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SITE SELECTION EDITORIAL SURVEY SEPTEMBER 2004 3

he Altamont Pass east ofthe San Francisco Bay areais notable for more than itswindmill farms. From itspeak, one can look west

into Alameda and Contra Costa Coun-ties and the rest of the Bay Area, whichserves as a daily destination for dozensof thousands of commuters from theeast. Looking east from the Pass —“the hill” to locals — one sees SanJoaquin County, which is an increas-ingly logical destination for high-techand other companies seeking closerproximity to their work forces.

The Pass, therefore, symbolizes aneconomic dividing line that many inthe region are working to eradicate.The division is between where thehigh-paying, high-tech jobs generallyare — west of the line — and whereaffordable housing is — east of theline. The division is eroded each timea site seeker realizes that a San Joaquinlocation delivers easy access to thetransportation, cultural, educational,high-tech and other assets of the BayArea. More significantly, the San Joa-quin Valley, based on the Consumer

The San Joaquin

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San Francisco Bay

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some might not

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San Joaquin County

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its labor force. But

that is changing as

commuters tire of

the daily trek over

the Altamont Pass

and companies

discover the cost

benefits of a San

Joaquin County

location.

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SANJOAQUINCOUNTY

SANJOAQUINCOUNTY

Logistics and DemographicsRedefine the Greater Bay Area

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The University of the Pacific in Stockton is one of three local higher education institutions

supplying San Joaquin County employers with workers (see page 12).

4 SEPTEMBER 2004 Contact the SAN JOAQUIN PARTNERSHIP at www.sjpnet.org or 800-570-JOBS

Price Index, provides a 69-percentlower cost of living and a 30-percentlower cost of doing business than alter-native Bay Area locations.

With corporate investment in newfacilities on the upswing following apost-9/11 and recession-induced slump,San Joaquin County is positioning itselfas the greater Bay Area location tobeat. Several infrastructure and devel-opment projects will soon come onlinein San Joaquin County that will furthermake the case that the region deservesclose consideration from those wholooked only west of the Altamont Passin the past for proximity to the SanFrancisco metro and Silicon Valley.

These include new business parks inTracy, in the southwestern part of thecounty nearest the high-tech havens onthe other side of the hill, and increaseddevelopment of the Stockton/SanJoaquin Regional Airport and the Portof Stockton. The latter, on the StocktonDeep Water Channel 75 nautical mileseast of San Francisco Bay, is a key logis-tics asset to the agriculture, buildingmaterials manufacturing and otherindustries in the San Joaquin Valley(see the sidebar on page 10).

Plans for these projects have been inthe works for some time, but recenteconomic conditions — and Califor-nia’s economic situation in particular,among other factors — have kept themfrom taking off. But the tide is chang-ing. The population is migrating inlandfrom the Golden State’s pricey coastalregion; high-tech companies are leanerand wiser following the dot-com era,and they are increasingly sensitive toemployees’ quality-of-life issues forfear of losing those workers; and agrowing economy means businesses

are expanding and need reasonablypriced space in which to do so.

California’s rebound is paralleled byPacific Gas & Electric (PG&E), theprimary energy company in northernCalifornia. PG&E exited from Chapter11 in April 2004 and as a direct resultreduced electrical rates to commercialand industrial customers by 10 to 15percent. Forecasts for the future pro-ject a continuing reduction in rates asstability returns to the California ener-gy market.

21st Century Gold RushHistorically, Stockton, the largest city

in San Joaquin County (pop. 300,000),was a jumping-off point for the 1849Gold Rush. Today it is a center ofrenaissance growth for the 21st centu-ry, with more than $200 million in pub-lic investment for waterfront improve-ments, office developments, a sportsarena, ballpark, convention center andhotel. In addition to the Channel rede-velopment, Stockton has more than 50million sq. ft. (4.6 million sq. m.) ofindustrial space attracting such compa-nies as Simpson Strong-Tie, with a 62-acre (25-hectare) research and devel-opment, manufacturing and logisticsfacility; Eagle Roofing Products, a divi-sion of Burlingame Industries, con-structing a roof-tile manufacturingplant; and Burlington Northern SantaFe Railroad with a multi-million dollarintermodal facility.

The case for a San Joaquin Countylocation relative to coastal California isstraightforward on the basis of realestate cost and availability. Adding anabundant skilled work force and excel-lent Interstate highway access, it’s clearto see what international logistics

providers such as ProLogis, PanattoniDevelopment Co. and IDI, and otherinvestors in warehouse and distributioncenters (DCs), discovered years ago —that the Valley, in the heart of thestate’s agricultural region, is an ideallocation from which to serve operationsup and down the West Coast.

“The exact demographic center ofthe West Coast is at Copperopolis inthe [Sierra Nevada] foothills, about 30miles east of Stockton,” notes RobertK. Wheeler, plant manager at a Gener-al Mills plant in Lodi, in the northernpart of San Joaquin County. “But thereare few roads there and no railroads, soyou’re not going to want to go there.You’d want to be here, which is whyyou see a preponderance of distribu-tion facilities in the Stockton and Lodiareas.” Wheeler serves as chairman ofthe board of the San Joaquin Partner-ship, the county’s public-private eco-nomic development corporation.

Distribution SolutionThe abundance of tractor-trailers

plying I-5 and Highway 99, the twomain north-south arteries runningthrough the county, and I-205 to I-580into the Bay Area, should come as nosurprise. Other than at Sacramento tothe north and at the point south of Bak-ersfield where the two meet, the Stock-ton area in central San Joaquin Countyis the point at which the two north-south thoroughfares are closest togeth-er at just three miles (4.8 km.) apart.This gives DC logistics and transporta-tion managers throughout the regionsome important route options whereserving their markets by highway isconcerned.

