industrial lands report pierce county 2_09

8/14/2019 Industrial Lands Report Pierce County 2_09

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Industrial Land Use, Availability and the Jobs-Based Economy

A Study of Industrial Land in Pierce County, WA


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Introduction

Land-use and economic development policy in Pierce County is based on the idea ofencouraging enough job creation to keep pace with population growth on encouraging a jobs-based economy. And the focus is on development of basic industries; that is, the creation ofjobs in industries which pay above average wages and which bring new money into the area. Butmaintaining that level of job creation requires there be sufficient land available to support thosejobs.

Several factors led the Economic Development Division to undertake a study of the industrial-

land supply in Pierce County. After historically slow absorption of industrial land throughoutthe county, development of industrial sites picked-up markedly in the last five years. At thesame time, the staff of the Economic Development Board began finding they could not respondto some inquiries from prospective industrial users because they could not find any suitableproperties to show. The intersection of those two trends calls into question our ability meet thejob-creation goals necessary to truly develop a jobs-based economy. This study examines theamount of land available for industrial development throughout Pierce County, and some of theimplications those findings may have for job creation. It starts with a more in-depth discussionof why jobs in basic industries are important, and what those industries are. Next, it discusseswhat industrial land is, why its important, how much we have, and some of the factors that makeland well suited to industrial development. Finally, it goes on to combine the employment andland information to draw some conclusions about our ability to continue creating jobs in primaryindustries.

Not All Jobs Are Created Equal

An economy is like a swimming pool in some respects. A swimming pool holds a lot of waterand constantly re-circulates most of it. Sometimes water leaks out of the system and new waterneeds to be added. Likewise, economies hold a lot of money and most of it is constantly beingre-circulated. Some of it leaks out to other areas, but new money is constantly being added. Thebig difference between a swimming pool and an economy is that you cant overfill an economy.

In fact, the central concern of economic development efforts is to see that more new moneycomes into the economy than leaks out, thereby gradually increasing the overall wealth in acommunity.

Some businesses operate like the pumps and plumbing in the swimming pool. They play a vitalrole in keeping the money moving around the system, but they cant add new money to the


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Just as some industries add more to a regions economy by bringing new money into the region,employees in some occupations are better compensated than employees in other occupations, and

are therefore better able to build wealth. All other things being equal, employees who earn morehave more disposable income to spend in the community, and thereby support the businesses innon-basic industries, and they have greater capacity to make investments which grow theeconomy. As a result, the goal of most economic development programs is to increaseemployment in basic industries to bring more money into a region, and especially thoseindustries which employ more highly-paid occupations so there is more money available tocirculate through and invest in the economy. To carry our analogy further, if we want to enjoyour swimming pool, we have to keep it full.

Basic Industries

Basic industries in Pierce County are generally related to military, port, health care andmanufacturing activities.

2The military is important because its output is nearly 100% export

the services provided by the bases in Pierce County are paid for and consumed by the entirecountry.3 New military-related money coming into the county covers wages and salaries,military construction and contracts for goods and services. Studies conducted for WashingtonsOffice of Financial Management have shown that military facilities in Pierce County provide20% of all wage and salary disbursements and provide 14% of employment in the County. 4Records from the U.S. Department of Defense show that prime contracts for militaryprocurements from firms in Pierce County totaled over billion dollars in 2006.5 Militarycontributions to the Pierce County economy dwarf the contribution of any other basic industryhere.

While the health care industry certainly serves the local population, it also serves the greatersouthern Puget Sound region. Clients come to hospitals, out-patient facilities and specialists inPierce County because those services may not be available in the surrounding rural counties. Inaddition, when health care services are paid for through retirement plans, Medicare or Medicaidit generates mostly new money coming into the community. As a result, for many years HealthServices has been the second largest export-industry employer, with nearly half of all exportemployers providing health care services and counseling.6

Port services are used by customers from all over the globe. While millions of tons of goodsmove through the Port of Tacoma each year, only about 2% of that volume is imported orexported by companies located in Pierce County. Hence, the value added by Port services isalmost entirely exported out of the region and traded for new money which then enters the localeconomy.


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Finally, manufacturing is a vital component of Pierce Countys economic base. From musical

instruments to huge parts for airplanes, from fine candies to industrial baking equipment, a verywide range of products are produced here. Most of what isproduced in Pierce County is shipped to customers in otherparts of the country, or outside the U.S. to locations aroundthe world.

Occupation and Industry Value in Pierce County

Every industry employs some people in nearly everyoccupation. It takes skilled and unskilled workers to keeprestaurants operating, to build aircraft, to deliver healthservices and to make and deliver all the goods and servicesproduced in Pierce County. Within any given industrywages can vary widely depending on the occupation, andwithin a given occupation, wages vary between industries.

