A Push to Establish Central Valley Industrial?

John Guinn, VP of development for Wonderful Real Estate Development.

Part 1 of 2 BAKERSFIELD, CA—The Central Valley has the land and infrastructure to facilitate multi-million square foot distribution centers and bolster today’s distribution demands. So says John Guinn , VP of development for Wonderful Real Estate Development . In the exclusive Q&A below, Guinn discusses what is driving interest in the Central Valley industrial market and how it compares to other hot industrial markets in Southern California, Northern California and across the US. GlobeSt.com: Describe the recent growth of the Central Valley industrial market. John Guinn: Recently we have seen a push to establish the Central Valley as a proven distribution location. Wonderful Industrial Park in Shafter/Bakersfield has developed over 5 million square feet for distribution and is capable of 26 million square feet in phase 1 of the project. In the northern Central Valley, Prologis developed a speculative 1 million square foot, 40′ clear building in Tracy in their largest industrial park and leased it to Amazon. GlobeSt.com: What is driving interest in the Central Valley industrial market? Guinn: Growth has been spurred over the last several years by the rise of the omni-channel & e-commerce fulfillment and new mega box distribution centers.  Companies desiring to minimize their total warehouse footprint through super regional hub and spoke models can often find the distance to all of the major population centers in the Western U.S. is less than two days and most favorable from the Central Valley.  The Central Valley has the land and infrastructure to facilitate multi-million square foot distribution centers and bolster today’s distribution demands. Companies like American Tire Distributors, Ross Dress For Less, Ikea, Target, Performance Food Group, Best Buy, Amazon, and Sears have integrated 1M sf + DC’s in the Central Valley to fit within their unique supply chain models. GlobeSt.com: How does the Central Valley industrial market compare to other hot industrial markets in Southern California, Northern California and across the US? Guinn: The Central Valley has been historically considered a Tier III industrial submarket and we traditionally do not see the same absorption velocity in markets such as Stockton/Tracy, the Inland Empire, Atlanta, Chicago or Dallas. However, the rise of the mega box’s and super regional models has given life to the Central Valley as a competitive location. Additionally, the development-friendly environment that is present in the Central Valley has attracted a number of companies to the area.  For example, when American Tire Distributors (“ATD”) identified the Wonderful Industrial Park for its west coast distribution facility, they initially intended to develop a 350,000-square-foot facility.  However, with the lease signed and construction underway, ATD realized they would require a much larger space.  Within 10 months, Wonderful Real Estate Development was able to deliver a 1-million-square-foot build-to-suit space.  This flexibility and ability to react to the changing needs of company at an accelerated pace is often not available in the more well-known and congested industrial markets. Check back in the next few days for part 2 of this Q&A, where Guinn discusses the biggest misconception about the Central Valley industrial market, what types of companies are best suited for the area, and what national industrial trends we will be talking about 12 to 24 months from now.