(continued on pg. 8)

Pac-WestTelecomm, Inc., a local exchangecarrier and Internetservice provider,serves Californiaand four otherwestern states fromits headquarters inStockton.

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Development Fee Comparisons

AssumptionsComparisonassumes a50,000 squarefoot facility with30 percent sitecoverage on 5acres employ-ing 150 people.

AssumptionsComparisonassumes a550,000 squarefoot facility with60 percent sitecoverage on 30acres employing300 people.

AssumptionsComparisonassumes a125,000 squarefoot facility with60 percent sitecoverage on 12acres employ-ing 224 people.

One measure of SanJoaquin County’s cost advan-tage over the Bay Area is thedifference in fees associatedwith developing sites. InOctober 2003, the San JoaquinPartnership produced aRegional Development FeeComparative Analysis reportin order to determine theeffect of a proposed regionaltransportation impact fee thatwould affect the cost of anynew development in the coun-ty. Higher fees make anypotential site location lesscompetitive.

The report includes analysisof 18 jurisdictions — eight inSan Joaquin County and 10outside the county — that areconsidered competitive interms of economic develop-ment. These charts graph thetotal estimated developmentfee cost for the 18 jurisdic-tions. Fees include permitsand plan checks, public/capi-tal facility fees, infrastructure,finance districts, taxes andother agency fees. The graphsalso provide the average andmedian development fee costfor the 18 jurisdictions. Withthe exception of Tracy, theSan Joaquin County locationsweigh in at or below the aver-age of the 18 jurisdictionsstudied — and well belowSacramento, less than anhour’s drive north of Stockton,and Livermore, the first citywest of the Altamont Passheading into the Bay Area.

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Dollar Tree Stores needs more thanhighway access to maximize the effi-ciency of its four-year-old distributioncenter in Stockton. The center servicesthe discount retailer’s stores in Califor-nia, the Reno, Nev., area and Yuma,Ariz. The 525,000 sq. ft. (48,800 sq. m.)DC is an intermodal facility with con-tainers delivered via rail from the Portof Oakland.

“We are fortunate here in that wecan service shipments in and out of theBay Area really well,” says J.C. “Bud”Baynard, general manager of the Dol-lar Tree facility, which is expandable to800,000 sq. ft. (74,320 sq. m.). “Theport provides good container service,we have rail access, and it’s a stronglabor market, so we have a great con-nection as far as we’re concerned.”Prior to February 2004, the center ser-viced Dollar Tree’s entire West Coastnetwork of stores. But a similarfacility in Ridgefield, Wash., hassince opened, serving the Pacif-ic Northwest.

When Simpson Strong-Tie, adivision of Simpson Manufac-turing, outgrew its San Lean-dro, Calif., facility, San JoaquinCounty was the focus of plantmanager Murray Daniels’search for new space.

“Cost was not the driving factor inour case — we were out of space,” hesays. “At the time, the cost of propertyrelative to the Bay Area was less, butcosts there were the highest in the

country — the Bay Area was booming.”Daniels’ selection of Stockton wasbased more on other area attributes.“Stockton is an ideal location for ship-ping to our Central Valley customers

via the highways, and the labor marketseemed larger here than anywhereelse,” he relates. Simpson’s 62-acre (25-hectare) site in an industrial park nearthe airport is composed of a 400,000sq. ft. (37,000 sq. m.) building for man-

ufacturing and a 20,000 sq. ft. (1,860sq. m.) R&D facility.

Central to the county’s logistics infra-structure is its rail network. BothUnion Pacific and Burlington North-

ern Santa Fe (BNSF) Railwayoperate intermodal shippingfacilities in the county. UnionPacific’s is in Lathrop, where ithandles the containerized ship-ment needs of such customersas the nearby Army and AirForce Exchange Service(AAFES) West Coast andPacific Rim distribution center.

BNSF’s facility is in Stockton, wherethe railroad is playing a key role in thedevelopment of a new business park(see sidebar on page 14).

“Both railroads have made majorinvestments in the [San Joaquin Coun-ty] market, which tells you somethingabout that market from a transporta-tion and logistics standpoint,” notesGreg O’Leary, senior vice president atthe Stockton office of Colliers Interna-tional. “Those of us who have workedin this market for some period of timehave always understood the signifi-cance of the location — proximity tomany markets in northern Californiaand on the West Coast. Some compa-nies are here to serve the Bay Area, butjust as many are looking at this locationfrom a regional standpoint,” he relates.

Underlying the logistics advantage ofSan Joaquin County are balance-sheetbenefits, says O’Leary.

“As the economy and the marketshave been flat, many companies willseek to reduce their cost of doing busi-

San Joaquin County is home to numerous building-materials manufacturing companies,such as Simpson Strong-Tie, a division of Simpson Manufacturing, which recentlyopened this distribution center in Stockton.

“Stockton is an ideal location for shipping to our Central Valley customers via the highways, and the

labor market seemed larger here than anywhere else.”— Murray Daniels,

plant manager, Simpson Strong-Tie Manufacturing

(continued from pg. 4)


Discount retailer Dollar Tree Stores opened this intermodal distribution center inStockton in 2000.


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Agribusiness has been the backbone of San JoaquinCounty’s economy for generations, and the fertile SanJoaquin Valley will continue to produce for export a

strong supply of asparagus, walnuts, almonds, tomatoes,grapes, cherries and milk. But the sector has undergonetransition in the past 10 years with the closure of severaltomato-processing plants and the elimination of sugar beetproduction. The diversity of the region’s agricultural assetshas mitigated the long-term impact, and the sector remainsa key component ofthe county’s economy.

