E-commerce Businesses Are Choosing Dallas

1-Ulta Business Park (OED-Patskin) CROPPED
By David Schleg
December 5, 2017

Over the past few years, the City of Dallas Office of Economic Development has worked to secure new e-commerce businesses. Amazon, Ulta Beauty, and Chewy.com all have established new distribution centers in Dallas, helping to expand the city’s tax base, increase sales tax revenue, and create new employment opportunities. 

E-commerce has been on the rise over the past decade, thanks in large part to industry titans such as Amazon, eBay, and China’s Alibaba. E-commerce continues to evolve and grow, helping define the future of retail. It is becoming apparent that nearly all future significant growth in the retail sector will take place online. 

According to a 2017 Business Insider Intelligence e-commerce article, U.S. consumers were estimated to have spent $385 billion online in 2016. Moreover, Business Insider Intelligence predicts that number will grow to $632 billion in 2020. The most recent available data from the U.S. Census Bureau shows that e-commerce accounted for 9.1 percent of all U.S. retail sales in the third quarter of 2017, an increase from 8.2 percent in the third quarter of 2016.

The following summarizes these strategic economic development partnerships with the city of Dallas.

2014 – Ulta Beauty:  Ulta Inc., through its retail shop Ulta Beauty, secured a 15-year sales tax refund grant for development of a new distribution and warehouse facility located at 4786 Mountain Creek Parkway. The leased facility also has a real property tax abatement agreement with warehouse owner Prologis, L.P. As of January 2017, Ulta Beauty has invested over $60 million in business personal property at the Mountain Creek location. According to a May 2017 CNBC report, the beauty supplier's digital sales grew 71 percent in the first quarter of 2017, to $104.3 million from $61 million, and same-store sales rose 14.3 percent and e-commerce sales grew 71 percent. Ulta expects its full-year comparable sales growth to fall within a range of 9 to 11 percent and its fiscal 2017 e-commerce revenue growth to be in the 50 percent range.

Amazon Warehouse Trammell Crow JJ Lemmon 2 1.26.16 (Credit Amazon)

2015 – Amazon Fulfillment Center: Economic Development staff worked with Trammell Crow to recruit Amazon to lease and operate a new 500,000-square-foot fulfillment warehouse center located at 33333 LBJ Freeway. The warehouse serves as part of Amazon’s e-commerce-oriented Fulfillment Network. Amazon spent approximately $13 million in tenant improvements to develop the warehouse receiving center. The city supported the establishment of a major employer, who had the option to locate within similar developments in other area cities, at this Southern Dallas location by providing an economic development grant to help secure investment and future job opportunities. The leased facility also has a real property tax abatement agreement with warehouse owner JJ Lemmon Industrial, LLC. The creation of 400 jobs and investment in the property is consistent with encouraging commercial and economic development in the city and is in compliance with the city’s Public Private Partnership Program Guidelines and Criteria.

Amazon Fulfillment Center. Photo Credit: Amazon.

2017 – Chewy, Inc.:  In February 2017, the Dallas City Council authorized a 10-year sales tax grant agreement with Chewy, Inc. for March 1, 2017 through February 28, 2027 from its leased facility at 7243 Grady Niblo Road. The facility is owned by CHCH Realty, LP, a Crow Holdings Capital limited partnership, who secured a real property tax abatement with the city of Dallas in 2014. The grant is estimated to be valued at approximately $7 million, based upon Chewy.com’s sales projections from the new distribution center. In April 2017, Chewy, Inc. was acquired by PetSmart for approximately $3 billion, further expanding its customer base in the pet supply industry.