On way to look at the relative value of different occupations and different industries is tocompare actual wages. If all jobs were compensated equally, one would expect the percentage ofwages to be equal to the percentage of employment. For example, if an industry occupationrepresented 5 percent of total employment, one would expect it to also account for 5 percent oftotal wages. So, if the wage percentage was divided by employment percentage, the result wouldhave a value of 1 (0.05 / 0.05 = 1). Since industry occupations are not compensated evenly,relatively lower paying industry occupations would have a value of less than one, and higherpaying industry occupations would have values greater than 1. Table 1 makes that comparisonby dividing the percentage of wages in broad categories of industry occupations by thepercentage of employment in industry occupations and displaying those industry occupationswhich are at least 15 percent higher than the expected value of 1.

Occupations related to engineering, finance, computers, science, healthcare practice, legal,installation and maintenance, management and sales score higher across industries than otheroccupations, indicating they have higher than average wages. The manufacturing and utilities

industries have the most occupations with higher than expected scores and have the highestaverage scores across all occupations. In other words, manufacturing and utilities create jobs ina wide variety of occupations, from production to engineering to sales to maintenance and repair,and those jobs tend to pay more than similar jobs in other industries. Manufacturing is especiallynotable because as an industry it represents over 8 percent of total employment in Pierce County,compared to Utilities which represents less than 0.5 percent. Data used to derive Table 1

Classifying Industries and Occupations

For purposes of statistical consistency, the U.S.Office of Management and Budget determinesthe procedures federal statistical agencies willuse when collecting and publishing data.Occupational information uses the StandardOccupational Classification (SOC) methods

which groups similar occupations such aslawyers or machinists into broad categories.Industry information follows the NorthAmerican Industrial Classification System(NAICS) which groups related industries suchas Utilities or Social and Health Services intobroad categories. Most studies examiningindustries or occupations use these classificationsystems because the most readily available datafollows their conventions.


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the best packages of benefits, followed by occupations in production, installation, maintenanceand repair. Industries with the lowest amount of turnover, suggesting greater job stability,

include utilities, government, educational services and mining.


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Why Industrial Land in Pierce County is Important

Some regions are more energetic than others when regulating land use. Due to ourrapidly growing population and perceptions that previous land-development patternswere not conducive to the provision of cost-effective public services, Washingtonadopted aggressive land-use policies. In the early 1990s Washington State beganimplementing land-use regulation to curb urban-sprawl development, andoperationalized it through the States Growth Management Act. Because exportindustries are so important to the health of our economy, it is critical that land-useauthorities planning under Growth Management allow sufficient room for those

industries to grow as the labor force grows. Areas of the country with less densepopulation and without stringent land-use regulation do not have the same constraints ascommunities in Washington and as a result they have more flexibility in terms of sitingindustrial uses.

From a land-use perspective, the military is for the most part self contained. However, itis important that actions taken by local jurisdictions do not impede the militarys abilityto perform their appointed mission. Aside from being good neighbors, the County has no

role in planning for military land uses. The County and cities and towns do have a role inpreventing incompatible land uses around the bases, and in ensuring the goods andservices needed by the military and military personnel are available in the surroundingcommunities.

Health care is a very diverse industry, with establishments ranging in size from one-person offices to regional hospitals. Much of this industry has a wide array of options forwhere new businesses are able to locate. In general, any commercial zone willaccommodate some level of use for health-care services.

Most port-related activities are situated in and around the Port of Tacoma industrial area,sufficiently proximate to the rail lines and marine terminals for the efficient movement ofgoods. Because of the need for port-related businesses to be proximate to the Port ofTacoma, most port-related land-use issues are within the jurisdiction of the Cities ofTacoma, Fife, Milton, Puyallup and Sumner.

Like the health-care industry, manufacturing occurs in a wide range of settings, fromsmall shops to very large production facilities. However, unlike health care which canlocate in many different land-use zones, manufacturing is essentially limited to locatingin zones specifically dedicated to industrial use. The basis for these regulations is thatplacing industrial uses next to some other uses, such as residential areas, creates


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for those businesses to relocate, as well as places for businesses new to the

community.

Aside from regulatory restrictions on where industrial uses can be placed, there arephysical considerations which limit the options for locating production facility. Precisionmanufacturing often requires very exacting specifications in terms of the sub-strata onwhich a facility can be located. Machines which are extremely heavy or which produceextreme downward force, such as punch-presses, can not be operated on ground subjectto subsiding, and machines which operate at tolerances in the range of 1/10,000 of aninch are sensitive to seismic disturbance. Considering the breadth of occupations and the

quality of employment offered in the manufacturing sector, it is important to ensure thereis sufficient land of appropriate quality available to support the continued expansion ofthis industry sector.

Buildable Lands

The implementation of the Growth Management Act by its very nature places constraints

on the types and locations of development that can occur. Every five years the Countyproduces a Buildable Lands Report which compares population and employmentprojections to current land supply and historic development patterns. This reportprovides an assessment of communities ability to accommodate projected economic andpopulation growth. In the most recent report, released in 2007, the analysis found theestimated employment capacity to be in excess of projected needs that is, there is moreland zoned for job creation than will be needed by the year 2020. However, there areimportant reasons why that report may underestimate the real land needs relative

to future economic development.

