INDUSTRIAL AND COMMERCIAL DEMAND PROJECTIONS FOR PATTERSON · 2013-07-02 · Patterson is...

INDUSTRIAL AND COMMERCIAL

DEMAND PROJECTIONS FOR

PATTERSON

Submitted by:

APPLIED DEVELOPMENT ECONOMICS, INC.

255 Ygnacio Valley Road, Suite 200 Walnut Creek, CA 94596

925.934.8712 www.adeusa.com

JUNE 21, 2013

A p p l i e d D e v e l o p m e n t E c o n o m i c s

TTAABBLLEE OOFF CCOONNTTEENNTTSS

EXECUTIVE SUMMARY .......................................................................... 1

INTRODUCTION ................................................................................... 3

NON-RESIDENTIAL SITE INVENTORY ...................................................... 4

DEMAND ANALYSIS .............................................................................. 11

CONCLUSION ...................................................................................... 20

A p p l i e d D e v e l o p m e n t E c o n o m i c s | P a g e 1

EEXXEECCUUTTIIVVEE SSUUMMMMAARRYY

This report presents market and land demand projections for industrial, business park and commercial

space in Patterson. This information provides a basis for estimating the rate of non-residential land

absorption in Patterson and ultimately to calculate the likely buildout period for the proposed West

Patterson Business Park Expansion project. The proposed project includes about 949 gross acres

(880.6 net). Subtracting parcels devoted to catch basins, setbacks and other public facilities, the net

buildable land area for the three primary land uses in the project are as follows: light industrial (585

acres), business park (86.4 acres) and general commercial (107.5 acres). Based on market conditions,

we anticipate that the light industrial development will primarily support distribution and logistics

functions, while the general commercial will be oriented to traveler-serving highway commercial and

certain regional retail uses. The analysis treats the business park a combination of flex and office

space serving primarily technical and professional services kinds of firms. Key findings of this analysis

include:

Patterson is developing into a significant distribution hub in western Stanislaus County.

Regional projections for the logistics cluster in the San Joaquin Valley suggest that

Patterson is well positioned to see continued growth in this sector.

StanCOG’s recent employment projections show Patterson increasing its share of county

employment fourfold between 2010 and 2035.

Based on data regarding existing employment in Patterson, and the overall acceleration of

employment growth indicated in the StanCOG projections, ADE projects an increase of

about 4,300 industrial jobs in Patterson between 2015 and 2035.

The market for business park uses in Patterson, which includes professional and technical

services, business administration functions and information technology, is currently very

small but growing rapidly. There is a very wide range of potential growth opportunities

ranging from 560 to 2,730 jobs over 20 years, with the most likely level at about 1,640

jobs.

Land demand to support industrial employment growth would range from 395 to 789 net

acres, including a five percent vacancy factor. In addition, business park demand would

support an additional 28 to 140 net acres, for a total of 423 to 929 net acres.

Patterson has 405 acres (365 net) of industrial/business park zoned land in its western

industrial area, which is most similar to the type of property in the proposed project. The

proposed project would add 758 acres (671 net) of industrial/business park land.

Based on the above projections, at the high end of projected growth, about three-quarters

of the land without significant constraints within the proposed SOI would be absorbed in

the 20-year time horizon. If the entitlements for the non-vacant land within the City are

not completed by the property owners, then nearly 90 percent of the remaining available

land, including the proposed project, would be absorbed in twenty years. It is important to


note that very few of the remaining industrial sites within the City have sufficient size or

configuration to support the type of large scale distribution facilities anticipated for the

proposed project.

Competing developments in both Crows Landing and Newman may make it difficult for

Patterson to reach the high end projections. However, Patterson has developed a very

favorable cost structure for industrial development and has market momentum in its favor

with the current development of the Amazon.com facility.

Regarding the commercial components of the proposed project, ADE projects demand for

48-69 net acres of highway commercial including auto sales, lodging, a truck stop and

additional eating establishments. Patterson has a 60.6 acre site (48 net acres) available for

expansion of highway commercial at the Sperry Rd./I-5 interchange. However, that

property is currently planted in an apricot orchard and is not immediately available for

development. Over a 20 year time frame, it may anticipated that the site will become

available, but in the meantime, there are only 13.6 acres of small sites available in the

remainder of the Villa del Lago development on Rogers Rd. If Patterson does not have an

alternative site to offer when major development such as an auto center or a truck stop is

ready to go, then the City will lose the opportunity. Additional interchange-oriented

commercial land ready for final development would assist the City in remaining competitive

for these uses.

