Build it…and They Will Come

Source:  www.bakersfieldmagazine.net / Fall 2014

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Since its founding roughly 150 years ago, Kern County has been known as a place to do business. Any business.

Our economy is made up of huge industries, including oil, agriculture, logistics, and renewable energy. Each of these industries has played a role in the growth of Kern County over the past century in some way or another. But while they’re all important to our overall economy, there’s one industry that is booming right now: retail.

“Kern County is a business friendly place,” explained Richard Chapman, president of the Kern Economic Development Corporation. “And population wise, we’re growing about three times faster than the state average. So companies north and south of Kern continue to realize the value of setting up shop here. Most of the companies are moving in from outlying counties when they see the opportunity to expand.” It doesn’t hurt that Kern’s per capita income puts us at the top of many statewide rankings for county and city growth. We’ve had one of the fastest growing economies in the country since 2001.

Of course, it seems like that growth is happening at a rapid rate right now, what with the opening of the Outlets at Tejon and extensive expansion in the works at the Shops at River Walk.

“When you look at California retail surveys,” Chapman continued, “we are a five star market. Our sales per outlet is higher than average in not only the state but in the country.”

According to Chapman, national data ranks Kern County as one of the top five areas in the country for recession recovery, meaning we’ve rebounded to a pre-recession market quicker than nearly the entire country.

And now that the country is aware of our economic power (and that our low cost of living allows residents to have more disposable income) national chains which previously stuck to Los Angeles, San Francisco, or even Fresno, have been looking for shop space.

“Most people would say we’re under-serviced for retail,” Chapman said. “But what’s been in retail in Fresno for the past few years is finally making it here. As our economy continues to pick up the pace, more retailers will be coming to our area.”In fact, a Moody’s Analytics report showed that the cost of doing business in Kern County is 93 percent of the U.S. national average. And according to the Bureau of Economic Analysis, Kern County is ranked number one in the nation for best performing metro areas for GDP growth.

And these new retailers will also help >>

Panera  
Elephant Bar

Stop the Leakage…and They Will Come

spent over the hill in L.A. It’s cyclical. Our economic standing has brought new retailers to our county, and that, in turn, will continue to bolster our local retail economy. This type of trend points to a nearly 10 percent increase in retail growth over the next five years.

Contributing to that growth is the Outlets at Tejon, a massive retail outlet center recently built and unveiled by Tejon Ranch Company. With over 70 retailers, this was no small undertaking.

“Ground breaking for the Outlets at Tejon began in May 2013,” began Barry Zoeller, vice president of Corporate Communications & Marketing. “Physical construction on the buildings themselves began in late October 2013 and we were open for business on August 7, 2014. Needless to say, it was a very accelerated construction schedule.”

And the decision to focus on outlets, rather than high-price retail or other chains, was a calculated one.

“We were specifically focused on creating ‘destination retail,’ and in today’s world, that means outlet retail,” Zoeller explained. “Outlet centers are thriving and continue to out-perform other types of retail, including regional malls and lifestyle centers.”

Chapman also stated that outlets have a great niche. Whereas mall sales equate to around $400 per square foot, outlet malls come in closer to $550. As Zoeller elaborated, though we are recovering from the recession, people aren’t anxious to spend a lot of money no matter what the product. “So consumers are increasingly turning to outlet centers for the opportunity to save money while still getting high-quality designer brands.”

Though the Outlets at Tejon have been open only a few months, the response from the community has been outstanding—during the Grand opening weekend, more than 200,000 people flocked to the Outlets. “And business continues to be very strong,” Zoeller said. “Plus, we’ve heard many times from the retailers how we exceeded expectations, both in terms of the quality of the center and the level of sales activity.”

Roughly 2,000 people are working at the Outlets at Tejon, and that number should increase as the retailers prepare for the holiday shopping season.

“The Kern County economy is flourishing and national chains are taking notice,” Zoeller explained. Retailers are doing extensive market research to determine where to set up locations, and based on that research, many are coming to Kern. For instance, Bakersfield was ranked as one of the top 10 shopaholic cities in the U.S., and these types of stats do play a part in helping attract retailer attention.

