I don’t usually discuss the goings on in other cities, but a recent story from Tracy caught my eye. Last week, city officials triumphantly announced the approval of a project on the city’s western edge. This 1,796 acre project, situated off of a highly visible stretch of I-205, could bring “tens of thousands of jobs” to Tracy and the greater metro area. Mayor Brent Ives referred to the project as a “game changer,” with the hopes of wooing tech companies away from Silicon Valley. This all sounds like fantastic news, so what kind of intrepid, forward thinking kind of development is Tracy banking on?
An office park.
I hate to be a buzzkill, but the excitement of this announcement is overblown for a number of reasons. Fancy new office parks in the region have not done very well in recent memory, and high-quality tech jobs do not want to be in office parks. To be fair, I don’t know very much about the specifics of this project—dubbed Cordes Ranch– or Tracy in general. What I do know is that these types of single-zoned suburban office parks are typically not the economic game-changers that Tracy officials are hoping for. Here’s why:
If Cordes Ranch was built 30 or 40 years ago, this would have been a marvelous economic development plan for Tracy. Back then, businesses flocked to office parks to take advantage of cheaper land and proximity to their workforce. These suburban locations provided the amenities that workers back then wanted: ample roads and parking spots for their cars and spacious yards for their families. Unfortunately for Tracy, today’s workers are much different, and companies are adjusting their locations accordingly.
As I have written several times, tech companies want to be where the best and brightest want to live. Increasingly, these workers prefer walkable, urban communities that are accessible by more than just cars. Today’s young, educated workforce doesn’t want suburban homes and they don’t want to work in office parks. As one official explained in the new book The Metropolitan Revolution, “The current generation of tech workers doesn’t want to toil in the soulless Office Space complexes surrounded by moats of parking that dot [the office parks’] sprawling vastness.”
This is not just theory, either. The dwindling relevance of the American office park is well-documented. According to the Wall Street Journal, suburban office parks continue to empty as downtown office space remains stable.
“The national office vacancy rate in downtowns was 14.9% at the end of the third quarter, the same level as in early 2005—while the suburban vacancy rate hit 19%, 2.3 percentage points higher than in 2005, according to data firm Reis Inc.
In the first three quarters of this year, businesses in the suburbs vacated a net 16 million square feet of occupied office space—nearly 280 football fields—while downtowns have stabilized, losing just 119,000 square feet.”
And this was in 2010. There is plenty of anecdotal evidence to confirm that this trend is still valid. See this story, and this one. And here’s one more, just to be sure. In fact, to stave off extinction, many older suburban office parks are attempting to reinvent themselves by incorporating mixed-use elements. It remains to be seen if this tactic will be successful.
Cordes Ranch is exactly the kind of environment that repels high-skill jobs. From what I can tell from the site plan, the project consists of low-density commercial and industrial with some retail sprinkled in (Tracy’s General Plan looks like there is an area zoned “village center” near the northeast corner of the project, but The Record reports that no residential is including in the specific Cordes Ranch plan). There is also a large amount of space dedicated to parks, which is nice, but doesn’t make up for the fact that Cordes Ranch is a typical office park at heart.
On top of that, suburban office projects continue to languish in the region. Why does Tracy think Cordes Ranch will somehow succeed where others have failed? Take Park West Place in Stockton. Billed much the same as Cordes Ranch, PWP was supposed to be the premier retail and commercial center of the area. Today, the AG Spanos building sits around a woeful 70% occupancy space, and the retail options are your mediocre Wal-Marts, Lowes and Targets.
Moreover, Cordes Ranch is located near another mega-project by the same developer: the 100 acre Mountain House Business Park. Both Pegasus Development projects appears to be of the same variety, offering class-A office space, some retail and lovely park and open space. But this begs the question: how much office space does west San Joaquin County need? It appears to me that both Cordes Ranch and Mountain House Business Park would be in direct competition with one another.
Again, I don’t know all the details about these projects, and they very well could end up being successful, and for the sake of our neighbors to the west, I hope they are. Unfortunately, there is no evidence that the economic boost envisioned by city leaders in Tracy will come to fruition. These types of office park projects coveted by local officials signal a misunderstanding of the how tech and start up industries think.