In terms of other regional retail opportunities, Patterson also has 44.4 gross acres available

for community/regional commercial opposite the new Wal-Mart store. ADE’s retail demand

projections indicate that this site could be occupied by a home center, discount clothing

outlet, junior general merchandise center, and additional food establishments. This site

should provide adequate area for the 20 year time frame for these kinds of community-

level shopping opportunities, particularly when combined with available infill sites near

downtown and on SR 33.

As discussed above, about 45 percent of the industrial land and more than 80 percent of

the commercial land in Patterson has some development constraint associated with it.

Some of the sites have insufficient size and poor configuration while other constraints relate

mainly to the fact that there are existing uses on the sites that would have to be

redeveloped or that entitlements are not complete to the point where prospective

businesses could immediately pull building permits to develop the land. Over a 20 year

period, we would expect that such constraints would be addressed. However, businesses

such as Amazon.com require sites that can be developed immediately and if the real estate

market in Patterson absorbs its remaining readily available land and cannot supply sites

within a short time frame, it may lose economic development opportunities despite the fact

that sufficient land is zoned. This is a particular concern for the highway commercial

property within the City limits.


IINNTTRROODDUUCCTTIIOONN

The project is located near the interchange of I-5 and Sperry Avenue, and anticipates an additional

future interchange at about Zacharias Rd. The project proposes to add 585 acres of light industrial

land, 86.4 acres of business park development, and 107.5 acres of general commercial land. These

are net acreage figures not including land that would be needed for circulation and public facilities or

infrastructure.

The existing industrial uses in the West Patterson Business Park are generally large distribution

facilities, including Grainger, CVS, and Kohl’s. These businesses are within a portion of the business

park called Keystone Pacific Business Park, which includes 225 acres. Amazon.com is also in the

process of building a large distribution facility. Prior to the Amazon project, the Stanislaus Economic

Development and Workforce Alliance reports that the Keystone Pacific Business Park added 2.4 million

sq.ft. of distribution space between 2003 and 2011. With completion of the new Amazon.com facility,

it is estimated Patterson will have absorbed 250 acres of industrial development between 2003 and

2013. Given the proximity of the proposed project to I-5 and this developing concentration of large

distribution facilities, it is likely that future development will also be largely dominated by warehousing

and logistics facilities.

The San Joaquin Valley Regional Transportation Planning agencies are currently preparing an

Interregional Good Movement Plan for the San Joaquin Valley (SJV). Growth projections developed for

this plan indicate that, “Between 2007 and 2040, freight moving on the SJV goods movement system

is anticipated to grow substantially, reaching over 800 million tons by 2040 (about 60% more

freight).” The majority of the tonnage (93%) will continue to be carried by trucks. In addition, the

study estimates that outbound tonnage from the SJV will increase at a greater rate than inbound

tonnage and that outbound tonnage to the Bay Area in particular is expected to more than double

between 2007 and 2040. These trends overall suggest continued strong demand for distribution

facilities in Patterson.


NNOONN--RREESSIIDDEENNTTIIAALL SSIITTEE IINNVVEENNTTOORRYY

For purposes of this analysis, the industrial and commercial sites in Patterson have been divided into

three areas: a) the western area from I-5 to Baldwin Rd. (Figure 1) b); the central commercial area at

the corner of Sperry Ave. and Ward Ave. (Figure 2); and c) the eastern area along SR 33 and

downtown (Figures 3A through 3D). These areas serve different market segments and may not be

comparable to the proposed project in every instance. The proposed project is intended to be an

expansion of the existing western industrial and highway commercial area in Patterson, so property in

that area is most similar to the proposed annexation area. In general the industrial uses in this area

are large scale warehouse and distribution facilities. The medical center in this area is similar in

development type to the business park uses in the proposed annexation area. In addition, the highway

commercial and general commercial land in this area would support similar uses as the proposed

project, particularly visitor-serving restaurants, lodging, and vehicle services.

TABLE 1 SUMMARY OF AVAILABLE NON-

RESIDENTIAL LAND IN PATTERSON BOUNDARIES

Zoning

Development

Status

Gross

Acres

WEST

Industrial:

Williamson Act 23.0

Requires Demolition 186.2

Vacant 241.6

Commercial: Working Orchard 60.6

Vacant 13.9

MIDDLE

Commercial: Requires Demolition 38.9

Vacant 5.2

EAST

Industrial: Requires Demolition 4.6

Vacant 25.7

Commercial: Requires Demolition 14.3

Vacant 8.3

Source: ADE, based on County Assessor and GIS files.

