Union Pacific on New Track to High Profits

Union Pacific Corp., a giant among the nation’s major land holders, owns 1.3 million acres of land and about seven acres of mineral rights.

Almost without exception, its development of some of that land, occupied mainly by warehouses and served by the Union Pacific’s vast, 22,000-mile railroad system, has been geared toward industrial purposes.

Until recently, that is. For even giants must bend to changes in the marketplace.

Upmost in the mind of L. B. Harbour Jr. who heads Upland Industries Corp., the real estate and land development arm of Union Pacific, has been the most efficient and most profitable use of 21,000 acres that are adjacent to major metropolitan areas in 21 states and that constitute Union Pacific’s prime parcels.

Harbour’s zealous eye has watched prime land become scarce and of much higher value. “There also has been a staggering growth in high-technology industries here and in other sections of California, New England and the Southwest,” Harbour said.

“More and more businesses are now using the piggyback system to transport their goods, trucking trailers directly to the customers’ premises, thus eliminating the need for spur tracks and warehouse distribution centers. Consequently, we are seeing the box cars slowly turning into dinosaurs.

“We have seen the attractively designed, beautifully landscaped business parks come into being to accommodate computer-controlled operations, the lighter industries, the research and development firms that want to attract higher-caliber personnel. This, in turn, has created a need for more amenities and a resulting search by companies for the ‘campus’ environment in which to locate their businesses.”

Harbour said Upland has begun to capitalize on its parent company’s valuable holdings by earmarking its prime properties for commercial and mixed use.

“Until five years ago,” Harbour noted, “our main thrust was in property management, and our second thrust was in development of rail-served industrial complexes.”

Income Increase

Since 1977, when Harbour became its president, Upland has realized a net income increase from $4 million to a record $32 million in 1984, on revenues that rose from $27 million to $63 million. During the past decade, the company developed 75 industrial parks and districts, most of which are served by the Union Pacific railroad system.

An important development which led to Upland’s current diversification was the Staggers Act of 1980 that freed railroad companies from strict controls of the Interstate Commerce Commission, allowing them to embark on longer-term operating and marketing procedures.

Harbour said that his firm is now focusing on “recycling” its former concept of industrial complexes. “And we are doing that by strengthening our restrictions and adding considerably more amenities and more landscaping,” he added.

South Bay Project

Upland Industries breaks ground this week on the 52-acre South Bay Business Park, first of these major projects originally designated as an industrial park, and even provided with a railroad track consistent with the traditional planning of such land.

The new park is located near the juncture of the Long Beach and San Diego freeways, on a site that probably is one of the last of any size in the Los Angeles/Long Beach corridor. A recent appraisal of the project placed a $32-million price tag on the land alone.

Right across the street, on property sold by Upland to Cabot, Cabot & Forbes some years ago, are several buildings leased to Hughes Aircraft for high technology and research and development and related office use.

The initial development at the new business park will be a 72,000-square-foot building, a joint venture of Upland and the Hewson Organization, a Southwest regional developer.

Joint Agreement

Upland will provide four acres of land for the structure and Hewson will arrange for construction and permanent financing and will build and manage the property. Under the joint agreement, about 14 acres may also be jointly developed by Upland and Hewson, once the initial project has been completed.

A second 75,000-square-foot building is being developed by Hewson in the South Bay Business Park on 3.8 acres of land sold by Upland to Scan-Ray Corp., a manufacturer of airport detection equipment.

In the greater Los Angeles area, Union Pacific’s holdings currently include 2,200 acres in or near San Bernardino and Riverside counties, in Ontario and Fontana, that are being reserved for possible mixed-use development.

In addition, about 820 acres in the Los Angeles/Long Beach harbor area are being master-planned for port-related commercial and industrial development, along with the expansion of the present Champlin Petroleum Wilmington refinery and Union Pacific railroad facilities.