Much of the agri-business sector’s eco-nomic potential nowand in the future is tiedto winegrape produc-tion in the northernpart of the county. TheL o d i - W o o d b r i d g eregion, in north-centralSan Joaquin County, isemerging as a leadingproducer of severalvarieties of grapes. Infact, in 2003 it was thetop producer in California of five out of six grape varieties,according to the Lodi-Woodbridge Winegrape Commission(www.lodiwine.com).

In addition to 50 wineries, the region is home to about 750growers, 400 of whom are active farmers. The others use

management companies to farm the grapes. Farms rangefrom 10 acres (4 hectares) to up to 6,000 acres (2,430 hectares)for a total of 90,000 acres (36,450 hectares) under production,up from 35,000 acres (14,175 hectares) a decade ago.

Like most other industries, the vineyards saw a slump ininvestment in the past few years, and global competitionaffects winegrape production just like any other industry.“The industry here is stabilizing,” says Stuart Spencer, pro-gram manager at the Commission. “The prospects look very

good for the future,with wine consump-tion growing fasterthan that of mostother categories ofbeverage. Lodi ispositioned very wellto take advantage ofthat growth.”

Imports have gar-nered much of that growth, but fallingexchange rates and a better economicclimate will help local producers cap-

ture more market share. The Commission is helping “culti-vate” the local industry by promoting the area as a touristdestination, foster retail sales, integrate the Lodi-

Woodbridge wine industry with the industry at large andimprove distribution channels. “It is very much a region inchange,” says Stuart. “I doubt we’ll see growth in acreageat the rate we saw during the past 10 years, but it continuesto creep up.”

Crystal Valley Cellars opened inLockeford in 2003, creating two dozennew jobs in the vineyard region of SanJoaquin County. At right is StuartSpencer, program manager of the Lodi-Woodbridge Winegrape Commission.

Grapes of Math: Vineyards Boost County’s Economic Climate


ness or increase their margin of profitby reducing cost,” he explains. “Oneway that’s been accomplished over thelast three and four years is by locatingdistribution centers and manufacturingfacilities in the right location. While

they have not been able to take advan-tage of a red-hot economy, they areable to add to their bottom line byshaving costs. That’s how supply-chainlogistics comes into play in helpingcompanies position themselves in thesetypes of markets.”

How ManufacturersSupply the Bay Area

There is no shortage of examples ofcompanies that are now located in SanJoaquin County to take advantage ofboth the logistics and the cost savingsbenefits. “The infrastructure here istremendous,” says Peter Ingenhutt,human resources manager at FuelTotal Systems (FTS) California Corp.,in Lathrop, which manufactures plasticgasoline tanks for Toyota Corollasedans and Tacoma pickup trucks. NewUnited Motor Manufacturing, Inc.(NUMMI), a joint venture betweenToyota and General Motors, producesthose vehicles at its plant in Fremont,north of San Jose. “We’re 60 to 90 min-utes from the factory, we have inter-state and rail service — it’s a tremen-dous location,” says Ingenhutt.

FTS is a newcomer to San JoaquinCounty, having commenced blow-molding operations at the 118,000 sq.ft. (10,960 sq. m.) Lathrop plant inMarch 2004. At full payroll, the facilitywill employ 75 to 80 workers, saysIngenhutt. And payroll is central toFTS’s selection of the San JoaquinCounty location. “Prices were a lothigher in the Bay Area, and labor therecosts more,” notes Ingenhutt. “Ourentry-level labor is about $10 an hour.We’re not having any trouble findingworkers — we have many more appli-cants than we can hire.”

Employees at FTS are typical ofthose in the San Joaquin Valley — agrowing number of people tired ofmaking the up-to-two-hour commuteto points west. “One of our nighttimeteam leaders in purchasing came onboard for $10.50 an hour, which is lessthan he really wanted,” says Ingenhutt,“but he was saving time and money ongas. We promised him a raise in April,and he got it plus a promotion. That isthe type of people we are able to get —well qualified Bay Area people who arelooking for something local.”

FTS also benefits from being inLathrop where California’s costly work-ers’ compensation system is concerned.“We are a brand new startup, so we areable to fit in at the bottom level for theworkers’ comp premium,” says Ingen-hutt. “We had to be here in Californiain order to service the Fremont plant.So coming here instead of the Bay Areawas really about the high costs of oper-

The San Joaquin Partnership (www.sjpnet.org) — San Joaquin County’snon-profit economic development corporation — is as much in the businessof dispelling myths about California as it is in helping site seekers evaluate

specific locations for new facilities. “People sitting in board rooms in the Midwest or on the East Coast think we are

kind of goofy out here in California, and perhaps we are,” says Robert Wheeler,chairman of the Partnership and plant manager at a General Mills production anddistribution facility in Lodi. “The challenge for the Partnership is to use our col-lective influence to get a little more predictability to decision makers who arethinking about moving here.”

As a California destination, the San Joaquin Valley has aless visible profile relative to the San Francisco Bay Areaand Silicon Valley, the Los Angeles metro area and SanDiego. And estimates that business costs are as much as 30percent higher in California than in other states add to thePartnership’s challenge. “I don’t get the sense from ourindustry that costs are quite that high, but 15 percent higherperhaps,” says Wheeler. “But once people find out about thearea and they look at the facts — the land costs, availablesites, labor costs, construction and housing costs — then weare starting to look pretty good,” he adds.

Managing growth in a region that is a natural alternative tocompanies seeking proximity to the Bay Area at a lower costis another challenge before the Partnership. Which is whythe agency is candid with prospects. “We will tell some that this is not the placefor them to come,” says Wheeler. Partnership President and CEO Michael E.Locke echoes Wheeler’s sentiments. “The Partnership provides comprehensivesite selection information at no charge. Sure, we’d love to have every companythat inquires locate here, but sometimes even under ideal conditions, it’s not agood fit. But we’ll try our best to provide all the information a company needs tosee if San Joaquin County is the right place for their business.”