The middle area is located at the corner of Ward Ave. and Sperry Ave. and would be expected to

develop in a similar fashion to the Wal-Mart site and the already developed northwest corner of this

location. As discussed in the market analysis below, this would be comprised of community- and

regional-level mid-size box facilities serving households in western Stanislaus and Merced counties.

The east area would support heavy manufacturing, mainly food processing but not major distribution

uses. The commercial areas would support mainly infill development. In addition, the Villages project

includes commercial areas to serve its future residents, but again, these would be very different from

the highway commercial uses likely along I-5.


Source: ADE, Stanislaus County Assessor Office, City of Patterson, US Census

FIGURE 1 CITY OF PATTERSON, INVENTORY OF VACANT INDUSTRIAL

AND COMMERCIAL LAND



FIGURE 2

CITY OF PATTERSON, INVENTORY OF VACANT INDUSTRIAL AND COMMERCIAL LAND

44.1 acre


FIGURE 3A CITY OF PATTERSON, INVENTORY OF VACANT INDUSTRIAL

AND COMMERCIAL LAND




FIGURE 3B CITY OF PATTERSON, INVENTORY OF VACANT INDUSTRIAL

AND COMMERCIAL LAND



FIGURE 3C




FIGURE 3D



DDEEMMAANNDD AANNAALLYYSSIISS

RECENT EMPLOYMENT TRENDS

Total employment in Patterson showed a net growth in 407 jobs in 2011 after the recession. By that

time, manufacturing jobs were still down nearly 300 jobs and more than 150 jobs in agriculture (Table

1). The jobs base in Patterson appears to reflect considerable self-employment and part-time work,

despite the presence of a number of major corporations in the City. The State Employment

Development Department (EDD) provided StanCOG with an estimate of 1,876 wage and salary jobs in

2010 for Patterson. Yet the Local Employment Dynamics (LED) database, also derived from Bureau of

Labor Statistics (BLS) data, shows 2,972 jobs in Patterson for 2010. The difference is probably due to

independently employed workers and sole proprietors, perhaps many operating independent trucking

TABLE 1 JOBS IN PATTERSON BY INDUSTRY SECTOR, 2002 TO 2011

Industry Sector 2002 2011 Job

Count Share Count Share Change

Agriculture, Forestry, Fishing and Hunting 232 8.7% 79 2.6% -153

Mining, Quarrying, and Oil and Gas Extraction 0 0.0% 0 0.0% 0

Utilities 19 0.7% 17 0.6% -2

Construction 73 2.7% 81 2.6% 8

Manufacturing 812 30.5% 520 16.9% -292

Wholesale Trade 26 1.0% 48 1.6% 22

Retail Trade 253 9.5% 320 10.4% 67

Transportation and Warehousing 24 0.9% 232 7.5% 208

Information 16 0.6% 35 1.1% 19

Finance and Insurance 24 0.9% 37 1.2% 13

Real Estate and Rental and Leasing 89 3.3% 199 6.5% 110

Professional, Scientific, and Technical Services 12 0.5% 54 1.8% 42

Management of Companies and Enterprises 1 0.0% 1 0.0% 0

Admin & Support, Waste Mgmt & Remediation 13 0.5% 37 1.2% 24

Educational Services 486 18.2% 665 21.6% 179

Health Care and Social Assistance 163 6.1% 190 6.2% 27

Arts, Entertainment, and Recreation 6 0.2% 8 0.3% 2

Accommodation and Food Services 271 10.2% 273 8.9% 2

Other Services (excluding Public

Administration) 89 3.3% 169 5.5% 80

Public Administration 57 2.1% 108 3.5% 51

TOTAL 2,666 99.9% 3,073 100.0% 407

Source: Local Employment Dynamics


operations serving the distribution centers in Patterson. Even with the higher figure, the absorption of

250 acres of warehouse/distribution facilities has created less than half the number of jobs that would

be normal for this type of land use. This indicates that the industrial real estate absorption has

proceeded well ahead of full utilization of the facilities, which has probably also been affected by

employment declines during the recession.

EMPLOYMENT PROJECTIONS

In order to project future job growth in Patterson, it is important to understand how the City is

positioned in relation to other employment centers in Stanislaus County and elsewhere on the I-5

corridor. Population growth in the City leveled off in 2007 and has not yet resumed any substantial

growth. As shown in Figure 4, Patterson has about 4% of the County population, up from 2.8% in

2002. Industrial employment, however, has lagged behind population in terms of county share,

averaging about 2.4% during the past decade. (Industrial employment generally consists of jobs in

the following sectors: construction, manufacturing, wholesale trade, transportation and warehousing,

and one-third of the jobs in the administrative support and waste management category.) This trend

is also reflected in commute data as an increasing share of workers commuted into the Bay Area prior

to the recession. Retail employment cropped between 2010 and 2011 but has increased more recently

with the opening of Wal-Mart.

