On the heels of an agreement with Amazon.com Inc. to develop a 1.2 million square foot high-tech fulfillment center in Tracy, San Francisco-based industrial giant Prologis Corp. has gained approvals to help build what the town’s mayor hopes will be the largest business park in the state.
The Tracy City Council has agreed to annex 1,780 acres fronting Interstate 205 and to create entitlements for 30 million square feet of commercial, general office and business park industrial development on land commonly known as the Cordes Ranch.
A 25-year development agreement awards Prologis vested development rights on 1,200 acres of the total, leaving the city a limited ability to change those entitlements in the future. Prologis has agreed to pay the city $5 million over five years “to be used at the city council’s discretion, as a public benefit to the community,” according to public records.
The plan assumes an underlying commitment of some $213 million by Prologis in horizontal infrastructure. Scott Lamson, Northwest Region president for Prologis, promised an aggressive marketing and outreach campaign to the company’s network of commercial property brokers and tenants in the Bay Area, Silicon Valley and globally.
Citing the company’s experience with Amazon, he said, “The business is changing today, and that environment is creating a lot more high-paying, white-collar jobs. We are very committed to working with the city to attract manufacturing jobs to Tracy.”
The Cordes Ranch project has already been shortlisted by four companies looking to set up fulfillment, manufacturing, call-center and business operations, Andrew Malik, the city’s director of development and engineering service said. At least one of those users is considering a 100-acre “mega-facility” where it would consolidate multiple operations including a call center and a fulfillment center, he said.
Amazon is to occupy approximately 85 acres in an 870-acre business park that the city annexed in 1996, Malik said before the Sept. 3 council meeting. But that park has only smaller parcels remaining in the 20-acre to 40-acre range, and companies speaking to the city today want much larger sites.
The land-development approvals and the tenant interest reflect the profound changes taking place in the supply chain for consumer goods in the United States, with retail sales migrating online and same-day delivery becoming the Holy Grail.
City officials emphasized that the jobs being created by the operations paid “head-of-household” wages, which Malik said is an estimated $52,000 a year. Seventy percent of Tracy’s work force migrates out of the city each workday to jobs in the more central Bay Area. The goal is to reduce that migration.
Prologis owns 10 million square feet of industrial property in the Central Valley with five million square feet of that in Tracy. It also owns 20 million square feet in the crescent from San Francisco to San Jose. “We have many contacts with brokers national and internationally and a marketing arm to reach global customers throughout the world,” Lamson said.
The plan still must go before the San Joaquin Local Agency Formation Commission, which considers city annexations, on Sept. 20. Little opposition is expected.
“If you think that Amazon is good news, stand by, because that could be repeated time and time again,” Mayor Pro Tem Michael Maciel said in voting for the project. The Tracy council voted unanimously to approve multiple measures including the Prologis development agreement.
“This is a game-changer for our city,” Mayor Brent H. Ives said. “This puts us in a position to attract the kind of jobs we have wanted for years. This stops our worker leakage.”
It also reverses the perception prevalent in the recent past that Tracy was not interested in attracting commerce, he said. “We have turned the corner. The largest industrial developer in the world thinks we are business friendly. That’s significant, and as this project begins to establish those jobs, we will see our neighbors work here and not there.”
Amazon wants 80,000 square feet of offices at its fulfillment center where it expects to have administrative operations such as human resources and information technology services. Fifteen hundred people are to work there even though the plant is to be “highly automated,” Malik said.
A Prologis spokesman declined additional comment.