Monday, November 15, 2004
Stockton, Calif., airport enjoys boom in industrial, construction activity
The Stockton (CA) Record
STOCKTON, Calif. — It’s easy to feel small in the booming industrial areas around Stockton Metropolitan Airport.
Streets here may stretch out a half-mile or more between intersections, the equivalent of six or seven downtown city blocks.
Cavernous distribution warehouses of a half-million square feet or more — room enough to plop down 10 football fields — are common. They dwarf tractor-trailer rigs pulled into the loading bays, much like a supermarket compared with a pickup.
Seven commercial-industrial projects covering roughly 2,300 acres are under way in the immediate airport area. And there’s more to come.
San Joaquin County officials hope to launch development next year of the long-planned Stockton East project — 550 acres of industrial, office and retail uses between the airport and Highway 99 to the east. Beyond that, city officials see future industrial growth pushing farther east and south, toward the state’s Northern California Women’s prison and Burlington Northern Santa Fe Railroad’s Intermodal facility.
So far this year, new construction around the airport has doubled, said Kevin Dal Porto, first vice president with CB Richard Ellis.
“Nearly 1.6 million square feet is currently under construction with roughly 75 percent of the total being built on speculation,” he wrote in an e-mail response. “This represents an estimated $80 million total investment cost.”
Carolyn Johnson, chief financial officer of Eureka Fabrication Inc., has witnessed much of the recent change.
“In six years, since we started the business, it’s amazing what’s come out here,” said Johnson, who with her husband, owns the business where more than 30 employees use precision lasers to cut parts out of sheet metal — anything from paper-thin to 3/4-inch thick.
Some newcomers are Simpson Strong-Tie, a manufacturer of construction connectors that occupies a 600,000-square-foot plant and distribution center; Golden State Lumber, operating a 300,000-square-foot facility; and BMW recently announced plans for a new 250,000-square-foot parts warehouse.
What’s driving this growth is access to transportation — the airport, Port of Stockton, Interstate 5 and Highway 99, and BNSF rail yard — and relatively low costs.
“We really would have preferred to be close to where we live,” said Angels Camp resident Johnson.
But a building in the airport industrial area, with easy access to the Bay Area and Central Valley, won out.
“We’re pretty centrally located,” Johnson said. “We’re able to get stuff moved in and out quickly. It’s very convenient for our suppliers. … We’re within an hour and a half of most of our customers.
Lower costs for land and operations were factors that prompted Dorfman-Pacific, a national hat company, to move from Oakland 16 years ago, initially occupying a 97,000-square-foot building with 38 employees, officials said.
That national distribution center has since expanded to 275,000 square feet and 169 employees, said Bakul Patel, Dorfman-Pacific controller.
“Plus there’s room to grow here,” Patel noted. “There’s still space behind us if we wanted to add to this building.”
The great majority of the company’s hats are manufactured overseas and imported through the Port of Oakland, which handles seagoing shipping containers. Stockton’s own inland port specializes in bulk cargo, such as cement, steel, sulfur, fertilizer, rice and cotton.
Several factors contribute to the boom in industrial and commercial activity around Stockton, said Michael Locke, chief executive of the San Joaquin Partnership, a nonprofit business development agency.
Demand has increased through the years as the U.S. economic recovery gains speed. Industrial projects in Manteca and Tracy are running short of available space.
As a result, “Stockton has captured a bigger percentage of the new project development in the past two years,” Locke said. That share amounts to roughly 65 percent of all new local transactions.
Also, he said, “We still believe that work-force availability in Stockton, transportation, access to rail and product movement through the port of Stockton are all contributing factors to the successful siting of these projects.
San Joaquin County officials hope to set the bar a little higher for future airport-area developments with their 550-acre Airport East project, which could potentially get under way by mid-2005.
In addition to the manufacturing and distribution activities that typify current developments, Airport East is intended to include high-end office space and retail uses, such as hotels and restaurants, on land near Highway 99 and Arch Road, said Barry Rondinella, airport director.