StanCOG has prepared projections for its new Regional Transportation Plan (RTP). For employment,

StanCOG shows a 2010 total for the County of 158,500 jobs and 1,876 jobs in Patterson (Table 2). As

indicated in the table, Patterson’s share of total employment in the County is projected to increase

from 1.2% in 2010 to 4.8% by 2035. This represents an acceleration in employment growth, as the

City population is only projected to grow from 4% of county population to 6% by 2040. However, as

discussed later in the retail market analysis, StanCOG’s projected population growth for Patterson is

slower than the population growth the City experienced during the past decade.

FIGURE 4 PATTERSON SHARE OF COUNTY POPULATION,

AND INDUSTRIAL/RETAIL EMPLOYMENT

Source: Local Employment Dynamics; CA Dept. of Finance.


StanCOG’s employment projections are higher than similar projections prepared by Caltrans, which

publishes long term projections for all California counties (Figure 5). However, projections from the

State Employment Development Department (EDD), which extend from 2008 to 2018, reflect a more

comprehensive definition of employment and are higher overall.

Unlike, the StanCOG projections, Caltrans provides projections for each major industry sector, which

permits a focus on industrial and retail development separate from other employment sources. In

order to derive industrial and retail projections for Patterson, we have assumed the StanCOG Total

Employment projections for the County would contain the same proportion of industrial and retail jobs

as do the Caltrans projections. Further, we have used the LED data for Patterson as our starting point,

since that data also separates jobs by major industry category. Thus, our starting point is 3,243 total

jobs in Patterson in 2010, of which 1,374 are in industrial or retail categories. With this data,

TABLE 2 STANCOG EMPLOYMENT FORECAST

Year

Total Countywide Patterson

Patterson

as % of County

Actual 2010 158,500 1,876 1.2%

Forecast

2015 171,375 3,627 2.1%

2020 184,250 5,378 2.9%

2025 197,125 7,129 3.6%

2030 209,999 8,880 4.2%

2035 222,874 10,631 4.8%

Source: Jaylen French, StanCOG.

FIGURE 5

STANISLAUS COUNTY EMPLOYMENT PROJECTIONS

Source: Caltrans, StanCOG, EDD.


Patterson industrial and retail jobs represent about 2.4% of county employment in these industries in

2010.

The StanCOG projections indicate that Patterson’s share of total employment relative to the County

will increase fourfold between 2010 and 2035. Given the strong market conditions for distribution and

warehouse facilities in the Patterson area, we believe the industrial sector will be leading this trend for

Patterson. Therefore, our industrial and retail jobs projections for Patterson show a similar

acceleration, increasing from a 2.4% county share in 2010 to a 9.4% share by 2035 (Table 3). This

leads to a projection of 7,774 retail and industrial jobs in Patterson, an increase of 5,330 jobs from

2015 when the proposed project is likely to start absorbing new jobs. The projections between 2010

and 2015 show an increase of about 1,039 industrial jobs, corresponding approximately to the job

count anticipated from Amazon.com.

TABLE 3 ADE PROJECTIONS OF INDUSTRIAL AND RETAIL JOBS

IN PATTERSON, 2010-2035

Year

Caltrans Projected Industrial and Retail

Employment, Stanislaus County

Percent of Total

County Employment

StanCOG Imputed

Industrial

and Retail Employment

Patterson Share of County

Industrial and Retail Jobs

Patterson Projected Industrial

and Retail Employment

2010 58,200 37.7% 59,804 2.4% 1,374

2015 63,900 38.3% 65,629 3.8% 2,413

2020 68,800 38.4% 70,818 5.2% 3,573

2025 74,000 39.2% 77,218 6.6% 4,891

2030 78,000 39.2% 82,340 8.0% 6,259

2035 82,000 39.1% 87,214 9.4% 7,744

Source: ADE, based on Caltrans and StanCOG employment projections as well as LED Employment data for Patterson.

The employment projection above contains about 80% industrial jobs, or 4,264 new jobs between

2015 and 2035. The corresponding retail employment increase would be 1,066 jobs, although we also

evaluate growth in regional retail spending in a later section of the report in order to project future

retail development.

