Central Valley Business Journal, February 2012
By KEITH MICHAUD/Business Journal Editor
The mystery – and hope – emanating from what was dubbed “Project X” in Patterson has splayed open just how very important it is to a regional economy to have available commercial real estate offerings.
So-called “mega sites” or “super sites” – arguably 100 acres and larger with a broad variety of “shovel ready” features – are home to distribution centers, food-processing plants, logistics centers, and, as in the case of Project X, a “fulfillment center.”
“It’s important to have those sites to be able to take advantage of those situations when they come around,” said Ryan Swehla, principal at NAI Benchmark in Modesto, which handles commercial real estate in San Joaquin and Stanislaus counties. “But they don’t happen very often.”
A distribution center or food-processing plant on a large commercial site can be a “huge jobs provider,” said Swehla.
“That project will be a boon to the area, especially when you see what’s happing with Patterson Vegetables,” said Swehla, referring to the food processing plant in Patterson that had announced it was planning to close, potentially leaving nearly 500 without jobs. “It’s just a godsend.”
Michael Ammann, president and chief executive officer of the nonprofit San Joaquin Partnership, is not alone when he pushes the development of mega sites.
“This is a competitive advantage that can allow San Joaquin County to diversify its economy with new jobs developed through the attraction of technology devices, software development, and advance manufacturing co‐located with other supply chain partners,” said Ammann.
“For the past 10 years San Joaquin Valley’s eight counties have consistently had double-digit unemployment rates and today San Joaquin County is still at 15.5 percent,” he said. “We need to do something different to solve this structural unemployment problem that increases social costs, crime, and a drag on the overall economy often ranking our communities low in quality of life nationally. … Mega sites create the opportunity to attract large growing corporate projects.”
“Most of the counties in the Central Valley have a few shovel ready sites and a few more that are in the process of being developed,” said William Bassitt, chief executive officer of the Stanislaus Economic Development and Workforce Alliance. “There is not an abundance of available industrial or business park land identified in the valley, probably in part to the reluctance to sacrifice valuable ag land for job.
“Unfortunately, no progress can be made in overcoming the economic doldrums and the unemployment quandary we are experiencing in the valley without the availability of employment opportunities for the residents,” he said. “And to create those opportunities, ready-to-go business sites must be available.”
Having those large commercial sites ready-to-go or “shovel ready” is key.
“These types of sites are important because they indicate the relative sophistication that a community has in understanding what is needed to be competitive in economic development,” said Bassitt.
Patterson, future home of the still mysterious Project X, is one of those communities.
“Communities that realize this and have set aside land for the purposes of job development will capture the attention of businesses looking to relocate or expand and provide employment,” said Bassitt. “Patterson is a community that glimpsed at the future and prepared for it with the development of Keystone and West Ridge business parks. Stanislaus County is also trying to prepare for opportunities as they work with Gerry Kamilos to develop a 2,500-acre business park site called West Park just south of Patterson. Site selectors and real estate brokers prefer dealing with organized parks with adequate land assembly, fully served, fairly priced and appropriately located for their clients’ needs.”
Having ready sites makes marketing a community much easier than trying to convince a company to relocate to a community or expand when there is no ready space, said Bassitt.
“Project X is an example of taking advantage of a community’s state of readiness and having adequate land ready to go,” said Bassitt. “The project will undoubtedly attract national and maybe even international attention and, if successfully completed, it will have been because the community of Patterson had the sites and was ready.”
“Prospects want ‘shovel ready’ or a detail plan and timeframe showing a pathway to entitlement, which includes interstate highways, airports, port, intermodal from truck to train and major power grid and other infrastructure in water, sewer and natural gas,” said Ammann.
The Central Valley is uniquely suited for that, said Ammann, because of Interstate 5, state Highway 99 and assess to east-west highways, two major intermodal yards operated by two national railroads – Union Pacific and Burlington National and Santa Fe – and assorted short lines, an airport Ammann has called as-yet underutilized, and the Port of Stockton that is in the process of installing huge cranes for its expansion that will allow container service and a connection to the Port of Oakland.
The Port of Stockton in July 2000 acquired Rough and Ready Island from the U.S. Navy.
“The Port has invested time and infrastructure into this property for large businesses in need of immediately access to port, rail and truck,” said Ammann. “Currently, there is approximately 200 acres available for development. In addition, the Stockton Metropolitan Airport has 550‐acres being developed as Airpark 599. This industrial park offers immediate access for corporate offices, delivery of air freight, and related air maintenance operations.
“These two sites and logistical assets tied together with the unique advantage of two intermodal truck-to-rail services,” said Ammann, “San Joaquin County can be sold as an international center of commerce in northern California’s ‘mega region’ of over 12.5 million consumers located in the Bay Area, Sacramento and Central Valley.”
And that consumer base is going to grow significantly over the next 40 years. Ammann pointed to state Department of Finance numbers – the population in the Bay Area will grow from just under 7.4 million people to nearly 10.3 million by 2050. The Central Valley region from Sutter and Yuba counties to Kern County will grow from 6.6 million people to 13.5 million people. And the northern Central Valley will grow from about 542,100 people to 1 million.
And having a workforce that is trained and ready to work is important, too.
“Workforce is always the question,” said Swehla. “Workforce is definitely a driving factor.”
Other factors include capacity and utilities – electricity, sewer and water. Those factors differ slightly depending on the industry, said Swehla. A food processor might need ample water supply and a larger sewer capacity than, say, a distribution center. Distribution centers need workers, but not as much when it comes to utilities.
But there is a common feature.
“You have to be near a major freeway,” said Swehla.
Having all these features are vital for a community trying to lure a job-generating business to one of its mega sites, said Swehla, but often it can come down to how a business is treated when it arrives to scout out a community. He said some communities still fail to see the economic boost such a business can bring and instead bog down a prospective commercial development with paperwork and regulations rather than trying to streamline the process.
Swehla praised Ammann and Bassitt’s organizations for providing necessary services that help streamline the process and help to showcase commercial real estate opportunities.
“They are tremendous help,” said Swehla.
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