The Lodi area, besides being home to the General Mills plant and a number ofdistribution facilities, is a major agricultural center with a growing winery indus-try (see page 9). “A lot of people want to preserve the agricultural strength andnature of this area, and reasonably so,” says Wheeler. “We have made sure thatwe have good representation on our Board of the stakeholders in the communi-ty, and that includes agricultural interests. Many hours of discussion have takenplace over the life of the Partnership aimed at gaining significant confidencefrom the ag community, understanding that we and they don’t have mutuallyexclusive objectives.”

Partnership Pledge: To Tell It Like It Is

Robert Wheeler,Chairman of theSan JoaquinPartnership



ating in the Bay Area.” But there is much more to San

Joaquin County’s automotive industry.Ford Motor Co. and DaimlerChryslerrecently restructured their West Coastparts distribution networks, resulting innew facilities for both companies in thecounty in the past two years. Hondaalso operates a 500,000 sq. ft. (46,450sq. m.) distribution center in Stockton,and seven NUMMI component manu-facturers, including FTS, have opera-tions in the county.

“There is not enough there yet to callit an automotive industry cluster, but itis a significant piece of business,” saysMichael E. Locke, president and CEOof the San Joaquin Partnership. “Wecontinue to see other manufacturerslooking, who seem to be asking them-selves, ‘Do Ford and Chrysler knowsomething about the efficiency of logis-tics here that we don’t?’ ”

Where Commuters CommuteHigh on the Partnership’s list of pri-

orities is stemming the flow of countyresidents to other areas for work.Approximately 50,000 people com-mute to the Bay Area each day fromSan Joaquin Valley. Roughly 6,000 to

7,000 commute to the Sacramentoarea; about 8,000 people commute toSan Joaquin from the capital. To thesoutheast, about 6,000 people com-mute to the Modesto area in StanislausCounty, and 12,000 commute into SanJoaquin from Modesto. “In general,there is a fairly homogeneous workforce within this region from southernSacramento County to Stanislaus

County, which we are in the center of,”says Locke.

In 2000, the Partnership and the SanJoaquin Council of Governments com-missioned Systan, Inc., a Los Altos,Calif., consulting firm, to identify thejob skills of the commuters crossing theAltamont Pass in order to attract theappropriate industries to the county

Fuel Total Systems (FTS) California manufactures fuel tanks for Toyota vehicles at thisplant in Lathrop, which opened in March 2004. Peter Ingenhutt, human resources manager (inset), says skilled labor is in abundance in San Joaquin County.



Among San Joaquin County’s most important assets arethe University of the Pacific, California State University,

Stanislaus-Stockton Center (CSUS-Stockton) and SanJoaquin Delta College. These institutions bring strong work-force training credentials to the table and provide a steadysupply of workers for a wide range of industries.

Among the University of the Pacific’s contributions to theeconomic well-being of the area is the Eberhardt School ofBusiness’s Business Forecasting Center.The center publishes quarterly economicforecasts that are composed of three com-ponents. The first is a business conditionssurvey, which resembles the Institute forSupply Management’s survey. “We cancompare what is going on locally with thatsurvey’s national results,” says Dr. Mark S.Plovnick, Dean and Professor ofManagement. A consumer confidence sur-vey mirrors The Conference Board’s nation-al consumer confidence survey. And a lead-ing economic indicators index takes theeconomic pulse of San Joaquin and otherarea counties.

“In the last two years, we have receivedalmost $1 million in federal funds to greatlyexpand the activities of the center,” saysPlovnick. “The center will be able to pro-duce much bigger and much more sophisti-cated quarterly forecasts. We will be able tomake some predictions about what will happen in the area ofretail sales, average incomes, the gross product of theregion and so forth. The models will be very robust and willlet us project for any geographic area or industry segment

you want to focus on.” All of which will be of interest tothose seeking a deeper understanding of the county’s eco-nomic strengths as part of a site evaluation.

The CSUS-Stockton campus is the centerpiece ofUniversity Park, a development of The Grupe Company, amulti-use 100-acre (40-hectare) site bringing together bothpublic and private businesses to create a unique campusenvironment.

The University is equipped with the latest instructionalinteractive equipment; almost 25 percent of the classes areoffered via satellite in concert with other CSU campuses.CSU’s flexibility is ideal for employers seeking access for

their employees to upgrade academic andcomputer skills as well as gain degrees oradvanced degrees in the CSU system.

San Joaquin Delta College, with an enroll-ment of 27,000, provides a Training ResourceCenter that offers a range of work-force train-ing services for employers in local industry.Even more important is the range of technicalexpertise on campus and breadth of technicalskill training programs in place. The programsare designed to address not just the currentneeds of industry in the region, but the futureneeds as well.

“As industries become more and moreautomated, the need for employees with high-tech skills only increases,” observes Dr. HazelM. Hill, Dean of Instruction for VocationalEducation and Economic Development at thecollege. “At the same time, whole new skillsets are needed as industries — both here in

the San Joaquin Valley and elsewhere — evolve to includemore automated processes. Our role is to equip those goingto work for these industries with the skills they need nowand those they are likely to need in the future.”

Higher Education Resources for Site Seekers

Among the work-force training programs available at SanJoaquin Delta College is a Caterpillar equipment repair course for employees of Caterpillar dealers. Dr. Hazel M. Hill directs the college’s vocational training and economic development initiatives.

Dr. Mark Plovnick is Dean of the Eberhardt School of Business, shown here, at the University of the Pacific in Stockton.


and to analyze the commuting patternsso that the Council could refine itstransportation services. Drivers, com-muter bus users and Altamont Com-muter Express train riders all partici-pated in the survey, with San Joaquincommuters of all three types repre-senting the largest morning users ofthe Pass, followed by Stanislaus Coun-ty commuters.