The business sectors driving industrial growth in Patterson are the wholesale and transportation

categories. The manufacturing sector has lost significant employment in the past decade and will do

well to recover to previous levels in the foreseeable future. Therefore, we would expect most of the

industrial demand to be met in the western industrial areas of Patterson and very little in the eastern

area where heavy manufacturing or food processing could locate.

BUSINESS PARK DEMAND

The project proposes 105.31 acres of business park development. While it is possible that industrial

uses can also occupy business park space, more typically firms in the professional services and

technology sectors look for business park locations. In Patterson, this would translate to a combination

of professional services and information sector types of companies, as well as the portion of the


administrative services sector not included in the industrial projections above. These uses constitute

3.7 percent of employment in Patterson as of 2011, but have been growing at an annual rate of 13.9

percent since 2002, while in the county professional services declined 15% during the same period. If

this rate of growth continues, business park uses would add 2,732 jobs by 2035. It is unlikely that a

13.9% growth rate is sustainable, but if this sector simply maintains its existing proportion of citywide

employment, it would add 560 jobs by 2035. We believe the current growth momentum will work to

add market share for business park uses in Patterson and the likely projection is the mid-point

between the low and the high, or 1,642 jobs.

EMPLOYEE DENSITY AND LAND REQUIREMENTS

The employment projections can be translated into land requirements based on employee density

factors for industrial, office and retail building space. Table 4 below indicates typical employee density

factors obtained from an extensive survey of employers in Southern California. For the industrial

development projected for Patterson, we would expect to use the employee density factor for the

warehouse category, or 11.4 jobs/acre, implying a need for about 375 acres. However, it should be

noted that this figure is lower than the experience in Patterson over the past 10 years. As indicated

earlier in the report, with the completion of the Amazon.com facility, Patterson will have seen the

absorption of 250 acres over ten years. At this rate, Patterson would develop 500 acres over the 20

year projection period in this study. If the employment projections are correct, this would amount to

an employee density factor of 8.6 jobs per acre.

TABLE 4

AVERAGE EMPLOYMENT DENSITY FACTORS

FIVE-COUNTY SOUTHERN CALIFORNIA REGION

Land Use Category

Average Employees per Acre

Average Building Sq. Ft. per employee

Regional retail 19.71 857

Other retail/services 21.98 344

Low-rise office 43.95 288

High-rise office 175.49 311

Hotel/motel 33.07 1,152

R&D / flex space 20.53 344

Light manufacturing 17.83 439

Warehouse 11.4 814

Government offices 51.67 261

Source: The Natelson Company and Terry A. Hayes Assc. http://www.scag.ca.gov/forecast/reds.htm

The actual industrial employment gain during the 2003-2013 period, however, is estimated at about

1,450 jobs, including projected jobs from Amazon. This estimate is derived by factoring out declines in

employment during this period due to the recession, which were not anticipated when the buildings

were constructed. This calculation amounts to only 5.6 jobs per acre, a substantial underutilization of

the building space. It is likely that some of the new firms in Patterson did not add jobs as planned

http://www.scag.ca.gov/forecast/reds.htm


once the recession began to take effect. If, however, real estate continued to absorb based on this

lower employee density, then the future demand would be 750 acres between 2015 and 2035.

Thus, based on the employment projections and a range of employee density factors, we have a low

medium and high projection of industrial acreage demand: 375, 500 and 750.

For the business park uses, we have alternate employment projections: 560, 1,642, and 2,732. From

Table 4, the R&D/flex space category at about 20 jobs per acre, best fits this land use, resulting in

acreage requirement projections of 27.3, 80.2 and 133.1 acres.

In both the industrial and business park cases, the mid-range projection reflects the most reasonable

assumptions; however, there are considerations on both sides of the issue that weigh in favor of both

the low and high end projections, as discussed further in the conclusion below.

RETAIL COMMERCIAL ANALYSIS

The proposed project includes two General Commercial Areas: 35.73 acres in the Arambel Business

park on the north end of the project area and 97.7 acres at the southern end of the project area. The

northern property is intended to be part of a larger commercial area at an eventual new freeway

interchange for a new county expressway linking Turlock with Patterson and I-5. In the 2011 Regional

Transportation Plan the eastern portion of this future expressway on West Main Street is listed as a

Tier I project and is projected to be widened to three lanes between the San Joaquin River and

Washington Rd. between 2016 and 2020.1 The remainder of the North Expressway and the

interchange at Zacharias Rd. is listed as a Tier II project and is scheduled for completion between

2030 and 2035.2

Both commercial areas within the project are intended to be “freeway commercial”, which would

support trade from I-5 traffic, such as lodging and restaurants, as well as regional-level demand for

major retail centers such as auto centers or big box discount centers. However, Wal-Mart recently

located at the corner of Ward Avenue and Sperry and anchors a new community-level shopping center

that also serves demand from some of the smaller towns in the areas such as Newman and Gustine.