It is important to note that the Buildable Lands Report considers employment for allsectors, not just industrial uses. It starts with a projection for total employment growthprovided by the Puget Sound Regional Council and the State of Washington, and makesno distinction between industries or occupations. In contrast to the Buildable LandsReport, this report considers only industrial land, and takes as its starting point the

proposition that job creation in the Countys basic industries is vital to continuedeconomic growth and broad-based wealth creation.

There are methodological factors which may lead the Buildable Lands Report tounderestimate the amount of land needed to accommodate future job growth. First, asnoted in the report, the analysis does not include construction employment. The rationale


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NAICS

Code NAICS Description Firms Reciepts

Average

Reciepts per

Firm

0 Total for all sectors 38,995 1,783,202,000$ 45,729$

11 Forestry, f ishing & hunting, and agricultural support services (NAICS 113-115) 456 26,390,000$ 57,873$

21 Mining 4 415,000$ 103,750$

22 Utilities 40 3,130,000$ 78,250$

23 Construction 3767 275,033,000$ 73,011$

31-33 Manufacturing 707 29,460,000$ 41,669$

42 Wholesale trade 794 56,904,000$ 71,668$

4 4-45 Re tai l tra de 4 674 1 63,67 2,0 00$ 35,018$

48-49 Transportat ion and warehousing 1534 121,029,000$ 78,898$

51 Information 493 11,263,000$ 22,846$

52 Finance and insurance 1472 64,485,000$ 43,808$

Non-employer firms by industry

Pierce County, 2006

Perhaps the most important category of employment not reflected in the Buildable LandsReport capacity analysis involves non-employer firms. Thses are companies that have

no employees other than the owner(s), and constitute a significant portion of businessesnationwide and in Pierce County. Table 4 shows the number and receipts of non-employer firms in Pierce County in 2006 by broad industry category. Many of thesefirms are small and home-based, so it would be inappropriate to include those in thecapacity analysis. The Small Business Administration (SBA) estimates that about 50percent of all businesses with fewer than 500 employees are home-based.7 However,there are important segments of non-employer businesses which could impact overallland needs for employment growth, and therefore introduce error into the Buildable

Lands analysis. The same SBA study, which surveyed over 16 million small businessesnationwide, found that about 40 percent of non-employer firms are not home based. Ifthat percentage holds for Pierce County, about 15,600 non-employer firms are operatingin non-residential settings. Table 5 presents examples of non-employer firms which areunlikely to be home-based. The Buildable Lands analysis does not take these firms intoaccount, nor does it contemplate the land needs associated with the growth in this portionof the economy. It is likely that if growth of non-employer firms were incorporated intothe analysis, the outcome would be a finding that there is insufficient land zoned for job

creation overall.

A review of zoning regulations within the cities and towns in Pierce County reveals thatmany commercial uses are allowed in the few zones that also allow industrial uses. Asdemand for commercial land outpaces the available supply, it is likely that

industrial land will increasingly be absorbed for commercial but non-industrial

purposes. As mentioned above, Service industries are vital for maintaining a healthyeconomy, but Basic industries are the key to long-term broad-based wealth creation forthe entire Pierce County region they are the garden hose that keep our swimming poolfull.

Table 4


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NAICS

Code NAICS Description Firms Reciepts

Average

Reciepts per

Firm

3231 Printing and related support activities 69 2,524,000$ 36,580$

333 Machinery manufacturing 31 1,783,000$ 57,516$

44112 Used car dealers 116 17,514,000$ 150,983$

4451 Grocery stores 90 13,165,000$ 146,278$

4452 Specialty food stores 66 3,154,000$ 47,788$

45393 Manufactured (mobile) home dealers 5 389,000$ 77,800$

53121 Offices of real estate agents and brokers 2,478 117,778,000$ 47,529$

5321 Automotive equipment rental and leasing 30 1,763,000$ 58,767$6211 Offices of physicians 284 27,965,000$ 98,468$

6212 Offices of dentists 46 3,444,000$ 74,870$

62131 Offices of chiropractors 63 3,462,000$ 54,952$

62132 Offices of optometrists 19 712,000$ 37,474$

62133 Offices of mental health practitioners (except physicians) 195 9,644,000$ 49,456$

62134 Offices of physical, occupational and speech therapists, and audiologists 88 4,154,000$ 47,205$

621391 Offices of podiatrists 3 173,000$ 57,667$

621399 Offices of all other miscellaneous health practitioners 426 13,373,000$ 31,392$

6214 Outpatient care centers 31 12,206,000$ 393,742$

6215 Medical and diagnostic laboratories 28 1,627,000$ 58,107$

7221 Full-service restaurants 51 2,399,000$ 47,039$

7222 Limited-service eating places 92 3,525,000$ 38,315$

7224 Drinking places (alcoholic beverages) 12 901,000$ 75,083$

8113

Commercial and industrial machinery and equipment (except automotive andelectronic) repair and maintenance 108 5,085,000$ 47,083$

