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ulta

The Ulta Beauty distribution center Fresno is nearing completion, and will inject hundreds of jobs into the local economy when it opens.

published on December 1, 2017 - 1:43 PM
Written by David Castellon

If you’ve been operating a business or own property in Fresno County this year, odds are you have reasons to be happy.

“We had some great announcements of new employers coming to Fresno County,” most notably Amazon and Ulta Beauty starting construction on large, high-tech distribution centers in Fresno, said Nikki Henry, chief operating officer for the Fresno County Economic Development Corp.

Those two businesses alone could bring 3,000-3,500 new jobs to this area and spawn at least an equal number of additional jobs, said Fresno Mayor Lee Brand.

Even the announcement in August by electric car startup Faraday Future that it plans to start building cars next year in neighboring Kings County is good news for Fresno County, as the 1,000 new jobs created there, along with the additional jobs generated by businesses supporting the car factory, are bound to bring additional commerce to communities here.

“We’ve got some great jobs and some good wages coming up,” said Henry.

Local businesses growing

It’s not just big, new businesses fueling her optimism, as Henry noted that several current Fresno County businesses are expanding, including U.S. Cold Storage adding 275,000 square feet to its south Fresno operation.

“It’s been a robust year, and we see our manufacturers doing very well and doing well next year as well,’ said Mike Betts, Chairman and CEO of BettsCompany, a Fresno-based manufacturer of auto and truck parts and accessories, as well as chairman of the San Joaquin Valley Manufacturing Alliance.

Fueling the trend in Fresno County is overall improvement to the U.S. economy, along with optimism among business operators because of President Donald Trump’s pro-business agenda, he said.

In addition, sales of autos, trucks, washers and dryers and other products that generally point to how the economy is doing are “bullish,” Betts added.

Manufacturers investing in themselves

“That level of optimism is leading to more investment in manufacturing and growing our manufacturing base, which is helping strengthen the sector,” he said, adding that investments that Fresno County manufacturers are making to upgrade and grow their businesses over the past five years are more than he saw in the 20 years prior to that.

And if the GOP pushes through a new tax plan that reflects the president’s promises of reducing tax burdens on businesses, “That will make a huge difference on the business owners, because they can use that cash to reinvest, and they want to reinvest in their businesses,” said Betts, adding, “We should expect to see some real growth, and that should bode real well for our region.”

County casting a wide net

People outside the Valley are taking notice, said Henry, noting that the growth of existing businesses here, along with Ulta and Amazon locating divisions here, is driving interest among U.S. and overseas companies from areas as diverse as Brazil, Finland and Spain, which have contacted the EDC indicating interest in Fresno County as a place to locate.

Another indicator of the county’s strengthening economy is real estate, with Nicholas Audino saying, “The market has been very good in Fresno County.”

Audino, senior vice president of Newmark Grubb Pearson Commercial real estate in Fresno, said, “The vacancy rate for industrial in the third quarter [of this year] has been trending at about 6.8 percent, which is very good.”

He said vacancies of industrial spaces in the county have trended down over the last couple of years, and a lot of smaller, lesser-known e-commerce businesses locating here are helping drive the trend.

Location, location, location

“It just seems now the companies are recognizing the Central Valley more,” in part because of the lower cost of living and cheaper labor pool compared to Southern California and the Bay Area, Audino said.

But Fresno County’s central location, where trucks can move goods in a day to anywhere in California and portions of neighboring states, is becoming a bigger selling point, particularly among ecommerce and shipping businesses that don’t want to incur the higher cost of airmailing goods, Audino said.

“We’re anticipating to remain relatively stable in 2018,” he forecast for the industrial real estate market. “I don’t think we will see costs rise significantly, as long as there are no major forces in the economy that will turn the economy down.”

As for the county’s job situation, the October unemployment rate was at 7.8 percent, 1.6 percentage points lower than a year earlier. That translates to about 6,300 additional people employed, according to the California Employment Development Department.

Better training makes a difference

Henry said another draw to Fresno County is that the manufacturing sector has been working with local governments and the education sector to train people in skilled jobs — particularly for the growing number of businesses in tech fields — so companies with such jobs are seeing that a ready workforce exists.

Betts, agreed, saying, “We are becoming a world-class career technical education ecosystem” from the high school level to adult training.

As for commercial real estate — office and retail — “I still think there is going to be a strong demand for space in the retail area,” said John Stewart, president and CEO of Pearson Realty, the parent company of Newmark Grubb Pearson Commercial.

Vacancy rates are low for commercial spaces, and construction of new spaces have been rising for the past couple of years, though Stewart said he expects that to slow down a bit in the coming year.

Some might expect more vacancies in retail space, considering brick-and-mortar businesses are facing harsher competition from Amazon and other online sellers.

But the local businesses are adapting, said Stewart, explaining that “I think what you are seeing is the brick-and-mortar people are leaning to compete with ecommerce,” often by cutting prices and, in some cases, offering their own products online that can be picked up at local stores without the wait or added shipping cost.

Home sweet home

Anecdotally, 2017 was a good year for people selling homes, as the inventory of available homes was low, keeping prices up, said Kristy Henry — no relation to Nikki Henry — president of the Fresno Association of Realtors and a broker for Andy Caglia Realty in Fresno.

Zillow.com, which tracks regional home pricing trends based on homes for sale on its website, puts the median value of a home in Fresno County at $226,000, up 6.9 percent from a year earlier.

Zillow forecasts a 2.8 percent rise next year in the county’s median home values.

Zillow puts the median lease price for rentals at $1,350 a month, well below the California-wide median of $2,650 a month.

For her part, Kristy Henry said she believes home values could rise as much as six percent next year, as people are being driven out of Southern California and the Bay Area by high home prices and move here, where housing is cheaper.

The NAFTA effect

As for the industry that drives Fresno County commerce — agriculture — the news wasn’t good when it was announced earlier this year that ag sales in 2016 totaled more than $6.18 billion, down more $482 million compared to sales in the prior year.

Officials attributed much of the losses to lower prices paid for some commodities and the effects of the drought last year.

But last winter was wetter than average and broke the drought, offering relief to farmers and ranchers.
“Certainly, the outlook for Fresno County agricultural output and production value is positive” in 2018, unless the winter weather takes an unexpected turn and is very dry or severe freezing occurs that damages crops, said Roland Fumasi, vice president and senior analyst for Rabobank Research Food and Agribusiness.

But weather isn’t the only thing that could effects the county’s ag industry in the coming year, he said, noting that the U.S. is in its fifth round of discussions with Mexico and Canada to renegotiate the North American Free Trade Agreement.

The agreement creates benefits for the three countries to trade goods, and agricultural products make up much of them.

But President Donald Trump has blasted the agreement, indicated he’s willing to end it if a more favorable deal for the U.S. can’t be worked out, which is causing worry among many in the farming industry who fear that ending NAFTA would result in a significant loss of trade, particularly with Mexico.

“NAFTA may be a wild card. I originally thought ag trade might hold these things together, but as the negotiations progress, they haven’t seemed to improve,” and a disruption of the agreement could have a big ripple effect on Fresno County, particularly among dairies that heavily export milk products to Mexico, Fumasi said.


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