Tuesday, July 27, 2004

Solanoe EDC Real Estate Round-up: Business Leaders Mull Housing, Jobs Disparity

Business leaders mull housing, jobs disparity

By Matthew Bunk

-- Urban areas of Solano County have more vacant business park space than last year and 200,000 more residents than jobs, but a panel of real estate experts said those disparities - along with rising home prices - could eventually balance a lopsided growth trend.

One expert even suggested that a pool of workers who would rather work close to home than commute could be used as a tool to bring more businesses to Solano County.

"Is it a curse or opportunity?" Colliers International Broker Brooks Pedder asked business leaders during a Solano Economic Development Corporation breakfast Tuesday at the Solano County Office of Education.

"Commuters traveling through Solano have an almost impossible commute and desperately want to stay home," he said. "The result is an overabundance of inexpensive labor."

Because home prices in Solano County have been much less expensive than other Bay Area cities, residential growth outpaced jobs creation. Despite steady gains in recent years, Solano's industry hasn't grown to the point where it can sustain the local workforce.

But that's not all bad, said Fairfield economic developer Karl Dumas. He said Fairfield benefits from its role as a home to those who work around the Bay Area.

"There will continue to be an imbalance of jobs and housing in the neighboring metro areas," Dumas said, "and our area will be looked upon to help solve the housing part of the equation."

Some real estate experts worried, though, that rising home prices in Solano could keep bedroom communities such as Fairfield from competing in a homes market that has thrived on being an alternative.

As far as housing affordability goes: "We lose out to the Sacramento and San Joaquin valleys and all points out of state," Pedder said.

Premier Commercial's Kevin English said generating more housing options, including lower-cost models, would relieve burgeoning demand and send positive signals to outside businesses.

But instead of more outside businesses moving in, Pedder said most of the recent commercial growth has come from native companies expanding within Solano County.

"Expansion of local firms is fueling our recent successes," Pedder said. "We need to do a better job of getting the word out about Solano County."

Business Park vacancy rates rose in every major city in the county with the exception of Vacaville, but the area continues to outperform other Bay Area counties. Solano's combined vacancy of 9.1 percent puts it in better position for recovery than most larger Bay Area cities, many of which struggle with 25-50 percent higher vacancy rates, Pedder said.

Fairfield, which in recent years lost major employers Providian Financial, BP Solar and Fibrebond, has a 7.6 percent vacancy rate, according to Colliers International. That's up from 2 percent vacancy last year.

Vacaville dropped to 18 percent vacancy from 23 percent last year.

Vallejo, still trying to come back from the shutdown of a major military base and the resulting glut of industrial space, is only about half full, said Greg Smith, who works for Colliers International in Vallejo. He said more than three million square feet of industrial space remains vacant, mostly on Mare Island.

Westfield Shoppingtown mall in Fairfield, which has said it lowered tenant vacancy to 2 percent from more than 25 percent since it bought the property from Trizec Hahn Corp. in 1998, teased business leaders by announcing plans to expand without offering details. A Westfield spokeswoman said the company has not yet submitted plans to the city.

Reach Matthew Bunk at 425-4646, Ext. 267 or mbunk@dailyrepublic.net.

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