Aside from this shopping center, which has 44.1 acres remaining to be developed, the General

Commercial sites in the proposed project are functionally distinct from other commercial sites in

Patterson in the Downtown, along Highway 33 and in the planned Villages of Patterson project, in that

those sites will serve local shopping needs of existing and future Patterson residents, while the sites

along I-5 will serve primarily business and visitor demand.

The existing highway commercial developed in Patterson is the Villa Del Lago center at Rogers Rd. and

Sperry Ave. This center includes gas stations, several restaurants and an RV park, with about 13

acres currently developed. There are an additional 10 acres in six parcels fronting Rogers or Sperry

that could support additional future development relatively easily. In addition, there are 5.3 acres

along the eastern edge of Villa Del Lago between the existing development and the canal (not

including a 6 acre parcel devoted to a drainage basin). Access to these parcels would be provided by

roads through from Rogers but visibility for these sites would be limited. Finally, the City has

1 Stanislaus Council of Governments, 2011 Regional Transportation Plan, July 2010. Appendix M-1, p. 3. 2 Ibid., Appendix N-1, Page 5.


designated a 60.6 acre parcel immediately south of Villa Del Lago on Sperry for General Commercial.

This property is currently within the City boundaries and would be the next logical location for major

freeway commercial development in Patterson. However, it is currently occupied by a fruit orchard and

is not immediately available for development.

In terms of other major freeway commercial centers along this stretch of I-5, Westley is about 9 miles

north of Sperry Ave., and has restaurants and two small truck stops. According the County planners,

this center has limited additional development potential. To the south, Santa Nella is a major visitor

stop with lodging, restaurants and four truck stops. However, a recent analysis of the truck stops

suggests that expansion of truck facilities at this location is unlikely.3 The Santa Nella Community Plan

does contain substantial expansion areas for other freeway commercial including additional lodging

and restaurants.

The RTP projects a 40% increase in traffic on I-5 at Sperry Ave. by 2035. Compared to Westley and

Santa Nella, Patterson has the least developed freeway commercial area along this stretch of I-5 and

in a position to substantially increase its market share, particularly with the increasing development of

distribution centers in the industrial area.

In addition, as population and business demand grows in the western Stanislaus and Merced county

region, there would be potential for additional regional-level commercial development. Table 5 below

shows projected growth for the three cities in the area. Patterson, Newman and Gustine had about

11,400 households in 2010 and the two County COGs are projecting the communities to add 9,220

households between 2010 and 2035. As indicated in the middle columns of the table, this projected

growth is substantially below the actual growth rates experienced in Patterson and Newman between

2000 and 2010. In order to consider potential commercial demand if growth follows more historical

levels, ADE created an alternate high growth scenarios using the growth rates from the last decade.

The results in a growth increment of 15,151 households out to 2035. (For this scenario we use the

COG projection for Gustine since it exceeds recent historical growth). The Diablo Grande development

may also expand during this time frame. The specific plan would allow another 1,600 units and the

development was acquired by new ownership in recent years. This market potential has not been

specifically included in the regional analysis; however, a further of-setting consideration is that

Newman is currently planning for expansions of its commercial base as part of a master planning

effort. If these plans go forward, Patterson would not capture as much of the regional market as

indicated in the analysis below.

TABLE 5 PROJECTED REGIONAL HOUSEHOLD GROWTH

City

2010

Households

County COG 2010-2035

Household Growth

Average Annual

Growth Rates

2000-2010 Population

Growth Rates

High Household Growth

Projection

Patterson 6,328 5,981 3.8% 6.9% 10,913

Newman 3,357 2,371 1.5% 4.0% 3,369

Gustine 1,704 868 2.0% 1.6% 868

TOTAL 11,389 9,220

15,151

3 Bay Area Economics, Final Dunnigan Truck Stop Economic and Fiscal Impact Analysis, November 16,

2012. pp. 14-16.


Based on the range of low and high growth projection, we have calculated existing and projected

regional retail demand by major store type category (Table 6). The table shows the dollar value of

household and business spending and translates those figures into supportable acres of retail

development. The right-hand column represents business-to-business retail sales from projected

employment growth in Patterson.

