project the city has seen since Eastman Chemical Co. located near Longview.
Stoudt said the jobs created by the new center will benefit not just Longview and Gregg County, but the entire region.
“It’s a great day for Longview. It’s a great day for Gregg County, but it’s a great day for this region in the state of Texas,” Stoudt said. “Along with Mayor Mack, I believe and I continue to believe that Gregg County and Longview is a region leader in not only health care and shopping, but in providing jobs and a great family environment and a great place to live and go to school.”
Stoudt said the revenue impacts from the center will be “huge” for the region. He noted a trickle-down effect from shipping to support vendors to an increase in hotel and motel activity during construction.
Mansfield also credited the vision of leaders in Longview and Gregg County when they, years ago, created a foreign trade zone that met requirements to “remove federal red tape and to allow almost immediate approval of sub-zone projects,” by which Gap Inc. benefits. Mansfield said there are three businesses that use the foreign trade zone. Foreign trade zones provide a variety of benefits to reduce tariff and duty payments normally required of companies.
“What an exciting day for Longview and Gregg County as welcome Gap Inc. to our corporate family here in Longview,” he said.