Public, panels to see draft of marketing plan for nearly built out area

Members of the public, City Council and Economic Development Board will get a chance Tuesday to see a draft market study for Benicia Industrial Park.

The report draft is a mixed review of the park that notes its attractive location and strong identity, but points out future competition is coming for a park that is viewed as nearly built out.

In the workshop and public hearing, those attending will hear that the park’s lease rates are priced attractively, vacancies have declined, rents are rising and new construction is under way.

But the park has only 23 acres of undeveloped space and is considered nearly built out, according to the report. However, 925,000 square feet of building space is available, mostly in three buildings.

Because of that, leasing brokers perceive the park as having a low vacancy rate, and call that a key constraint for the park.

The study was launched in January 2014, after City Manager Brad Kilger hired Chabin Concepts and its president, Audrey Taylor, Economic Development Manager Mario Giuliani wrote in a report to the Council and EDB.

The draft is a 55-page report with several appendices that describes the Industrial Park’s existing conditions, examines marketing challenges and opportunities, and suggests long-term strategies.

Giuliani wrote that the document follows the Business Development Action Plan (BDAP) adopted in 2012, and is costing $49,000 to develop.

He wrote that since the BDAP’s adoption, the city’s economic development has shifted toward the Industrial Park, which he described as “the city’s major revenue generator.”

However, based on sales tax revenue reports, he wrote, the Industrial Park has seen six consecutive quarters of stagnant growth.

“The Chabin Concepts team has spent nearly 12 months conducting business surveys, interviews and analysis resulting in some key data that will inform the city’s future actions,” Giuliani wrote.

Among the other findings noted in the report are that most Industrial Park tenants are on short-term leases. The companies would prefer to stay put if their growth can be accommodated; if not, they will have to move.

In fact, some companies have building space elsewhere because nothing appropriate was available in the Benicia park. “They would prefer to consolidate under one roof and stay in the BIP,” the report said.

On the other hand, brokers told the surveyors that there is a shortage of “true industrial parks” that serve both light and heavy industrial tenants, and said they appreciate that the Industrial Park doesn’t try to be “everything to everyone.” Instead, it focuses on the industrial and warehouse market.

The report said the demand for industrial space is coming from those who want distribution plants close to transportation hubs and population centers; from area wineries, food and beverage companies that need larger warehouses; and from those who need usable manufacturing space, especially in areas close to Oakland.

Solano County’s industrial sites have a slightly larger vacancy level — 8.6 percent — when compared to Napa County (5 percent), the California Highway 4 corridor (5.5 percent), Richmond (3 percent) and Oakland, which has a severe shortage of available space — and what is available in that city borders on obsolescence, the report said. However, The Highway 4 warehouses are experiencing a 19-percent vacancy rate, it said.

Solano County lease rates are more attractive than Napa’s, which are among the highest in the region, the report said, with Highway 4’s rates just behind. Richmond’s average rate of 50 cents a square foot is slightly less than BIP’s 64 cents a square foot, but Richmond’s available sites are considered older and more obsolete.

“If the BIP had sufficient land to accommodate new investment, it would be well-positioned to take advantage of the tight real estate market,” the report said. It could accommodate those struggling to find space in Oakland, where the demand is for new, large warehouses and distribution buildings.

Without adding land and buildings, BIP won’t remain competitive, because about 3 million square feet of new construction elsewhere is under way, including speculative building, the report said. The park’s infrastructure also needs upgrading, or prospective tenants may seek space elsewhere, it said.

However, the market for industrial park space is likely to remain strong, with BIP having “a strong image” of a true industrial park with attractive lease rates.

In addition, BIP is seen as having an attractive location, convenient for employees, vendors, customers, highways and other transportation as well as a large labor market, the report said.

But the local park could face strong competition from Fairfield in the race to supply wine industry demand, as well as places where other construction is planned or under way.

It also could lose current “quality tenants,” as well as jobs and sales tax revenue, if there is no inventory or room for new investment to accommodate expansion, the report cautioned.

Chabin’s report recommends both short- and longer-term ways to capitalize on market changes.

In the near future, it said, focus should be put on business retention, communication with tenants and improved delivery of services and incentives. Tenants also need to be told how some long-term problems — such as road conditions and high-speed broadband Internet service — are being addressed.

Benicia could talk with Solano County about ways to identify target users of the park, and promotion campaigns should be “very focused,” marketing the park to clients in inner Bay Area locations where markets are tight.

In addition, the Port of Benicia and the Benicia Arsenal present ideal niche marketing opportunities, the report said.

It said in the long term, the park needs to be expanded. Funding needs to be found to invest in the park, particularly its infrastructure. But redevelopment and building retrofitting, adding acreage and developments that would attract tax-revenue generating businesses also need to be considered, the report said.

“If and when the BIP is improved with expansion land and buildings shovel-ready, an aggressive business attraction campaign targeting a mix of emerging industrial innovation, tech and advanced industrial tenants … should be implemented,” the draft report said.

The workshop is a special joint meeting of the Economic Development Board and the City Council, and will start at 6 p.m. Tuesday in the Council Chamber of City Hall, 250 East L St. A regular Council meeting will start at 7 p.m. Tuesday in the same room.