Selected non-employer firms unlikely to be home-based

Pierce County, 2006

Source: U.S. Census Bureau, EPCD, Nonemployer Statistics

Table 5

Defining Industrial Land

For the purpose of this study, zoning is considered industrial if it allows manufacturingand assembly. There is little consistency between jurisdictions as far as what other usesare allowed in an industrial zone, or how zoning maps are drawn, so not all industrialzones are equivalent. Even within Pierce Countys development regulations there aredifferences between community plan areas as far as what is allowed in industrial zones.

This inconsistency introduces error into attempts to inventory industrial land becauseactivities that are allowed in one industrial zone may not be allowed in another. Forexample, some jurisdictions allow a wide range of commercial uses that are not typicallyconsidered industrial in nature. Some jurisdictions have an industrial zone in their zoningcode, but have not implemented that code by designating any land to that zone. Somejurisdictions only allow existing industrial uses, not new uses. Some jurisdictions allow


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Jurisdiction Zone Description

Bonney Lake M1; C3 Manufacturing; Heavy

Commercial, Warehousing and

Light Manufacturing

Buckley LI Light Industrial

DuPont BTP; MRP; IND Business Tech Park;

Manufacturing and Research;Industrial

Edgewood BP; I Business Park; Industrial

Fife BP; I Business Park; Industrial

Fircrest CC Community Commercial

Gig Harbor C1; ED; PCD-BP; MUD General Commerc ial;

Employment District; Planned

Community Development-

Business Park; Mixed Use

District Overlay

Lakewood IBP; I1; I2 Industrial Business Park;

Industrial 1; Industrial 2

Milton M1 Light Manufacturing

Orting LM Light Manufacturing

Pacific LI Light Industry

Pierce County EC; CE Employment Center; Community

Employment

Puyallup MP; ML Business Park; Limited

Manufacturing

South Prairie I Industrial

Steilacoom I Industrial

Sumner M1; M2; Light Manufacturing; Heavy

Manufacturing

Tacoma M1; M2; PMI Light Industrial; Heavy Industrial;

Port Maritime and Industrial

Unversity Place LI-BP Light Industrial - Business Park

Zoning Districts Considered "Industrial" For Analysis

As a first step in analyzing how much industrial land there is in all of Pierce County,zoning codes for each jurisdiction were reviewed and the zones presented in Table 6 were

selected as industrial, based on the ability to perform at least light manufacturing in thezone.

Table 6

Industrial Land Supply in Pierce County

Just as there are great differences between occupations and industries, there are great

differences between parcels of land zoned for industrial uses. Large tracts of land closeto major transportation corridors that are served by utilities and free of environmentalfeatures such as wetlands are in high demand. Small, isolated parcels, far fromtransportation and other infrastructure, or those with major environmental features areslow to develop because they are unsuitable for many uses, costly to build on andtransportation to and from them increases operating costs. Large parcels offer economic


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Jurisdiction

Total

Acres

Acres

Already

Developed

Total

Acres

Number of

Parcels

Acres In

Identified

Environmental

Constraints

Total

Acres

Average

Unconstrained

Parcel Ac res

Largest

Parcel

Buckley 46 20 26 5 20 6 1.2 3

Dupont 893 228 664 55 92 573 10.4 190

Edgew ood 64 26 38 15 16 22 1.5 5

Fife 1,558 715 843 182 334 509 2.8 65

Fircrest 17 7 10 2 0 10 4.9 9

Gig Harbor 194 48 147 26 114 32 1.2 17

Lakew ood 566 316 250 148 47 203 1.4 23

Milton 115 54 61 46 39 22 0.5 3

Orting 1 1 1 1 0 0.0 -

P ifi 180 80 100 60 34 66 1 1 3

Area Without Identified Environmental

Constraints

Acres of land zoned for industrial usesPierce County, February, 2007

Remaining Developable Industr ial Land*

add to the cost and the time it takes to get a building constructed, and they generallyreduce the amount of land area available to build upon. As new regulations are adopted,

such as those addressing storm-water runoff and retention, the amount of land requiredfor development of individual projects tends to increase in order to comply with thoseregulations, which effectively reduces the amount of land available for job creation.

