When American Eagle Outfitters Inc. went looking for a site to build its first distribution center away from its corporate headquarters, it thought it found a home in Lawrence’s East Hills Business Park.

But only after announcing plans in March 2000 for a $45 million project, one that would bring 300 jobs and years of investment, did company officials learn the startling truth.

East hills Business Park is running out of room to attract a major industrial or warehouse-type operation. The lack of such available space is an issue confronting economic development officials.

Lawrence simply didn’t have any room left or at least none ready to handle a major industrial or warehouse-type operation.

“That is our biggest challenge in Lawrence,” said Doug Brown, a commercial broker for Coldwell Banker McGrew Real Estate. “We need to attract more quality businesses to this city and that’s the only way we’re going to do it: by finding some quality industrial ground to have a place to put them.”

American Eagle’s misfortune proved to be a wake-up call for officials handling economic development issues in the area. The company had landed a deal to build a 420,000-square-foot center on 87.7 acres in East Hills, only to find out later the property lacked proper regulatory clearances. American Eagle abandoned its plans in September 2000, opting instead to build outside Ottawa in nearby Franklin County.

The resulting outpouring of opposition about the development of farm land, about an expected 80 percent tax break, about the provision of 300 jobs, most of them paying entry-level wages may have proved frustrating to development officials, but it also gave them a road map for what not to do the next time.

And how to move forward.

“I think the process that ECO2 is following is valuable simply from the standpoint that it helps raise the awareness and knowledge level of people in Lawrence and Douglas County,” said Keith Folkmann, director of plant operations for Sauer-Danfoss, a manufacturer of pumps and motors for off-road mobile hydraulics equipment.

Fast-track authority

The ECO2 group, known as “eco-squared,” is working to build support for creation of new industrial parks and preservation of open space in Lawrence and the county. The two efforts are tied together, recognizing that both sides’ interests need to be addressed before any meaningful plan can be advanced.

The effort started in early 2000, and Folkmann has watched with interest.

He knows what’s at stake. At Sauer-Danfoss, Folkmann heads the Lawrence operation that remains the city’s single most expensive private economic development project, one that went from decision to opening in nine months back in 1998.

“We’re not unique,” Folkmann said. “Businesses are looking to fast-track projects, and you can’t fast-track projects if you don’t have any land to begin with.

“I think that anytime space isn’t readily available, you’re going to slow down the process. And slowing down the process is not what businesses are looking for.”

Folkmann also knows the political landscape. He’s a member of the board of directors for the Lawrence Chamber of Commerce, and serves on the Lawrence-Douglas County Economic Development Board.

He welcomes the efforts of ECO2.

“The value, in my mind, is that going through the process and reaching a consensus ahead of time hopefully prevents us from having to go through it again when we have a prospective business looking to locate in Lawrence and Douglas County,” Folkmann said. “That’s what bogs down a project. If we can clear the field before negotiating with a prospective business, that’s what allows us to be able to fast-track a project.”

So far, ECO2 has yet to formulate any concrete plans. But earlier this year, the group announced plans to seek an increase in sales taxes to finance acquisition of industrial land and open space.

No specific date, or form for a request, had been settled upon by March, and the group still had plenty of ground work to contemplate. It commissioned a work-force assessment survey to determine who works in the area and what skills they offer to employers.

Meanwhile, as the recession drained the urgency out of searching for new space expansions during a downturn are less likely some successes did surface.

Moving in slowdown

Classic Eagle Distributing started construction in November on a warehouse and distribution center in the new Riverside Business Park, a 37-acre industrial area along the east side of North Iowa Street, about a half mile north of the Kansas Turnpike. The distributor of Anheuser-Busch products in northeast Kansas had been searching for space for months, and finally found it in a space it would anchor; smaller lots in the park would be offered to other companies on the lookout for such spaces.

Classic Eagle’s decision to leave its current home at 801 E. Ninth St. opened space for the relocation and expansion of Star Signs & Graphics, which had been crammed into rented space at 801 E. 23rd St.

Star Signs’ move also meant the end of another project. Harris Construction Co. Inc. had been working with Star Signs to put up a 60,000-square-foot building in East Hills.

The $3 million project would have given Star Signs room to grow, and left some space available for a light-industrial or warehouse-type tenant. The cost steered Star Signs away, especially when it found an existing building it could own.

But Bo Harris, president of Harris Construction, is undeterred. He’s still working to put a project together for the property at East Hills, property he knows remains at a premium.

“We still hope to move ahead with some type of development at the site,” Harris said.

Harris isn’t the only one busy at East Hills. NCS Pearson the park’s largest employer with about 1,000 people on its payroll announced plans in February to open a call center for the Immigration and Naturalization Service.

The project, set to be in full operation by June 3, was expected to have about 100 employees all without adding a new building, breaking new ground or winning any new regulatory approvals.

The project simply came as economic development, without the headaches.

“They’ll basically be new jobs for our company here in Lawrence,” said Terry Kroshus, call center director for NCS Pearson in Lawrence, when the INS contract was announced in February. “Not a lot of people know about NCS Pearson, and we’re working to change that. Our commitment is to make this an employer of choice, not just a temporary stop.

“We’re one of the few growing companies out there right now.”

And with their search for new industrial space in Lawrence, area officials are hoping to find and attract similar companies.