COVER STORY, DECEMBER 2006

NO CITY LIMITS
Cities court development while accentuating their positives.
Brianne Gloski and Brian A. Lee

While economic growth and commercial real estate activity are automatic in California’s major metropolises, great opportunities for new development and business expansion also exist in the secondary and tertiary markets within the Golden State. Western Real Estate Business took a look at three California markets and their economic development status and objectives as 2007 approaches.

County of San Bernardino, California

With a population of 1.96 million, San Bernardino County in Southern California is striving to become a globally competitive economy and a recognized center for international trade. With major population growth, a vibrant economy and relatively low land costs, the county just might achieve its goal.

Several large-scale developments are currently under construction in San Bernardino County, and, according to Brian McGowan, economic development administrator for the county, “Many San Bernardino cities have plans to revitalize their downtown areas in order to meet the needs of the area’s population growth and to create an urban lifestyle within their community cores.”

J.H. Snyder Co. is developing Ontario Town Square in Ontario. The pedestrian-oriented project will be located in the city’s historic downtown district and will include Ontario City Hall, a new senior center, a state-of-the-art library and The University of La Verne College of Law. Construction also recently began on a mixed-use project in the city that will include 471 residential units, a 76-unit senior housing community and 80,000 square feet of retail space. The project is scheduled for a fall 2009 completion.

Piemonte at Ontario Center

Panattoni Development Co. has recently begun construction on a 1 million-square-foot, mixed-use urban center located along Interstate 10 in the heart of Ontario’s business and retail area. The 120-acre Piemonte at Ontario Center includes 500,000 square feet of retail space; 400,000 square feet of office space; a seven-story, 256-room hotel; and 800 luxury condominiums built by Toll Brothers. The City of Ontario will also develop an 11,000-seat sports and entertainment arena. Piemonte at Ontario Center will be completed in 2009.

Like Ontario, the city of Chino Hills is completing several projects in its downtown district with development partner Opus West. The three projects include a civic center with governmental offices, a 28,000-square-foot library, police and fire stations; a 33-acre community park; and the Shoppes at Chino Hills lifestyle retail center that will comprise 260,000 square feet of retail space, 53,000 square feet of office space, and live/work lofts and multifamily units. The community park is scheduled to open in March 2007, with the next four phases opening in quick succession and finishing with the retail center’s completion by the 2008 holiday season.

These new developments will help further stoke the county’s $96 billion economy, which focuses on logistics and manufacturing, aerospace and defense, medical research, and technology. In addition, San Bernardino is looking to increase its presence in international trade, where, according to recent data, the county was a destination and departure point for nearly $16 million in international commerce. According to McGowan, the county led its first trade mission to China in November. “The primary goal of the mission is to assist businesses to increase their international trade potential by introducing their products, services and advance technologies to China,” says McGowan.

Grubb & Ellis named the Inland Empire the third strongest office market for investors through 2010, surpassing both Los Angeles and Orange counties. In addition, new or recently constructed space in many San Bernardino County communities costs half compared to the markets of Los Angeles and Orange counties, says McGowan. Combine these two factors with the low cost of home prices — the lowest in Southern California — and San Bernardino County looks to be an attractive market in which to settle and do business.

Santa Clarita, California

Southern California citizens apparently discovered the appeal of Santa Clarita first. Now businesses are clamoring to catch up.

“Driven by unmatched residential development, the city is currently experiencing a jobs-to-housing imbalance,” says Andree Walper, economic development associate for the City of Santa Clarita. “More than 53 percent of all resident workers commute to jobs and work outside of Santa Clarita.”

Located in north Los Angeles County, Santa Clarita has a population of more than 175,000 residents and is home to nearly 8,000 businesses. According to Walper, from July 2005 to July 2006, 350 new businesses opened their doors in the city. “This increase can be attributed to a significant development of vacant land, quality workforce, favorable business climate and a high quality of life,” he says.

With its large and growing residential sector, Santa Clarita offers retailers new and expanded opportunities to serve the resulting consumer demand. Valencia Town Center will add on 593,000 square feet of office, retail and restaurant space as well as two, five-story parking structures. PacSun is developing Golden Valley Ranch, a 50-acre lifestyle community center located along State Route 14. Slated for completion in 2007, the 619,000-square-foot development will serve the new 1,250-acre Golden Valley Ranch and 850-acre Fair Oaks Ranch communities, which combined will comprise nearly 2,000 new homes. The Canyon Country and Sand Canyon neighborhoods already surround the site.

Summit Oaks in Santa Clarita, California

Santa Clarita’s office sector is a burgeoning one with 21 office projects, totaling nearly 1.7 million square feet of new professional and medical office space, currently under development. Parker Properties recently got approval to develop Summit Oaks, a five-story, 145,205-square-foot building located along Interstate 5. The office property will serve as the gateway to the surrounding Valencia Industrial Center and will be flanked by two new business class hotel properties, Embassy Suites and Courtyard by Marriott.

The City of Santa Clarita’s redevelopment focus is on the heart of the city. Adopted in 2005, the Old Town Newhall Specific Plan calls for the creation of a 271-acre mixed-used urban neighborhood, which will feature nearly 1,100 new homes and about 1 million square feet of new commercial space.

“This plan offers forward-thinking developers a unique opportunity to establish a strong presence in one of Southern California’s fastest growing communities,” says Walper. 

Santa Clarita economic development efforts have focused on recruiting businesses in the aerospace, biomedical, entertainment and technology industries. Such employment offerings would eliminate the long commutes of many Santa Clarita residents and build on the 3,880 new job hires occurring each year in the city. Recently designated an “Enterprise Zone,” Santa Clarita offers special state and local incentives, including substantial tax credits, to promote business investment and job creation.

Redding, California

Located 160 miles north of Sacramento, Redding is capitalizing on its position in Northern California. The city of 90,000 people — its metropolitan statistical area encompasses twice that amount — has room to grow and a strategic plan with which to do it.

As part of the cooperative SHASTEC Redevelopment Project, the City of Redding is developing the Stillwater Business Park, the largest economic development project in the city’s recent history. The 700-acre, master-planned, large-parcel business park will be located adjacent to Redding Municipal Airport near Interstate 5 in east Redding. Groundbreaking for infrastructure development is slated for May/June 2007, and the park is expected to be fully operational by mid-2008.

“The unique feature of this development is that it is designed for large projects, companies needing between 10 and 100 acres that are permitted and ‘shovel ready,’” says Randy Bachman, assistant city manager with the City of Redding. “There is a shortage of large, ready-to-go industrial sites in the West, so the Stillwater Business Park should be very desirable for competitive firms seeking to expand or relocate.”

Redding’s economic development activities are focused on attracting primary industries, such as manufacturing, in order to create better, higher-paying job opportunities for area residents. The primary geographical focus is the newly designated Shasta Metro Enterprise Zone, which comprises all major commercial and industrial areas along the I-5 corridor, as well as the new Stillwater Business Park. Enterprise zone benefits include significant tax credits. On top of that, the fact that the City of Redding owns and operates the electric utility means up to 50 percent savings for large industrial users.

“Redding’s position along the I-5 corridor and equidistant between Seattle and Los Angeles also makes it an attractive alternative for companies seeking access to western markets,” says Bachman. “Recent newcomer, North Carolina-based Captive Aire, opened its West Coast manufacturing and distribution facility at the small-lot Redding Airport Business Park because of its ideal location, low-cost electric power and enterprise zone tax credits.”

The City of Redding Economic Development Team collaborates with the Economic Development Corporation of Shasta County on Shasta 2011, a 5-year growth strategy supported by the various municipalities as well as 60 local companies.

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