In all of Pierce County, including unincorporated areas, cities and towns, there is a totalof about 16,000 acres of land zoned for industrial uses (using the zoning designationsidentified in Table 4). Less than 1/3 of these are in unincorporated Pierce County.Distributions of industrial land are shown in Table 7 and mapped in Figure 2. Nearly half

of Pierce Countys industrial land is already fully developed and unlikely to havecapacity for adding substantial numbers of jobs. Of the remainder, nearly half hassubstantial known environmental constraints such as wetlands, steep slopes, flood hazard,or critical habitat areas. For all areas in the County, there are a total of about 4,700 acreszoned for industrial development which are currently undeveloped or underdevelopedand do not have substantial known environmental constraints. Those 4,700 acres are splitbetween approximately 2,300 parcels, for an average parcel size of 2.1 acres. The largestarea within a single parcel without known environmental constraints is about 190 acres,

although that parcel will soon be divided into several smaller parcels (discussed in moredetail below). Fewer than 10 parcels have over 50 unconstrained acres, and over 1,500have less than 1 acre. In unincorporated Pierce County there are just over 2,000 acres ofdevelopable industrial land, with an average parcel size of 2.3 acres.

Table 7


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0.00 0.01 - 2.5 2.51 - 10 10.01 - 40 40.01 - 100

Buckley 46

Dupont 228 20 39 310 296

Edgewood 37 27

Fife 977 152 174 115 140

Fircrest 17Gig Harbor 94 43 39 18

Lakewood 483 76 7

Milton 93 22

Orting 1

Pacific 175 5

Pierce County 3,029 860 662 449 151

P ll 416 51 32 106 47

Development Potential Index Score

Acres of land zoned for industrial usesPierce County, February, 2007

As discussed above, a number of factors combine to make land more or less desirable forindustrial development. For major development, larger parcels are better than smallerparcels, with parcels 5 acres and over being the best suited for development. Whereparcels are smaller, or a large area is needed, land can be assembled, but only if there issufficient adjacent developable land. Hence, parcels which are clustered together arebetter candidates than isolated parcels, and the more parcels in the cluster the better.Land with significant environmental constraints is harder to develop than land without,and so tends to be less sought-after and much slower to develop, or may not be able to

support industrial development at all.

Using the criteria of parcel size, current state of development, proximity to otherdevelopable parcels, and presence of environmental constraints, each parcel of landzoned for industrial uses throughout the County was given an index score related to itsdevelopment potential. Other factors could also be included such as proximity toinfrastructure such as roads and sewers, but were not included in this model due to thecomplexity it would introduce (see Appendix B for the methodology used in creating the

development potential index). The scores range from 0 to 100, with the parcel having thegreatest development potential using these criteria having a score of 100. As shown inTable 6 and mapped in Figure 3, over 11,000 acres have an index score of 0. Low scoresare generally due to being already developed, being small or isolated parcels, or havingsignificant environmental constraints. Just over 700 acres received the highest scores,with nearly 40 percent of that total in DuPont. About 3,900 acres fall in the middleranges between 0 and 40.

Table 8


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A number of cases exist which add variability to the findings presented here. Two areasare not included in these estimates which, if included, would add some industrial land

capacity. First, the Town of Eatonville is in the process of annexing and planning forlight-industrial development on land that was recently included in the towns UrbanGrowth Area. The area was not included in this analysis because it was not zoned forindustrial use when the analysis was conducted, and because plans for the area are notfinal, so the actual amount of developable industrial land is uncertain. Inclusion of theEatonville land would likely add between 60 and 100 acres to the amount of developableindustrial land and those parcels would likely have a high development potential indexscore.

Second, land within the proposed Cascadia development was not included. Cascadia is alarge master-planned community south of Bonney Lake and north-east of Orting.Development of the community has begun, but some of the planning is still somewhatconceptual so it is not possible to know precisely how much land will be available forindustrial development. Similar to the industrial land in Eatonville, the Cascadia landswere not zoned for industrial use when this analysis was conducted. Current plansindicate there may be about 400 acres available for industrial use, and so would add a

considerable amount to the inventory of lands with high development potential indexscores.

Conversely to land in Eatonville and Cascadia which was not included and mighttherefore lead to underestimation of available land, some lands were included that maylead to an overestimation of available land. In general, these lands are not considered tobe on the market, meaning the land owners have not shown an interest in selling theproperties for development. The Boeing Company owns several parcels which together

account for about 270 acres. There are no known plans for future development or sale ofthese parcels, yet they are zoned for industrial use and were therefore included in theanalysis. Similarly, many prime developable parcels are owned by the BurlingtonNorthern and Union Pacific railroads and together account for over 300 acres. It isunclear if or when these parcels will be developed, and if so, what uses they might host.

Also complicating the analysis of the available industrial land base is the plannedexpansion of SR-167. When built, the highway will consume a considerable amount ofhigh-quality industrial land. Expansion of the highway is critical to the future of the Portof Tacoma and continued growth of the Pierce County economy. However, the likelyalignment of the new highway section will consume nearly 500 acres of industrially-zoned land. Some of that land is very desirable because it is vacant or underdevelopedwith few environmental constraints. Some of it currently has industrial development on it


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currently have no buildings on them, many of those vacant parcels serve as storage forindustrial goods and supplies used by firms in the area. Also, some parcels may be good

candidates for redevelopment, but for the most part they are already home to employers.Redevelopment of those parcels will mean the displacement of currently existing firms.