Would those commuters rather workin the San Joaquin Valley? By a largemargin they would. Asked whetherthey would take a comparable job if itwere available in or near their home,87.8 percent indicated they would.Those most willing to change jobs for awork location near home were high-tech employees, those who have beenat their jobs less than three years andwomen. The map above shows the des-tination of morning commuters intothe Bay Area from the San Joaquin Val-ley via the Altamont Pass at the timethe analysis was released.

Perhaps most significant is the num-ber of commuters who would take a


San Joaquin I-580 DestinationsAM Peak Period, Westbound Drivers



Adiscussion of the Stockton area’s considerable logis-tics attributes must include Burlington Northern SantaFe Railway’s (www.bnsf.com) role in the movement of

goods to and from the region’s many distribution centers.BNSF’s intermodal facility in Stockton is central to the trans-fer of rail-shipped products to truck, by which they are trans-ported to local distribution facilities and elsewhere. Cargocontainers arriving from eastern U.S. locations, particularlyChicago and Dallas/Ft. Worth, travel by rail to the Stocktonfacility and are offloaded to trucks for local distribution.

The $83 million facilityopened in 2001 on a 425-acre (172-hectare) site inStockton. It has two loadingand unloading tracks, aver-aging 7,000 ft. (2,133 m.) inlength with the capacity tohold approximately 150intermodal railcars. Threestorage tracks accommo-date 230 intermodal railcarswith more than 1,100 con-tainer and trailer parkingspaces.

In February 2004, Stockton was awarded a $5.9 million fed-eral economic development grant, part of which is ear-marked for an extension of rail service into Duck CreekCommerce Park, a 106-acre (43-hectare) industrial park nowunder development by Catellus Development Corporation.The park represents the first phase of a 1,000-acre (405-hectare) logistics park anchored on one end by the DuckCreek project and on the other by BNSF’s intermodal facility.BNSF is installing a mainline switch and a 520-ft. (158-m.)

track extension from the mainline adjacent to Duck CreekCommerce Park to the BNSF right-of-way line.

“The Stockton intermodal facility is a catalyst to otherdevelopment that is going to occur in the area,” says KevinPalmer, BNSF’s economic development manager for north-ern California and Nevada. “The federal grant is for water inthe industrial area around the intermodal facility,” in additionto the rail extension, he adds. “We see there the ability toconsolidate the core components of our business — theintermodal, the carload business for non-containerized bulk

materials and the third-partytransload business. That’sthe idea behind the DuckCreek Commerce Park.”

BNSF’s Stockton facilitywill only get busier with dou-ble-digit growth in volumeover 2003 levels forecast.“We did a quarter million liftsout of the Stockton facility in2003, and the rate is growing.We will likely see that kind ofgrowth for the foreseeable

future,” predicts Palmer. The location’s proximity to the BayArea, the north-south freeway network and the port facilitiesin Stockton, Oakland and Richmond are its key strategicadvantages, says Palmer. “I would add a fourth, too, whichis the fact there is a significant amount of available land ataffordable prices there to accommodate not only our facili-ties but the growing number of distribution facilities in thearea. You will not be able to find land, on a cost-effectivebasis, in the Bay Area on which to build distribution facilities.The land is either not there or it’s too expensive.”

Intermodal Facility to Anchor New Development


pay cut to work at a comparable jobcloser to home. Asked what salary levelrespondents would require in order towork closer to home, 63 percentexpected the same salary, but 26 per-cent said they would accept “a littleless” salary to take a comparable jobcloser to home.

Home-Grown Labor ForceLabor demographics in the greater

Bay Area bear monitoring regularly,given the area’s abundance of high-techworkers, population migration eastfrom the bay and California’s economiccircumstances. Viewed through anylens, however, it cannot be said thatlabor is in short supply. If anything,supply is burgeoning and shows no signof abating (see the Demographics andEmployment Forecasts chart on page21).

“The Bay Area has been a heck of ahotbed of technical talent, but that areahas cooled off,” says Hank Carabelli,president and CEO of Pac-WestTelecomm, Inc., a Stockton-based localexchange carrier and Internet providerserving California and four other west-ern states. “But people who wanted tostay in California have made someadjustments to their lifestyles,” hepoints out. “They are willing to comework in the San Joaquin Valley for alike kind of position.That is a resource, atalent base nowavailable to us thatdid not exist fouryears ago.”

But even werethat not the case,says Carabelli, find-ing talent has neverbeen a problem inthe company’s 24-year history. “Thereis not a lot of competition in our spacelocated here in the same community,”he relates. “That means you don’t havethe high turnover and churn as is thecase in, say, Denver, which became atelecom hub.”

Carabelli stops short of referring toPac-West as a high-tech company andtherefore on the lookout constantly forhigh-tech expertise. “We use technolo-gy in our field, but we really are a ser-vice company,” he explains. “I can buyall the technology in the world like any-

We’ve got you covered.Transportation options

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(209) 639-2908

It‘s all here and waiting for you. BNSF, Catellus and Colliers present this second-to-none Industrial Park in Stockton, California offering 106 acres of rail-served land near BNSF’s Stockton Intermodal Facility. Located in aState Enterprise Zone, this location offers building sizes from 50,000 to 2 million square feet and excellent freeway access to I-5 and Hwy 99.

Duck Creek Commerce Park


Hank Carabelli


one else. But my strategic advantage isin finding people who understand whatit means to serve others — it’s either intheir DNA code or it’s not. We canteach the technology.”

Regional IntegrationUltimately, the hope of area business

and industry leaders as well as thedevelopment community is to makethe most of the inter-regional cross-pollination of commuters and themovement of goods and services in andaround San Joaquin County, and tobenefit economically from a deeperintegration of the county with the BayArea. That effort is well under way withthe Inter-Regional Partnership (IRP)being the most notable attempt atregional integration so far.