The store development potential expressed in the projections is best understood in the context of

developing out the 44.1 acres in the community shopping centers at Ward and Sperry. Wal-Mart is

part of the General Merchandise Group, which had potential equivalent to 13.7 acres in 2010 and

projected to grow by another 9 to 16 acres in the future. Wal-Mart recently built a store on 17.2 acres,

with a view to future growth in the market. The 44.1 acre sites across from Wal-Mart could be

anchored by a Home Center, at about 13 acres, with a discount family clothing outlet (6 acres), a

furniture store (4 acres), additional restaurants (9 acres), and eventually a junior discount center (12

acres).

TABLE 6 PROJECTIONS OF REGIONAL RETAIL DEMAND, 2010-2035

RETAIL GROUP

EXISTING REGIONAL

HOUSEHOLDS (11,400)

LOW PROJECTED 2035

HOUSEHOLDS

(20,600)

HIGH PROJECTED 2035

HOUSEHOLDS (26,500)

2010-2035 NEW

JOBS (8,750)

Retail

Demand

($000's)

Support-

able

Retail

Acres

Retail

Demand

($000's)

Support-

able

Retail

Acres

Retail

Demand

($000's)

Support-

able

Retail

Acres

Retail

Demand

($000's)

Support

-able

Retail

Acres

Total $245,704 61.9 $444,611 111.9 $572,558 144.2 $33,225 9.7

Apparel Store Group $10,460 3.2 $18,928 5.8 $24,374 7.5 $1,003 0.5

General Merchandise Group $44,867 13.7 $81,189 24.9 $104,552 32.0 $2,984 1.3

Specialty Retail Group $16,270 5.0 $29,441 9.0 $37,914 11.6 $466 0.2

Food, Eating and Drinking Group $72,234 22.1 $130,711 40.0 $168,326 51.5 $12,614 3.8

Grocery Stores $36,812 11.3 $66,613 20.4 $85,782 26.3 $0 0.0

Eating Places $32,656 10.0 $59,093 18.1 $76,098 23.3 $9,519 3.0

Full-Service Restaurants $16,580 5.1 $30,003 9.2 $38,636 11.8 $4,685 1.3

Other Eating Places $16,076 4.9 $29,090 8.9 $37,462 11.5 $4,543 1.6

Drinking Places $1,032 0.3 $1,867 0.6 $2,404 0.7 $292 0.1

Building Mat./Homefurnishings

Group

$24,777 7.6 $44,834 13.7 $57,737 17.7 $7,862 3.3

Furniture & Home Furnishings $6,969 2.1 $12,611 3.9 $16,240 5.0 $407 0.2

Home Centers $17,808 5.5 $32,224 9.9 $41,497 12.7 $3,727 1.6

Automotive Group $77,096 10.3 $139,508 18.6 $179,655 23.9 $12,024 0.6

New Cars & RVs $40,620 4.1 $73,503 7.4 $94,656 9.5 $7,974 0.8

Gasoline Service Stations $29,002 8.9 $52,481 16.1 $67,584 20.7 $2,583 0.2

The freeway commercial site, in contrast, would support the gas station and auto sales demand from

Table 6 (6 acres and 10 acres, respectively), as well as some of the regional restaurant demand. Most

of the development at the freeway, however, would be directed to the expansion of traveler demand,

which would include lodging/restaurants (20 acres) and potentially a truck stop (20 acres). As

discussed above, Westley and Santa Nella have limited expansion capacity for trucking facilities. With

the 40% growth projected in traffic on I-5, much of it truck traffic (currently 25% of total traffic), it


would be important for Patterson to anticipate the need for additional truck serving facilities. Further

market analysis would be needed to confirm this, however, as competing track facilities currently exist

within a 60 mile radius at Lathrop, Stockton and Lodi, in addition to Westley and Santa Nella.

Based on the land requirements for freeway related uses discussed here, it is reasonable to project

that Patterson will develop another 55-60 acres of highway commercial by 2035, in addition to the

other regional retail development discussed above for the site at Ward and Sperry. While the requisite

60 acres exists within the City limits, it is not clear when that site will be available for development.

With the completion of the Amazon.com facility and continued development of the other available

industrial sites, it is possible Patterson could lose near term development opportunities of multiple

sites are not available on the market. An additional zoned and prepared commercial interchange site

would help the City to remain competitive for these uses.


CCOONNCCLLUUSSIIOONN

Having recently experienced the most significant recession in 75 years, it is difficult to forecast with

accuracy the pace of business development over the next 20 years. Based on a variety of analytical

methods, we have derived low, medium and high projections for the land use types planned in the

West Patterson Business Park Expansion project. Table 7 summarizes the land demand projections

and compares the projected acreage to the existing supply and the additional amount that would be

provided in the proposed project. The land demand figures include a 5 percent vacancy factor above

the employment-derived figures. The table uses the land supply figures from Table 1 above, not

counting the industrial properties still in full Williamson Act contract (about 23 acres). Also, the

acreages are reduced 10 percent to convert the gross acres to net acres. The existing land area is

divided between vacant and non-vacant parcels. The proposed project area reflects actual buildable

land.