Finally, First Park at Northwest Landing in DuPont deserves mention. In general,DuPont offers some of the best opportunities for industrial development in PierceCounty, and First Park represents a significant portion of that inventory. When thisanalysis was performed, the entire site was one single parcel of about 250 acres and oneof the largest industrial parcels available in the County. However, the shape of the parcel

is a doughnut which has a premier golf course in its center, and as such is not a good fitfor a single user wishing to develop a large facility as might be assumed when justconsidering parcel size alone. Developers of the site are currently pursuing division ofthe parcel into multiple smaller parcels, and it still represents one of the bestopportunities for industrial development in the County. The land can still accommodaterelatively large facilities just not as large as an uninformed glance at the data mightsuggest.


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Figure 2


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Figure 3


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Jobs per

Acre

Developable

Acres

Expected

Jobs

Created

Manufacturing 18.74 4,747 88,959

Industrial Park 18.58 4,747 88,199

Wholesale Trade 15.37 4,747 72,961Transportation 11.34 4,747 53,831

Warehousing 5.27 4,747 25,017

Big-Box Warehousing 2.96 4,747 14,051

Source: Pierce County Economic Development Divi sion analysis o f 200 7 Assessor and Employment Security data

Expected Job Creation

Land Needs for Industrial Development

Understanding the quantity and quality of land available is critical information. Takingthat information one step further can be instructive. Applying knowledge of the amountof available land to what we know about how land is used and how the economy isstructured allows us to understand how land might be used most efficiently. In otherwords, it helps us examine the question, how many jobs can be supported by the land wehave left? If all the developable land were used for one industry, and the number of jobscreated per acre was consistent with past development in Pierce, the number of jobscreated would be somewhere around the values presented in Table 7. Clearly, some

industries are more conducive to generating substantial job growth than others.

Table 7

However, it is extremely unlikely that all the developable land would be put to use foronly one industry. Also, within and between industries there will likely be a range of

employment densities. Recognizing that future development will occur among a range ofactivities suggests taking a more complex look at future possibilities. There are severalways to approach those possibilities, and each one requires making assumptions aboutindustry mix and employment density. Industry mix refers to the amount of employmentin each industry relative to other industries. Various ways to think about the futureindustry mix in Pierce County are presented in Table 8. Employment density refers tohow many people are employed in a given area (such as the number of employees peracre). A variety of density assumptions are presented in Table 9.


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Table 8

Industry Mix Assumptions

Assumption ExplanationIM-1 Assume trend for industry share

of total employment growth in thelast 5 years will continue

Over the 5-year period of 2002 through 2007, total coveredemployment in Pierce County grew by about 35,000 jobs. Of thatgrowth, a certain percent was in each of the NAICS industryclassifications. Under this assumption, each industrys share ofthe growth in last 5 years will be their share of growth in the

future. It also uses the Buildable Lands employment projection tofind the total amount of land needed to support employment growth.

IM-2 Assume industry compoundannual growth rate will continue Over the past decade, each industry grew at a certain rate. Underthis assumption, the growth rate of each industry over the pastseveral years will continue to be their growth rate in the future.It also uses the Buildable Lands employment projection to find thetotal amount of land needed to support employment growth.

IM-3 Assume industry share of totalemployment will stay constantover time

In 2007, total covered employment in Pierce County was splitbetween each of the NAICS industry classifications, with someindustries having a larger share of total employment than others.Under this assumption, each industrys share of total 2007employment is held constant into the future. It also uses theBuildable Lands employment projection to find the total amount ofland needed to support employment growth.

IM-4 Assume historic trend of marketabsorption will continue,regardless of employmentforecasts

Every year a certain amount of land is developed for industrial uses.Under this assumption, recent trends for industrial development

are held constant to determine the amount of land needed,

regardless of employment projections. It then uses employmentdensity assumptions to estimate the number of jobs that could be

created at the given rate of absorption.

Table 9

Employment Density Assumptions

ED-1 Assume industry-specific jobdensity from Pierce County

study

Nearly 800 companies in Pierce County in the Manufacturing,Wholesale Trade and Transportation and Warehousing industries

were reviewed for size of facility and number of employees. Underthis assumption, the average job density from that review is

applied to the projected industry employment to find the amount

of land needed for future industrial employment.

ED-2 Assume job-density valuesfrom Builable Lands

The 2007 Pierce County Buildable Lands Study, a planningdocument accepted by Growth Management Act authorities used


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Employment Density Assumptions

ED-3 Assume job-density values

from other studies

A number of other studies have attempted to find average job

densities for different industries. Under this assumption, jobdensity findings from other studies are applied to the projectedindustry employment to find the amount of land needed for

future industrial employment.

ED-4 Assume job density from mostrecent 5 years of PierceCounty study

Under this assumption, density values are used from the Pierce

County study described in ED-1, but only from facilities built in

the past 5 years.