“The Inter-Regional Partnership isan attempt to recognize the economiclinkage between the two regions,” saysLocke. The five-county initiative waslaunched in 2000, with three Bay Areacounties-Santa Clara, Contra Costaand Alameda — plus San Joaquin andStanislaus Counties participating. Anindependent commission of politicalrepresentatives from each of the coun-ties runs the IRP. Specifically, the goalis to resolve the jobs-housing imbal-ance, where jobs are in one sector(west) and housing is in another (east),and the resultant transportation issues.

“Affordability of housing really wasdriving a lot of what was happening inthis region at the time the Inter-Regional Partnership was formed,”says Tracy Mayor Dan Bilbrey, whochairs the IRP. Tension between thetwo sides of the Altamont Pass had pro-duced growth-related litigation, whichprompted discussions among variousparties, including Bilbrey, resulting inthe first state-sponsored Inter-Region-al Partnership; several other IRPs arenow in place around California. “Theobjective of the IRP was to figure outhow to develop housing in a job-richarea and how to develop jobs in ahouse-rich area,” says Bilbrey. The lat-ter was clearly the challenge for Tracyand the San Joaquin Valley.

The participating counties devel-oped proposals for Opportunity Zones,which in the case of the three Bay Areacounties focused on increasing the sup-ply of housing. “For our part, we sawthe need to develop Opportunity

Developer Joel Elekman has been working in the California real estate indus-try for more than 30 years, which is long enough to conclude that he hasseen it all where that market is concerned. So when the dot-com, high-tech

bubble burst in 2001 and many thousands of jobs were lost in the San FranciscoBay Area, he assumed the ensuing exodus of workers would soften the residen-tial real estate market, making it more affordable for those who remained. Not so.

“Even with the loss of hundreds of thousands of jobs in the Bay Area in the lasttwo or three years, home prices have continued to escalate,” says Elekman. “It’sthe strangest thing I’ve ever seen. But it has to do with very limited supply andheavy demand.” More recently, the East Bay Business Times, a Pleasanton-based business newspaper, surveyed more than 500 corporate executives whoindicated that “the overwhelming factor that would determine where their busi-ness should be located is affordability of housing,” Elekman relates.

What’s missing east of the Altamont Pass is a supply of Class A office spacenear where so many Bay Area commuters live, particularly in the Tracy areawhich has seen enormous growth in residential development. The TracyGateway development gained the backing early on of the Inter-RegionalPartnership, in part because third-party analysis of its economic impact revealedit would generate approximately 25,000 direct jobs at build-out (6 million sq.ft./557,400 sq. m. of office space) and an additional 17,000 indirect jobs.

But with vacancy rates in the Bay Area well into the double-digits in the wakeof the technology industry slump, it’s a tenant’s market. That goes for TracyGateway’s direct competition — the existing business parks over the AltamontPass in Livermore, Pleasanton and San Ramon. But Gateway has an ace up itssleeve: “We looked at building permit costs in two areas of Livermore for a sin-gle-family house,” says Elekman, who is the project’s developer. “One was$110,000 and the other was $120,000 — for building permits!” The relative costsof housing will continue to influence where workers choose to live.

Still, for companies to entertain a Tracy location, it must offer something dif-ferent, something more than a plain vanilla business address in a park thatresembles another one up the road. The 538-acre (218-hectare) Gateway Projectis designed to do just that. Besides office space, the project features a nine-holegolf course designed by Robert Trent Jones, retail, restaurants, a hotel and a95,0000 sq. ft. (8,800 sq. m.) health club.

“The idea is to create a place where people will go and spend time,” saysElekman. “Obviously, it has to serve the office tenants, but with the non-officecomponents, it also will have a night use that will benefit the people of the City ofTracy.” Which may give them even less reason to leave the San Joaquin Valley.

Developer Plans a Park with Office Space, Nine Holes and More

Joel Elekman is developing a businesspark in Tracy that the surrounding community will use, thanks to such “destination” amenities as golf, restaurants and a health club.


Zones that would provide a strata ofincomes as well as generate the Class Aoffice space we were lacking,” explainsBilbrey.

The winning proposals of all thosesubmitted by the counties were theTracy Gateway Project — a businesspark in Tracy featuring Class A officespace, retail, entertainment and recre-ation amenities — and the San JoaquinBusiness Park located at the Stock-ton/San Joaquin Regional Airport.

But just as the stage was set for suchprojects to get under way, the economyfaltered. Retrenchment, not expansion,was the new corporate strategy. Tomake matters worse, funds promisedby the state government for relatedinfrastructure projects — new Inter-state interchanges and the like — evap-orated as California’s budget crisisescalated.

Region in TransitionStill, those companies needing to

expand, regardless of economic condi-tions, did so, primarily with a rash ofnew distribution centers. The City ofManteca, for example, with its mixed-use Spreckels Business Park, metstrong demand for space with the addi-tion of 1.9 million sq. ft. (176,500 sq.m.) of retail and 10.1 million sq. ft.(938,000 sq. m.) of industrial repre-sented by national tenants such as FordMotor Co., Millard Refrigeration andFrito-Lay, Inc. Building on the successof this project, Manteca is moving for-ward with two new business parks,Austin Road (500 acres) and Tara (500acres) in collaboration with AKFDevelopment LLC.

In 2005, ground will be broken onthe 4,800-acre (1,940-hectare) River

Island Development in Lathrop. Thisproject, by The Cambay Group is thelargest of its kind in northern Califor-nia and includes 11,000 homes,schools, a town center and recreationamenities. It will also have 4 millionsquare feet of office space.

