Hanger Company To Move Distribution Operations
Written by Risa Polansky on May 22, 2008
By Risa Polansky
Miami’s out-of-the-way location, high rental rates and lack of space to build mean The Great American Hanger Co.’s distribution center won’t be hanging around.
The homegrown, 9-year-old company is to set up a new corporate office here, but its distribution operations, which employ about 50 people, are to be moved to Savannah, GA, this fall.
"It’s just too expensive for us," said Devon Rifkin, company founder and chief executive officer.
As a third-generation Miamian, he isn’t pulling out of South Florida altogether.
He plans to keep the Great American Hanger Co.’s corporate operations here in a new 10,000-square-foot space in the Blue Lagoon area and to employ about 50 there.
The company occupies now just under 100,000 square feet in the Miami International Airport area, he said, and pays about $11 a square foot.
Rent for the new home in Savannah: less than $5 a square foot.
Asking rates for warehouse distribution space in Miami-Dade County averaged about $7.34 a square foot the first quarter of this year, according to an industrial market trend report by Grubb & Ellis Company.
"I don’t think you can grow a serious business in Miami anymore if you need a lot of warehouse space unless you supply South America and you need to be here," Mr. Rifkin said, adding "It’s a terrible place to ship (domestically) from."
The Great American Hanger Co., which sees about $10 million in annual sales, is the largest UPS shipper in its zip code, he said.
Its Reno, NV, warehouse outpost — set up "to counterbalance being at the end of the Earth here in Miami" — is to close, as well.
"The reality also is, you’ve got no land (in Miami-Dade). You can’t build in the bay, you can’t build in the Everglades," Mr. Rifkin said. "We have to create our own opportunities."
Stephen Beatus, associate executive vice president of expansion, retention, recruitment & urban initiatives for the Beacon Council, Miami-Dade’s economic development arm, acknowledged that, "over time, the cost of operating in Miami-Dade County has gone up, as it has in other areas… The cost of land certainly has gone up, and the cost of labor has gone up."
However, Mr. Beatus said, "I don’t see a trend of any exodus (of locally based companies) at all."
Miami-Dade County is home to 13,586 wholesalers, 581 established within the past year, according to data the council provided.
Should a company express concerns over doing business here, the Beacon Council can help search for less-expensive space elsewhere in the county, Mr. Beatus said.
Training grants are available to those who need help building a skilled workforce, and the council offers access to experts to help with transportation and logistics issues.
"We try to customize our support to them (companies) based on their specific needs," he said.
Savannah boasts some built-in offerings for distributors.
The trucking industry there operates 103 carriers and 22 local terminals, according to the Savannah Economic Development Authority.
And the area port’s $60-plus million intermodal system provides for expedited shipping, allowing, for example, goods to reach Chicago or other Midwest destinations within 48 hours of arriving by ship, according to the Georgia Ports Authority.
The Great American Hanger Co.’s new Savannah operation is to include also a small factory.
Though hangers produced there will probably be more costly, they’ll be ready quicker than those made in China, and, Mr. Rifkin predicted, "People are going to be willing to pay for a domestic product in the US."