Outlets

The Outlets at Tejon will continue to expand as space is needed. But Tejon Ranch is also looking to develop a master-planned community, located between the base of the Grapevine and the Tejon Ranch Commerce Center. “With almost 4,000 people currently working in the area, it makes sense to build housing close to those jobs. But this new community, which we’re currently calling ‘Grapevine,’ will serve much more than just the workers at the Tejon Ranch Commerce Center. It will be a cutting edge sustainable community that reflects Tejon Ranch’s commitment to quality. ”

So while the oft-used phrase “retail follows rooftops” certainly applies in this case, rooftops also follow retail.
“Once a store or center…becomes successful, others will follow, creating a momentum that results in a flurry of development activity,” Zoeller added.

That momentum is going strong in both the county and in Bakersfield, as well. Just take one look at the Shops at River Walk,  developed by Castle & Cooke. “It was right before the recession hit that we started developing the Shops at River Walk,” explained Scott Thayer, senior vice president for Castle & Cooke.

California Pizza Kitchen, the Elephant Bar, PF Chang’s, BJ’s…we all remember when those came. But just as the Target was in the works, development was put on hold, including the plans for the McDonald’s, Panera Bread, and others next to Target.
“As we came out of the recession, many retailers were really cautious,” Thayer said. “The tenants were moving forward slowly, making sure that they did all their financial studies and that the climate was right to proceed.”

And as we know now, the Shops at River Walk still fit the bill and continues to grow. The big news has been the announced addition of some big name retailers including Nordstrom Rack, BevMo, DSW, and Sprouts Farmers Market. With 500,000 square feet of first-in-name properties available for these retailers, there is a lot of excitement not only from our community, but from these national companies looking for prime locations.

“The appeal of this location has made it a hot spot for major retailers looking to open their first stores in Bakersfield,” Thayer added. “These new retailers, combined with the already opened anchors, will provide a tremendous amount of synergy, and a shopping experience that offers a wide breadth of products and services.” Construction has started, with the first of the stores estimated to open in February of 2015.

Castle & Cooke has also been hard at work further developing the retail opportunities at Gosford Village. With Wal-mart, Buffalo Wild Wings, Kohl’s, Chipotle, the center is already a powerhouse, but 2015 will see a build your own pizza bar (Pizza Rev) and Ross Dress for Less.

 

BJs 
PFChangs 
CPK 

According to Thayer, Gosford Village has attracted a lot of interest from national and regional tenants wanting to serve the southwest Bakersfield market. But Castle & Cooke has always looked to pair retail and residential when planning their development. Castle & Cooke has always considered the options of retailers when building their communities. As Thayer explained, that’s not just so that people have an easier time getting to and from stores and their homes, it’s also because retailers are looking for those residential developments to support their business. They need to see that people are close by so that they can patronize their store. Those types of facts weigh heavily when national and regional retailers are deciding where to nail down stakes.

“Bakersfield offers tremendous opportunities. That’s what these national retailers are finding out,” Thayer added. “We’ve been able to educate different retailers out there so it’s almost like a firestorm! They’ll see that someone is doing well [Target, for example], and that word will get out, so then other retailers will look to see if that site will do well for them. If they know the competition does well, they’ll see it’s a good market.”

That was the case for Nordstrom Rack, Thayer said. “Nordstrom Rack has a location in Fresno that has been doing very well, so they were looking to expand.” And after performing demographic and sales studies, our community fit the bill since other stores like it are succeeding. “It creates a sort of magnet—other retailers want to come into the market, as well. Retailers are seeing how amazing our market is. We’re going to see more and more expansion in our community in the coming years,” Thayer explained.
But the challenge, Richard Chapman added, is appealing to certain markets that historically have been less than receptive to Bakersfield and Kern County.

“Los Angeles thinks we’re in a different time zone,” he continued. “We can and do sell them on the benefits when they get here, but the problem is getting them to see it. There seems to be a psychological and physical barrier of the Grapevine. But with Tejon developing housing at the base of the Grapevine, more folks will be living there, and so maybe that’s one step closer to showing L.A. the type of retail power we have.”

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The creation of the Outlets at Tejon and the abundance of retail property available from Castle & Cooke and other developers is capitalizing on the fact that retailers are ready to expand in this post-recession economy, and because of our area’s strong economy, they’re choosing us. More jobs, more revenue, more national attention.

“It used to be that a large portion of local money went out of town to retailers and shops not in Bakersfield or Kern County,” Chapman said. “We have no way of knowing how much was actually going out, but with these new developments, a lot more of that local money will be captured now…and stay here in the community.”

 

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