COVER STORY, AUGUST 2009

THE NEW ECONOMY OF THE PANHANDLE PLAINS
The burgeoning industries of wind energy and biotech are reshaping Abilene’s industrial sector.
By Coleman Wood

The metropolises of Houston and Dallas/Fort Worth cast a long shadow within the state’s industrial sector. However, approximately 150 miles west of Fort Worth sits the city of Abilene. Long known as an oil town, the city has made great strides in recent years to compete and, despite its status as a secondary market, it maintains an active industrial sector. A lot of this can be attributed to the city itself, which has taken the initiative to bring business to Abilene.

The Abilene Industrial Foundation (AIF) was formed in the 1960s and was one of the forerunners of economic development organizations in the region. The goal was and remains to attract and retain business to the city. In what has historically been a one-industry town, new business provides a hedge against single-sector booms and busts.

“They wanted to diversify themselves from where they were with oil and gas,” says Bill Ehrie, current president of the Abilene Industrial Foundation. “Historically, if you’re just a one-sector economy — such as oil — when oil goes up and oil goes down you really get bounced around a lot.”

The AIF has several tools at its disposal to do this. In 1989, the city passed a half-cent sales tax to fund economic development — providing approximately $9 million per year for incentives. The AIF also has its own private fund, which was originally funded by contributions from its members. This fund helps the organization attract companies, advertise and acquire property.

AIF’s recently completed spec project at Five Points Business Park (Photo: Krazer).

The city’s development arm, known as the Development Corporation of Abilene, recently completed its third speculative industrial building within Five Points Business Park, a 600-acre industrial park located along Interstate 20 that the city took over in 1995. It also has announced plans to acquire 122 acres for the future expansion of Five Points. Having the park allows the city to set its own rental rates independent of market conditions. It also gives the city the leeway to work with existing tenants to keep them in their spaces.

“We use lease rates as incentives to attract people who may be looking at other cities, but can’t get as lucrative a deal as they could here,” Ehrie says.

An aerial view of Windstar Energy Center.

The most recent tenant at Five Points is wind tower production company Tower Tech Systems, a subsidiary of Broadwind Energy, which opened a 146,000-square-foot production facility on 46 acres within the park. Tower Tech is one of many companies in the burgeoning wind energy industry that has set its sights on Central Texas and Abilene, in particular. Earlier this year, Neo Energy Solutions leased 66,814 square feet within the 782,000-square-foot Windstar Energy Center for its wind turbine blade storage and maintenance operations.

“We already have [wind] companies here right now and lots more coming in behind them. Within a 50-mile radius of Abilene, there are probably tens of thousands of wind turbines already blowing and cranking out energy, and more to come between here and Lubbock,” says Scott Senter, president of locally based brokerage firm Senter Realtors.

Senter adds that how large the wind energy sector gets in Abilene will ultimately depend on how fast transmission lines can be built to move the energy to customers. In the meantime, Abilene is seeing activity on other fronts. Coca-Cola recently spent $5 million upgrading its existing bottling facility at Windstar Energy Center, which itself has seen a flurry of activity recently. PepsiCo also acquired Abtex Beverage in a reported $200 million deal, and it expects to take occupancy of and expand the facility for its bottling operations. All of these transactions show a prominent trend in Abilene.

“Most of the deals that come into Abilene come from outside — people out of Dallas dealing with the bigger industrial brokerage companies,” Senter says. “They have been sticking people out here because our market is affordable, sitting around $2 to $2.50 per square foot for industrial space in our market.”

While interest is high, Abilene has some work to do to get industrial product in the market up to current expectations. “We’ve got a little bit of a building shortage,” Senter adds. “We have some space available — 300,000 to 400,000 square feet — but we are limited a little bit by ceiling heights and column spacing. It makes it more challenging for most people to use.”

A rendering of the new Accelerator biotechnology facility that is being developed in Abilene. (Image: Tittle Luther Partnership Architecture)

The completion of the Abilene campus of the Texas Tech School of Pharmacy has brought another thriving sector to the city: biotechnology. To help further establish the sector’s presence the city is developing what is referred to as the Accelerator, a $5.3 million biotech research center. The 20,000-square-foot building will be divisible between five or six companies and will serve as a business incubator for biotech companies. One company, Receptor Logic, has signed on as the center’s first tenant. The company will be housed in the School of Pharmacy building until the Accelerator is complete.

The new Texas Tech School of Pharmacy (Photo: Steve Krazer, Krazer Marketing)

“I’m anticipating a lot of potential in the biotech area,” Senter says, adding that Receptor Logic is encouraging other companies to relocate to Abilene, especially those in Austin, where there is a shortage of wet and dry lab space.

In the future, many industrial companies will continue to look at the four major cities in Texas first. But to Ehrie, Abilene has benefits that those markets cannot provide.

“All too often, industries go for the name appeal of major cities, when the reality of it is that they would be better off in the secondary cities such as Abilene and others like us, where they have a dialogue, where their needs are being met and where their frustrations are heard,” Ehrie adds.

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