Each assumption has strengths and weaknesses. Our economy is very dynamic.Assuming the coming years will look like past years, or assuming constant rates ofchange does not account for that dynamism. Manufacturing has traditionally been a verystrong component of Pierce Countys economy. However, in recent years it has grownmore slowly than other industry sectors, so its share of total employment has beenshrinking. Since this has been a nationwide trend for some time, it may not be reasonable

to assume vibrant or steady growth in manufacturing here. On the other hand, a recentDeloitte Research manufacturing study found that Far from abandoning North America,executives see the region as the key to managing and developing their global capabilities.In fact, we see signs that more sophisticated supply-chain strategies are emerging that arenot being driven simply by low-cost labor but focused more on the overall contribution togrowth and profitability of the enterprise.8 In an increasingly competitive globalenvironment, U.S. manufacturing is becoming more productive and manufacturingenterprises view locating portions of their operations here as key to their global strategies.

As such, it is reasonable to assume that manufacturing employment will continue togrow, at least to some extent.

Assumptions about job density are also difficult to validate. Several studies haveattempted to find average densities for various industries and land uses. Some of thisinformation has been compiled and adopted by transportation engineers using historicalsurveys nationwide, going back many years, and is used to gauge traffic impacts of newdevelopments.9 Other studies have used various methods to collect employment density

data specific to the Pacific Northwest.10 All studies exhibit great variation both withinand between industries, making it difficult to attribute precise density values to industries.A similar effort was undertaken for this study. Using establishment employment data

8 Giffi Craig and Peter Koudal Made in North America Deloitte Research New York: 2008


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from the Bureau of Labor Statistics Quarterly Census of Employment and Wagesprogram, and parcel and building data from Pierce Countys Assessor/Treasurer, actual

building size, lot size and employment were recorded for over 800 locations. AppendixC presents scatter plots of employment by lot size for industrial uses in Pierce County.As with other studies, there was extreme variation for some industries, especiallyTransportation and Warehousing.

None of the studies attempt to show differences by age of development. In Pierce Countythis distinction is relevant because several facilities developed within the last 5 yearshave very large buildings with relatively few employees. For example, if all

Warehousing uses are combined, regardless of year built, they host an average of justover 5 employees per acre. However, for facilities built within the last 5 years, thatnumber drops below 3. This trend is true across all industrial land uses, due in part tochanges in technology and increases in productivity, but is glaringly evident forwarehousing.

Regardless of which assumptions are used to forecast employment needs and job growth,one thing is certain. If the amount of land is held constant, then the greater the

density of high-wage jobs, the greater the growth in income from wages. With afixed amount of land designated for industrial use, the lower the job density on that

land, the sooner we will deplete the supply and less likely we will be to meet our job-

creation goals. Tables 10 through 13 show how different assumptions about industrymix and employment density interact to suggest land needs for industrial development inthe future.


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Page 24

ED-4 Industr ial Employment Density ( jobs/acre)

Manufacturing 11.66

Wholesale Trade 10.81

Trans portation and Warehous ing 5.85

2022 Employment Grow th 121,583

NAICS *Industry

Industry % of

5-year

Change

Industry

grow th based

on share of 5-

year change

Acres needed

to support

grow th

Industry

Compund

Annual

Growth Rate

(CAGR)

Industry

Grow th

based on

CAGR

Acres needed

to support

grow th

'07 industry %

Industry

growth based

on '07 ind. %

Acres needed

to support

growth

31-33 Manufactur ing1.03% 1,248 107 0.37% 1,057 91 7.22% 8,783 753

Sq. Ft. of industrial space absorbed per year3,

42 Wholesale Trade 6.35% 7,720 714 4.63% 10,263 949 4.02% 4,896 453 A cres needed per year at 31% lot coverage

48-49 Transportation and Warehousing 8.00% 9,735 1,664 4.24% 8,498 1,453 3.75% 4,565 780 Total acres needed by 2022

Total 15.38% 18,703 2,485 19,817 2,493 15.00% 18,244 1,987Number of jobs supported at average density

IM-1 IM-2 IM-3 IM-4

Table 13 - Assumes job density from most recent 5 years of Pierce County study


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Conclusion

Just as maintaining the water in our swimming pool is important to keeping it a healthyenvironment, maintaining the flow of money is important to keeping our economyhealthy. By increasing the amount of basic industry activity we can increase the totalamount of wealth in our community. But doing so requires sufficient land of sufficientquality to support that increased activity.

There are more than just economic benefits which come from encouraging creation ofprimary-industry jobs. Creating stable, well-paying jobs here reduces the need for

workers to commute to other areas. Reducing commuting benefits communities bydecreasing the amount of roads that need to be built and maintained; it decreases theamount of greenhouse gasses produced; it decreases the costs associated with just gettingto work; and it increases the amount of time that can be spent on more enjoyableactivities, and so increases the quality of life as workers have more time to spend withfamily in leisurely pursuits.