“River Island has a unique emply-ment center plan that will provide sig-nificant economic incentives forprospective employers,” says SusanDell’Osso, project manager and presi-dent of The Cambay Group. “We thinkthese economic incentives, combined

with good project design, will result inthousands of new, permanent jobs inthe Central Valley.”

In the Tracy area, a Costco retail dis-tribution center and an ADESA Gold-en Gate auto auction facility are amongrecent investments. The developmentagreement for the Tracy Gateway pro-ject (see the sidebar on page 16) wasfinalized in the spring with the under-standing that the park would not offerspace for distribution facilities, butrather higher-end corporate space and

City of Tracy – The Smart Business Decision

Tracy Mayor Dan Bilbrey


The proposed Stockton Events Center project, on thenorth bank of the Stockton Channel, will serve as anentertainment hub for Stockton and the surrounding

region. The master planned site is designed with both pub-lic and private uses in mind. The Events Center contains thefollowing components:

• An approximately 220,000 sq. ft. (20,438 sq. m.), 10,000-seat, city-owned, multi-purpose indoor arena (shownabove) which will be used for sports, entertainment and

community events and activities. It will include 24 suitesand club seating. The arena will be home to professionalice hockey, arena football and indoor soccer teams.

• A city-owned baseball park (shown below) with seatingfor approximately 5,000 persons will be the home of theStockton Ports, the city’s minor-league baseball team.

• A privately owned, 150-room hotel and conference center will have more than 10,000 sq. ft. (930 sq. m.) of meeting space and related parking.

• Approximately 60,000 sq. ft. (5,600 sq. m.) of retail andrestaurant development.

• City-owned parking, which will include a 650-spaceparking structure and a surface parking lot.

• Other public improvements, including a “loop road”providing access to most of the components of the project, improvements to Fremont Street, on-site utilities and landscaping.

Stockton Events Center Project


amenities to attract the attention ofhigh-tech and service-industry tenants.The ball is rolling again.

“Companies on the other side of thehill know that they can do businesshere for about 30 percent less,” saysMayor Bilbrey. “That 30 percent trick-les down, and when you get to the bot-tom line, net revenues are 30 percentmore. If you’re an owner, that’s 30 per-cent more with which to expand. Forpublic companies, that means makingyour numbers and paying dividendsand making the shareholders happy.”

From Bilbrey’s point of view, integra-tion with the Bay Area is happening.The mayor sits on a task force lookingat expanding public transportation ser-vice along the I-580 corridor from SanFrancisco into the Valley, and his workwith the Inter-Regional Partnershiphas helped keep the San Joaquin area’sprofile front and center with keyregional players. “We’re on the righttrack,” he notes. “When I’m in thesemeetings, they refer to this area as thegreater Bay Area.”

The City of Tracy will scarcelyresemble itself in five to 10 years, whenthe current rounds of city planning,land annexing, business park develop-ing and infrastructure improving arecomplete. Development is nothingnew to the southwest corner of SanJoaquin County, but given the pace ofdevelopment about to unfold, it hashardly begun. And the stage increas-ingly is set economically for the train toleave the station.

“Finally, the market is such that it’stime to start bringing the work to theworkers rather than dragging the work-ers to the workplace,” says DaveCorliss, a principal with the West TracyOwners Group, who is developing a1,300-acre (526-hectare) Class B+industrial business park on the north-ern side of I-205 in as-yet unincorpo-


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“Companies on the other side of the

hill know that they can do business

here for about 30 percent less.”— Dan Bilbrey,

Mayor of Tracy

Boise 607Denver 1,249Fresno 108Las Vegas 529Los Angeles 329Oakland 63Phoenix 684Port land 651Reno 190Sacramento 44Salt Lake City 716San Francisco 73San Jose 65Seatt le 835

Mileages to Major MarketsFrom Stockton, California



The Port of Stockton has acquired the 1,400-acre (567-hectare) Rough and Ready Island on the San JoaquinRiver from the U.S. Navy, which had used the island as

a supply base and communications station since World WarII. The Port will use the land, located adjacent to existingport facilities, to expand its maritime services and to devel-op commercial real estate projects.

“Office buildings, logistics facilities, distribution, big box,warehousing all make sense at this site, given our centrallocation here in the valley and with the migration of peoplecoming out of the East Bay,” says Mark Tollini, deputy port

director, trade & operations. “Property values are attractive,and the location is attractive from a distribution standpoint.”

The port is a key part of San Joaquin County’s emergenceas a building-materials manufacturing cluster. Such manu-facturers are opening facilities in the San Joaquin Valley tosupply builders with the materials they need to meet the pro-jected population growth of 1.7 million people and businessexpansion growth now under way.

“Weyerhaeuser operates on about 20 acres [8 hectares]on the island right now,” notes Tollini. “They’re bringingdomestically produced, preformed trusses and frames forlocal distribution supporting building and housing construc-tion. We are seeing fairly significant inbound shipments byrail of structural steel andsteel beams. It’s becoming afairly significant portion ofour business right now, and Ithink that is where the sus-tained activity will be forsome time.” Cement compa-nies, too, are significant play-ers at the port; CaliforniaPortland Cement recentlyinvested $40 million at theport to install infrastructurethat will help it meet antici-pated demand for cementand construction products.

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Mark Tollini, deputy port director, trade & operations

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rated Tracy. “We are anticipating15,000 people working here when thepark is fully built out,” says Corliss.They will work in 25 million sq. ft. (2.3million sq. m.) of newly available space.

For the next several years in theTracy area, Corliss envisions strongdemand for industrial space, whichmay well be followed by R&D and thenClass A demand, particularly if theoffice vacancy rate west of the Alta-mont Pass contracts. Of Tracy’s popula-tion of about 70,000, Corliss estimates22,000 commute out of the area, mostto the Bay Area. “That tells you thereare already 22,000 people who areskilled and trained in different aspectsof business, so businesses have a goodreason to want to set up in Tracy,” henotes. “The market is at the pointwhere you can entertain that. That hasnot been the case heretofore.”

