Before they convince young urbanites to move to an isolated part of Kings County, the developers of Quay Valley must convince the Kings County Board of Supervisors that the economics of this new town proposal is worth the risk.
Consultant group Empire Economics was asked by the supervisors to provide a risk analyst of the planned Quay Valley development in southwest Kings County along I-5. In a draft report dated Dec. 1, they advised the county to be wary.
Empire analyzed the plan to establish a small city in this most rural area of the county. There are expected to be 25,906 residential units and almost 21 million square feet of nonresidential products in Quay Valley, and so it has a long-term development horizon and likely to be subject to the various phases of the real estate cycle expects Empire. Location is bound to be an issue they say.
“Quay Valley Phase 1- due to their location in the southern portion of the Central Valley along Route 5, are not well-positioned to benefit from the typical sources of organic demand that usually support new development.” Also,” Quay Valley is too distant from the major employment centers; even during the housing market boom of 2000 to 2007, the area did not benefit from the enormous spillover from these major urban centers.”
“Quay Valley Phase 1 contemplates forming its economic base through the development of recreational/amusement facilities and hotel/conference centers: Empire’s research on these product types during the 2000 to 2016 time has revealed the following:
- The vast majority of new recreational and amusements parks/facilities occurred in the SF and LA urbanized areas, in close proximity to major economic bases.
- The majority of new hotels occurred in the LA urbanized area in close proximity to major economic/population centers.
“Tejon Ranch serves as an example of a town that was developed in a somewhat remote area. However, its development pattern is different than what is contemplated by Quay Valley since its proximity to the Los Angeles region has enabled it to focus on retail outlets and warehousing activities.”
Unlike Quay Valley “most of the new development activity has been concentrated in the cities along Route 99, as the growth of the established cities continues to expand due to their own economic bases. By comparison, development along Route 5 has been minimal as this is not the population/ economic center of the Central Valley. “
Noting a change in how millennials are choosing to live in urban areas with fewer of them buying a house reduces an effect seen in the past.
“The combined impact of these social and economic factors has recently resulted in a dramatic shift toward more apartments and fewer for-sale homes. For example, in Southern California, the long-term average market shares are 62 percent for single-family/attached for-sale homes and 38 percent for apartment rentals. However, this has significantly changed during the past four years: for 2015, the share for apartment rentals amounted to 62 percent while single-family’s share amounted to only 38 percent; this represents a complete reversal of recent patterns.”
Summing up — Empire’s economic analysis concluded that the economic feasibility of developing the forthcoming products in Quay Valley Phase I will NOT be determined by the typical expansion of a large diversified economic base. Rather, Quay Valley appears to be focused on attracting destination oriented research, retail/outlet and entertainment products. The success of this strategy will depend upon the special/unique characteristics of Quay Valley as compared to other competing sites for similar destination products. As discussed above, Empire’s scope of research focuses on the established development trends/patterns, and this does not address such destination products.”
“The most significant risks factors will occur during the development phase due to the occurrence of real estate cycles. During the downturn phase, property values are adversely impacted and considering the minimal amount of the residual value of land that Quay Valley has as a cushion to absorb value declines, the feasibility of development would be adversely impacted, and is likely to be put on hold.”
Consultants for Quay Valley have yet to respond to these issues.
HSR will force solar farm relocation
Another Kings County farm will be impacted by the bullet train's right-of-way take. But this time it will be a solar farm that will be forced to move due to the pathway choice. CED Corcoran 3 Solar, LLC, owned by Consolidated Edison, will pick up a portion of its 20 acres of panels and relocate them north near Highway 43 under a new conditional use permit being processed by the county. In a related matter the CHSRA has told the Board of Supervisors they will work with property owners in the Highway 43 and Iona Avenue area to accept their request to cul-de-sac that area as opposed to building an overpass for the proposed high speed rail project. The decision both pleases the residents and saves money.
Payless Shoes declares bankruptcy - Fresno stores will close
Payless Shoe Source, the largest specialty shoe retailer the U.S., has declared bankruptcy this week and said they would immediately close 400 stores during its Chapter 11 period. The company has two stores in Hanford, three in Visalia and one in Tulare but all are spared in the initial wave of closures according to a list made public Wednesday. But three stores in Fresno and two in Bakersfield are on the closure list.