Looking at the total amount of land zoned for industrial use, and comparing it to

reasonable expectations about job growth, the raw data suggests we have just aboutenough land for the next 10 to 15 years.11 But much of the land is in small parcels andmuch of it is faced with significant environmental constraints, which leads to the view ofmany people that all the easy-to-develop land is gone. And just because land isdevelopable, doesnt mean it is available for sale. While our supply of developable landis increasingly held in smaller and smaller parcels, industrial users are looking for largerand larger parcels, making it increasingly difficult to keep and create primary-industryjobs here. How we use the remaining land will determine the extent to which we are able

to create a jobs-based economy. Our ability to have existing primary businessesexpand here, and have new ones locate here, will determine the character of our economyfor years to come.


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APPENDICIES


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Appendix BDevelopment Potential Index Methodology

Many factors contribute to the potential for development of a piece of property. Land canbe affected in varying degrees by environmental constraints, and parcels with fewerconstraints have greater potential for development. Larger parcels, in general, offer moreoptions for development, and proximity to other developable parcels can increase thoseoptions. An index score was created for each developable parcel of industrially-zonedland in Pierce County. The index incorporates the proportion of developable land

without known environmental constraints, the size of the parcel and its proximity to otherdevelopable parcels.

The first step in calculating the index was to find which parcels had industrial zoning, andof those, which were fully developed. Zoning maps and development regulations for alljurisdictions within Pierce County were reviewed to find areas with allow manufacturingor assembly. Candidate parcels were then selected using Geographic Information System(GIS) software. Then, using Assessor/Treasurer parcel data, properties were classified as

either vacant or developed. Next, developed properties were further analyzed to findthose with the greatest potential for redevelopment. Properties were consideredunderdeveloped if the current use is residential and the parcel is greater than 2.5 acres, orfor any use if the improvement value was less than $50,000, or if the improvement valuewas less than 20% of the total taxable value of the parcel. Then each parcel was verifiedusing aerial photography to confirm that it was either vacant or underdeveloped. As aresult, each parcel was classified as developed, underdeveloped or vacant. Fullydeveloped parcels are assumed to have no further development potential, and so will

ultimately have an index score of 0; underdeveloped and vacant parcels are given equalweight for the development factor. In reality, vacant land should often have a higherindex score, but the circumstances surrounding each property are so individualized thatthe distinction was not incorporated into this analysis.

Next, using GIS data, the proportion of known environmental constraints was calculatedfor each parcel. Constraints considered included: wetlands and associated 300-footbuffer; steep slopes; 1-percent flood-hazard area (100-year flood hazard), and; critical

wildlife habitat. While many environmental constraints can be mitigated or engineeredaround, doing so adds cost and time to a project and therefore reduces the developmentpotential of the land.

Parcels were then standardized into 5-acre units. Five acres was chosen somewhat


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The geospatial analysis tools available in ArcView GIS software were then used to find acluster score for each parcel. This analysis considers the number of developable parcelsadjacent to the subject parcel, as well as the number of developable parcels within a givendistance. The more concentrated the grouping of developable parcels, the higher thecluster score.

Once all index components are found, the percentage of unconstrained area is multipliedby the number of 5-acre units and the cluster score, to get a development potential scorevalue. Each score was then divided by the development potential score of the highest-scoring parcel to index all scores to 100. Thus, the equation is:

(1 - percent of parcel with environmental constraints) x (parcel acres / 5) x (cluster score)Highest score

Adding additional components might make the index score more precise. It might bedesirable to add terms for the overall size of each contiguous cluster, for contiguous

blocks under common ownership and for proximity to infrastructure such as roads,sewers, water, telecommunications and industrial-grade power. Software, data and timelimitations precluded the use of additional development potential factors.

A di C


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Page 33

Employment per Acre

Warehousing

N = 14Avg. = 5.27

R2

= 0.0027

0

200

400

600

800

1000

1200

1400

0 50 100 150 200 250Acres

Employment

Employment per Acre

Transportation

N = 49Avg. = 11.34

R2 = 0.1526

0

200

400

600

800

1000

1200

1400

0 50 100 150 200 250

Acres

Employm

ent

Employment per Acre

Manufacturing

N = 240Avg. = 18.74

R2 = 0.5605

0

200

400

600

800

1000

1200

1400

0 50 100 150 200 250

Acres

Em

ployment

Employment per Acre

Industrial Parks

N = 25Avg. = 18.58

R

2

= 0.7712

0

200

400

600

800

1000

1200

1400

0 50 100 150 200 250

Acres

E

mployment

Appendix CObserved employment density by industry scatterplots


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Page 34

Employment per AcreWholesale Trade

N = 80Avg. = 15.37

R2

= 0.3011

0

200

400

600

800

1000

1200

1400

0 50 100 150 200 250

Acres

Employment

industrial lands report pierce county 2_09

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