Analysts See More Growth in Solano

Analysts See More Growth in Solano
Reports Suggest Region's Continued Development for Jobs, Population to Outpace East Bay's Surge
By George Avalos
CONTRA COSTA TIMES

Solano County enjoyed a remarkable burst of economic activity during the final three months of 2006, and more expansion beckons, two area business leaders said Monday.

What's more, after a hiatus of several years, some businesses from the other eight Bay Area counties have begun to actively scout the Fairfield-Vallejo-Vacaville-Benicia region for places to expand or transplant their operations.

"This is the most economic activity we have seen in Solano County in the last three years," said Michael Ammann, president of the Solano Economic Development Corp. "Activity has hit a peak."

Case in point: Colliers International brokers report that commercial realty leasing activity totaled about 2.5 million square feet during the final three months of 2006.

"Those three months are probably higher than our best year," said Brooks Pedder, managing partner with the Colliers office in Solano County. "I don't think we have ever exceeded 2 million square feet of leasing in a single year. This is significant."

The new business expansions have fueled job creation. Solano County added 2,400 jobs during 2006, according to data released by the state's Employment Development Department. That was an annual growth rate of 1.9 percent. And that topped the Bay Area's rate of job growth of 1.7 percent.

Even the East Bay, which has had the strongest job market in the Bay Area for the past several years, grew slower than Solano County, with the Alameda-Contra Costa region showing job growth of 1.7 percent.

Projections from the Association of Bay Area Governments suggest Solano County is poised to outperform the Bay Area on multiple fronts through the end of the decade.

Solano County from 2005 through 2010 should enjoy an increase in total jobs of 7.2 percent, ABAG prognosticated in a recent report. The Bay Area during the same five years can expect job growth of about 7.1 percent, ABAG estimated.

Still, a growing number of Solano County's residents may have to suffer through ever-longer drives to get to work. The ABAG projections suggested that Solano County's population will grow 8 percent from 2005 through 2010. That means the number of residents living in Solano will grow measurably faster than the job growth that actually occurs within that county.

That trend could prompt more companies to eye Solano County as a way to ease the pressure on their employees who may be driving long distances to work.

"We have about 200,000 people driving through Solano County every day to go to work," Pedder said. "Companies may have to find to way to get their labor to stay put. They will have to figure out how to solve that problem for their employees."

The companies that took large chunks of office, research, or industrial space in the October-December period came primarily from the East Bay or San Mateo County, according to Pedder. He said the deals included relocations by Encore Glass, Home Depot, Ashley Furniture, Owens-Illinois, Alsco, Oakhills Hardwood, Checkers Moving and Cole Supply.

Area business leaders also believe the life sciences and alternative fuels industries could propel much of the future growth of Solano County.

They point to a $1 billion-plus Kaiser Permanente facility in Vacaville, and expansion of a Kaiser in Vallejo, as well as an expansion of the Sutter Solano Cancer Center in the same city. Plus, San Francisco-based Genentech continues to expand its campus in Vacaville, which eventually will lead to more biotech jobs.

A further boost could come from a $500 million BP Energy Biosciences Institute at UC Berkeley.

"We will see some of the benefits from that as we are right smack in the middle between UC Berkeley and UC Davis," Ammann said. "You can only do so much in the labs. We can get pilot project facilities, crop-growing facilities, companies that are in this field."

George Avalos covers the economy, jobs, financial markets, insurance and banks. You can reach him at 925-977-8477 or gavalos@cctimes.com.

GROWTH SPURT

Solano County should grow more quickly than the Bay Area, as measured by population, average household income, and jobs within the county, according to projections released by the Association of Bay Area Governments. The chart shows the percentage change predicted by ABAG economists for the years 2005 through 2010 in three key categories.

Region Population Income Total Jobs

Bay Area +4.5% +4.8% +7.1%

Solano County +8.0% +5.0% +7.2%