Looking ahead, five factors are dri-ving San Joaquin County’s economyinto the 21st century: Bay Area integra-tion, transportation, comparativeaffordability, work force availability andstability and affordable housing.

Specific amenities include 7,000acres of available land, 20 businessparks, more than five million sq. ft.(464,500 sq. m.) of industrial inventoryand the Interstate network. Combined,these attributes make a solid case formaking San Joaquin County your WestCoast connection for business andindustrial expansion.

Firms that have located to the coun-ty recognize it as California’s “Popula-tion and Economic Energy Zone” —the foremost region for enhancingprofitability through efficiency of logis-tics, the ability to control costs and thearea’s strategic location. SITE

Year 2000 2005 2010 2015 2020 2025

Population 566,600 633,348 700,095 766,834 821,851 900,338

Households 202,320 225,185 248,094 270,994 293,903 316,768

Jobs 201,671 218,051 234,430 250,810 267,189 283,569

Jobs/Housing Ratio 1.00 .97 .94 .93 .91 .90

• San Joaquin County will grow by 59 percent interms of population in comparison to the Bay Areacounties at 22 percent for the same time period.

• San Joaquin County households will grow by 57 percent from the current 202,320 to 316,768.

• San Joaquin County will add 81,898 new jobs for atotal of 283,569 jobs by 2025, a 56-percent increaseover the 25-year period.

• San Joaquin County is projected to produce an excess of 127,200 housing units over what is needed to house its own workers.

IRP San Joaquin County Demographic and Employment Forecasts

Source: Inter-Regional Partnership Report on Demographic and Employment Forecasts, June 2003


One of the most underused infrastructure assets in SanJoaquin County is the Stockton/San Joaquin RegionalAirport (www.stocktonmetro.com). Capable of han-

dling any aircraft, the airport is home to a handful of aircraftservice companies and the private jets of local owners.

Menlo Worldwide, a global freight-forwarding companybased in Redwood City, Calif., is the sole cargo operator atthe airport with a daily flight to the company’s Dayton, Ohio,

sorting hub. Menlo consolidated its northern California oper-ations in Sacramento and San Jose at the Stockton airport.The Stockton operation now serves the Sacramento metroarea, the Central Valley and the San Francisco Bay Area.Menlo was the first user of a new cargo ramp capable ofaccommodating up to four Boeing 767s at once.

“There is enormous growth potential in the area aroundStockton Airport,” says Mark Lasof, northern California ser-

vice manager for Menlo Worldwide. The facility could easilyhandle additional cargo carriers, and that may come to passas more industry locates in the northern Central Valley. “TheStockton area is a gateway to SanFrancisco, San Jose and Oakland as wellas Sacramento and Fresno — it’s a cen-tral, strategic location for us.”

Adds Airport Director Barry Rondinella,“Menlo saved money by consolidatinghere. What they learned is that we arethe only major airport in northernCalifornia from which you can serve all ofthe large northern California marketswithin a two-hour truck drive.”

“The movement of goods is incredibly easy here,” addsRondinella. “We can facilitate that better than a SanFrancisco International, or LAX or even Ontario [Calif.],because we don’t have the kind of congestion they all sufferfrom. We are not crowded in terms of the roadways and theairfield itself.” The San Joaquin Business Park, a 550-acre(223-hectare) industrial and commercial development, isabout to get under way at the airport that will offer afford-able land on which companies can develop facilities. Andthe airport’s Foreign Trade Zone, Enterprise Zone and desig-nated Opportunity Zone status affords import and exportadvantages.


new look, same vision.

145 W. 10th St. • P.O. Box 419 Tracy, CA 95378

Phone: 835-3030 Fax: 835-0655 or 832-5383 www.tracypress.com

Airport Development Is Ready for Takeoff

Freight forwarder Menlo Worldwide ships a wide range of products from San Joaquin Valley companies to points worldwide from the Stockton/San Joaquin Regional Airport. Planned development of the airport is likely to attract additional cargo companies to the facility, from which they can serve the Bay Area, Sacramento and the northern Central Valley.

Barry Rondinella

1990 Population 480,6292000 Population 563,5982004 Population 643,481

Percent Population Growth 2000 – 2004 14.17

Percent Population Growth Forecast 2003 – 2009 9.84

1990 Households 158,6572000 Households 181,6292004 Households 215,070

Percent Household Growth 1990 – 2004 18.41

Percent Household Growth Forecast 2004 – 2009 11.65

Percent Urban Population 89.9Percent Rural Population 10.1

Percent White 54.4Percent Black 6.6Percent Asian 12.3

Percent Hispanic Origin 33.5Percent Other Population 26.7

Median Age 31.9Median Household Income ($US) 41,152

Per Capita Income ($US) 17,302


This editorial survey of investment opportunities in San JoaquinCounty, Calif., was prepared by the staff of Conway Data Inc.,Norcross, Ga., under the auspices of the San JoaquinPartnership. For more information on San Joaquin County, call (209) 956-3380 or visit www.sjpnet.org. For information onSite Selection editorial surveys, contact Mark Arend, Editor, [email protected] or (770) 325-3438.

SITESe l e c t i o n

Stockton Metro Area Data

Education (Age 25+)Percent Less Than High School 26.5

Percent High School 25Percent Some College 25.2

Percent Bachelor’s Degree 10.9Percent Graduate Degree 4.7

EmploymentPercent White Collar Occupations 55.5

Percent Blue Collar Occupations 27Percent Service Occupations 14.6

Percent Management, Business, Financial 11.7Percent Professional Specialties 17.2

Source: Community Demographics at DevelopmentAlliance.com

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