To make that happen, he said, “You start with a specific plan that designs something that doesn’t currently exist in this area in terms of its upscale features: better architectural requirements, parks and bike trails … things like that.”
Offices in the area aren’t entirely new. The San Joaquin County Office of Education has long been located off Arch-Airport Road, but it built those facilities for its own use.
Buzz Oates Real Estate, the Sacramento-based firm that is the leading developer in the airport area with control of about half of the existing projects, is currently building a 108,000-square-foot office building just off Highway 99 north of Arch-Airport Road. It is still seeking a tenant or tenants. That makes it a pioneering project, said Bob Taylor, Oates regional vice president.
“I think that people that are in the office-development market are probably scratching their heads saying, ‘What the heck are those people doing out there?’ ” Taylor said. He explained, “We saw a tightening office market in Stockton … and we chose to think outside of the box a little bit.”
The airport itself, too, is adjusting its focus. America West Airlines terminated passenger service there in September 2003 after a 2 1/2-year stint, and ongoing efforts to attract another carrier have come up empty.
But earlier this year, county officials completed a new $6 million air cargo center, a 10-acre area east of the airport’s main runway. It’s intended to attract more freight operations, leveraging the airport’s long runway and proximity to highway and rail transportation.
Rondinella is seeking a cargo-marketing consultant “whose role would be to help us tell the world about our great facility, location, etc.” Also, the airport plans to expand an older cargo ramp adjacent to Farmington Fresh, which provides cold storage and air-shipment services for fruits and vegetables.
“The Asian economy is back, and we anticipate … a lot of tree-fruit shipments that will require cold storage,” he said.
Locke agrees with the goals of building a new air-freight business base and landing some research facilities and business offices. However, he thinks the picture is incomplete.
“The key to a higher-value development in that region and the next phase of expansion is construction of the Arch-Sperry connector to I-5,” he said.
That estimated $110 million project would tie the west end of Sperry Road into the existing French Camp Road interchange on Interstate 5. It’s only a half-mile stretch, but because of rail lines and French Camp Slough, traffic from I-5 currently must go several miles out of the way to reach the airport.
Taylor, while he supports both the air-cargo improvements and I-5 connector, is not convinced they would have a dramatic impact on economic activity in the area.
“I think it’s too early to tell what kind of effect that’s going to have,” he said about the new cargo center. “I only really see maybe one or two companies utilizing that facility.”
As for a Sperry Road-I-5 connector, he said, “It would just relieve congestion at the Arch Road-Highway 99 interchange.”
Taylor has mentioned the Sperry Road connector to many business executives considering locating in Stockton.
“To a person, they say, ‘Yeah, that would be great.’ But does it make a difference to whether you’re going to do business here? No, it doesn’t,” he said.
It made a difference to at least one company, said Steve Carrigan, Stockton’s economic development director.
An executive from Ace Hardware, a national retail chain planning a new distribution center near the airport asked, “How do I get to I-5?” Carrigan said.
After hearing the answer, the executive opted to locate in Tracy, even though real-estate costs were appreciably higher.
Carrigan and Taylor both said that restoring regular airline service to the airport would make a bigger economic splash than new air-cargo operations.
“We have this wonderful asset that just about any city would love to have, and it’s just sputtering,” Carrigan said.
County officials, too, would like to bring passenger service back to Stockton. But it’s a matter of being realistic, Rondinella said.
“We recognize that the airline industry is really struggling right now and is in a contraction mode, not an expansion mode,” he said. “Until they get to the point where they are looking to gain market share rather than just survive, it’s going to be difficult to get them to take a risk in a new market like San Joaquin County.”
In any case, there’s no denying the importance of the airport and surrounding industrial lands.
“Collectively, if you look at all the industrial parks around the airport in south Stockton, it is the largest industrial development area in the county … and will provide the central focus for job development over the next decade,” Locke said.
And whether today’s mix of giant distribution centers and smaller service businesses gives way to forests of office complexes and research facilities is anybody’s guess.
“What’s really going to make it interesting is 20 years from now, when we look back and ask, ‘Did we do it right?’ “Carrigan said.