Double-digit Housing Growth Foreseen
By Amanda Janis/Business Writer
The status of Solano County real estate was the topic du jour Thursday in Fairfield at the Solano Economic Development Corporation's member-investor breakfast.
"It's a dynamic market, changing every year," said Michael Ammann, president of the organization whose purpose is to attract and retain business within the county.
A panel of local industry experts offered the 150 in attendance an insight into topics including business and industrial parks, retail and residential development.
Peter Beucke, senior vice president of Lennar Homes, noted a tightening of the residential retail market in the past 12 months, calling its current situation "unique."
Around the same time last year, he said, people in the home building industry were giddy, things were going so well.
"A lot of them were out playing golf at this time - you don't see so many builder-golfers these days," he quipped.
Current market conditions can be characterized by "seven I's," according to Beucke: rising interest rates, increased inventory, increased order cancellations, enhanced incentives, increased construction costs, investors selling their properties, and intense cost reduction initiatives by home builders.
Despite all that, Beucke said, "We really view Solano County as a great opportunity down the road - it's ideal for home buyers and businesses."
Not only is it strategically located, he said, but "each of the county's 7 cities is looking at double digit growth over the next 18 years. The big three along I-80 will lead the way - Vacaville, Fairfield and Vallejo. We see that as a huge opportunity for brokers and new home buyers."
As do institutional investors, according to Jose McNeil, industrial real estate portfolio manager for CalPERS.
McNeil explained that the majority of the state employee pension fund's $5.87 billion housing portfolio investments are "tri-coastal," that is, they're focused on the western, eastern and southern coasts of the United States.
Brooks Pedder, managing partner of Colliers International's Fairfield office and Solano EDC chairman, characterized Solano's business and industrial park market as "tight."
Vacancy rates have increased to 15 percent county-wide, he said, attributable to many tenants becoming owner-users.
"Our land values are skyrocketing, in certain circumstances they've more than doubled in the last 12 months, and our inventories are starting to disappear," Pedder said.
Unless cities create new opportunities and consider annexation, he said, "we're going to be out of land."
A flurry of new retail development is also taking place throughout the county, said Jim Randolph, senior vice president and director of retail real estate in the Bay Area for Cornish & Carey.
He expects home-furnishings tenants to occupy a portion of the proposed 700,000 square foot Vacaville Pavilion, which will be located off the I-80/505 interchange. Kornwaser Development has not disclosed who will be the center's anchors, Randolph said, "but they seem to slowly be gaining momentum on this."
A Longs Drugs will anchor the 33,000 square foot Hillside Terrace shopping center under construction on North Texas Street in Fairfield, he said, which is scheduled to be finished this fall.
In the Cordelia area, two new 80-plus room hotels are under construction in Green Valley Center, Randolph noted, and nearby, the former truck stop site will be developed into a 450,000 square foot shopping center.
"We have probably a good full year of entitlement to go through and we have to get it anchored," he said, "but this will probably be the largest center in Fairfield to be built in the next couple of years."
Amanda Janis can be reached at firstname.lastname@example.org.
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