May 8, 2024 Maria Verdin

Unlocking Potential: Exploring Central California’s Booming CRE Market

California’s Central Valley is not just the heartland of agriculture; it’s also emerging as one of the nation’s most dynamic commercial real estate markets. In AIR CRE’s recent Town Hall, Jennifer Faughn, Executive Director of California Central Valley EDC, and her team provided an in-depth look at the region’s growth and development, showcasing the diverse opportunities and projects driving the Central Valley’s economic engine.

Central Valley Overview

The Central Valley, spanning from Bakersfield to Stockton, is home to 4.3 million people and sits at the heart of California’s economy. Its strategic location between major economic hubs like the Bay Area and Los Angeles makes it a prime destination for commercial investment. The region boasts extensive transportation infrastructure, including major freeways, railroads, and access to ports like Oakland and Stockton. With three metro passenger airports and numerous educational institutions, including public universities and community colleges, the Central Valley offers a robust workforce and opportunities for career technical education.

Economic Trends and Growth

Over the years, the Central Valley has experienced significant growth, outpacing the state’s average. The industrial sector, in particular, has seen substantial development, with a current base of 382 million square feet and a vacancy rate of 4.4%. Speculative building activity has been on the rise, with approximately 20 million square feet either planned, under construction, or available. Notable trends include the expansion of industrial land by counties and cities, with major developers contributing to the region’s growth.

County Spotlights: Unveiling Development Projects

Each county in the Central Valley offers unique opportunities and development projects, contributing to the region’s economic vibrancy. Representatives from each of the eight Central Valley counties provided comprehensive overviews of local developments.

FRESNO COUNTY: The discussion revolved around the surge in logistics centers, renewable energy projects, and food processing facilities. With a focus on diverse sectors like technology and agriculture, Fresno County is attracting a wide range of businesses seeking strategic growth opportunities.

KERN COUNTY: Kern County, known as “The Golden Empire,” boasts a rich history of gold, oil, and agriculture, ranking as the nation’s top agricultural producer and consistently in the top five for petroleum production. It serves as a major distribution hub with over 50 centers, hosts significant renewable energy projects, and is strategically located within a four-hour drive of 90% of California’s population, while also housing key aerospace facilities like Mojave Air and Space Port, Edwards AFB, and China Lake Naval Air Weapons Center.

KINGS COUNTY: Kings County hosts major food processors like Del Monte Foods and is home to Naval Air Station Lemoore, featuring the Navy’s F-35C Lightning II. Recent additions include Faraday Future and the World Surf League’s Surf Ranch. Flanked by State Route 99 and Interstate 5, it has strong logistical connections, served by BNSF Railway and San Joaquin Valley Railroad, with future access planned via California’s High-Speed Rail.

MADERA COUNTY: Notable developments such as the AutoZone distribution center and the Madera Food Park were highlighted. Investments in transportation and manufacturing underscore Madera’s potential as a business destination.

MERCED COUNTY: Transformative projects like the VST project supporting UC Merced’s expansion and the Castle Commerce Center, positioned to become a key air cargo hub, were highlighted. With significant investments in infrastructure, Merced County is primed for sustained growth.

SAN JOAQUIN COUNTY: Highlights included the county’s strategic location in the state and robust infrastructure. Notable projects include over 55 million square feet of industrial development since 2013, with Amazon leading the charge with 11 buildings totaling over 10 million SF.

STANISLAUS COUNTY: Upcoming projects such as the Costco in Riverbank and a sports complex in Interlock were mentioned, while the focus on manufacturing and emerging sectors like AgTech demonstrates the county’s commitment to innovation.

TULARE COUNTY: Emphasis was placed on the influx of major companies like FedEx, Amazon, and Gap, attracted by the county’s logistical advantages. The development of industrial parks and cold storage facilities further solidifies Tulare County’s position as an industrial powerhouse.

Q&A Session: Addressing Key Concerns

In the Q&A session, attendees raised questions regarding long-term growth concerns and macroeconomic factors. Infrastructure improvements, transportation enhancements, and legislative support emerged as crucial elements in sustaining the region’s growth trajectory. Attendees also gained insights into major companies expanding within the Central Valley, ranging from logistics giants like Amazon to food processors and renewable energy developers.

Unlocking Opportunities in the Central Valley

As California’s Central Valley continues to evolve, it presents unparalleled opportunities for investors, developers, and businesses. With its strategic location, robust infrastructure, and diverse economic base, the region offers a fertile ground for growth and innovation. By leveraging its strengths and fostering collaboration, the Central Valley is well-positioned to shape the future of commercial real estate in California and beyond. The session concluded with a reminder of the resources available through California Central Valley EDC and a call to continue leveraging partnerships for sustained economic prosperity.