The 20-year absorption for the industrial land ranges from 38 percent to 76 percent of the total land

supply, but up to nearly 90 percent for land that would be unconstrained. For highway commercial,

the absorption would require 27 percent to 57 percent of total current and proposed land areas.

TABLE 7 SUMMARY OF 20-YEAR LAND SUPPLY AND DEMAND

Land Use

Industrial/ Warehousing

Business Park

Regional/

Highway Commercial

Community Commercial

Acreage Demand *

Low 395 28 48 51

Medium 526 84 59 65

High 789 140 69 79

Existing Acres** 365 69 60

Vacant 218 14 12

Non-vacant 167 55 48

Proposed Project*** 671 108 0

Total Future Land Supply 1,036 176 60

Percent Projected Absorption with Total Land Supply

Low 38% 27% 86%

Medium 51% 33% 109%

High 76% 39% 132%

Percent Projected Absorption with Vacant Land Only

Low 44% 40% 423%

Medium 59% 49% 538%

High 89% 57% 652% Source: ADE.*Note: Acreage demand includes a 5 percent vacancy factor.**Existing and future land supply adjusted ten percent to account for circulation and public facilities/infrastructure.***Proposed project removes an additional 101 acres for unbuildable parcels.

However, the demand for community commercial exceeds the land supply in most of the scenarios,

suggesting that additional commercial development may occupy sites at the freeway as well.


Over a 20 year period, one would expect that entitlements on existing land in the City would be

completed and existing structures removed as development proposals come forward. However, it is

revealing to note that the main reason Amazon.com chose to locate in Patterson was because the City

had a site on which they could immediately pull a building permit.4 For some businesses, waiting 18

months to commence building will not be an option and if the City’s land supply gets fully constrained

to that point, the City will begin to lose economic development opportunities despite the fact that

sufficient land may be zoned.

It is important that the land supply exceed demand at any given point in time, so that the real estate

market can function properly. An important case in point is the fact that the 60.6 acre site for General

Commercial at the Sperry Ave. interchange is not available presently for development, although small

infill parcels at Villa Del Lago do exist. The commercial area in the proposed project would provide a

market alternative for a highway commercial developer which otherwise does not exist in Patterson.

Again, over 20 years, this may not be an issue but in the short term, large highway commercial

developers would be forced to look at Santa Nella or Westley to build within this segment of the I-5

corridor.

Regarding industrial and business park development, it is also true that Patterson is not alone in this

market area and competing developments may occur in Crows Landing and Newman. Stanislaus

County has been trying for a number of years to develop the former Crows Landing Naval Air Station

into an industrial and business park. The most recent agreement with a developer terminated last

summer, but the County has now issued an RFP to move ahead with CEQA work to permit

improvement of the airport as a business commuter facility and potentially the development of 1,100

acres of industrial and business park uses.5 This site is about one mile from I-5, so it will not have the

same visibility as the existing and proposed sites in Patterson, but the airport would provide a useful

transportation link to the San Francisco Bay Area and beyond. This would be an asset for businesses

located in Patterson as well. Over the 20 year time frame under study in this report, it may be

assumed that some level of business development will be successful in Crows Landing and this will

affect the pace of some of the development in Patterson.

Similarly, Newman is now in the process of creating a master plan for business park and commercial

uses along with additional residential areas. Newman is about five miles off the I-5 and in less position

to capture distribution and warehouse facilities than is Patterson. However, some of the business park

and community-level retail development in Newman could affect development opportunities in

Patterson over the long term. These two developments may depress growth in Patterson toward the

lower end projection above.

However, Patterson has developed a very competitive impact fee structure for industrial development

which creates a cost advantage. In addition, industrial firms like to locate with other similar firms and

Patterson definitely has the upper hand in this sense. Given these factors and the other considerations

discussed above, we believe that Patterson will continue to be the main location for major industrial

business development in western Stanislaus County.

4 Joel Andrews, Patterson City Planner, personal communication, May 20, 2013. 5 Keith Boggs, Assistant Executive Officer, Stanislaus County, personal communication June 7, 2013.

INDUSTRIAL AND COMMERCIAL DEMAND PROJECTIONS FOR PATTERSON · 2013-07-02 · Patterson is...

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