HomeMy WebLinkAboutLarge Lot Industrial Land Needs AnalysisDESCHUTES COUNTY CENTRAL OREGON REGIONAL LARGE LOT EMPLOYMENT NEED ANALYSIS
Central Oregon Large Lot Industrial Land Need
Analysis
November 20, 2012
PAGE 2 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
TABLE OF CONTENTS
I. Background ................................................................................................................. 4
A. Oregon Department of Land Conservation and Development Grant ............................ 4
B. Regional Economic Opportunity Analysis ....................................................................... 4
C. Ordinance 2011-017 and 1,000 Friends of Oregon Appeal ............................................. 5
D. Oregon Land Conservation and Development Commission Rule Making ...................... 5
II. Project Introduction .................................................................................................... 6
A. Problem Statement ......................................................................................................... 7
B. Framework for Central Oregon Regional Large Lot Employment Need Analysis ........ 11
III. Community Vision ..................................................................................................... 11
A. Regional Goal and Introduction .................................................................................... 11
Regional Approach .................................................................................................. 11
B. Community Vision Statement ....................................................................................... 13
IV. Trend Analysis ............................................................................................................ 13
A. National Economic Trends ............................................................................................ 13
Introduction ............................................................................................................. 13
Short-Term Outlook ................................................................................................. 14
Long-Term Outlook ................................................................................................ 17
B. State Economic Trends .................................................................................................. 20
General Industry Trends .......................................................................................... 20
Risk Factors ............................................................................................................. 25
C. Local Trends and Conditions ......................................................................................... 26
Economic Factors .................................................................................................... 26
V. Target Industry Analysis ............................................................................................. 29
A. Large-Lot Trends and Dynamics .................................................................................... 29
Large-Lot Trends ..................................................................................................... 30
Importance of Large-Lot Supply and Market Choice .............................................. 31
Competitive Inventories .......................................................................................... 34
B. Strengths and Challenges in the Central Oregon Economy .......................................... 35
Madras (Jefferson County) ...................................................................................... 36
La Pine (Deschutes County) ..................................................................................... 36
Prineville (Crook County) ......................................................................................... 37
Bend (Deschutes County) ........................................................................................ 38
Redmond (Deschutes County) ................................................................................. 39
Sisters (Deschutes County) ...................................................................................... 39
C. Target Industry Opportunities in Central Oregon ......................................................... 40
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 3
D. Site/Resource Characteristics of Key Development Classes ......................................... 41
Targeted Industries with Large-Lot Needs .............................................................. 42
Central Oregon Viability for the Data Center Industry ............................................ 43
Central Oregon Viability for the High Technology Industry .................................... 45
Central Oregon Viability for the Warehouse and Distribution Industry ................. 46
E. Regional Large-Lot Demand .......................................................................................... 47
Long Range Employment Forecast .......................................................................... 47
Industry Placement Velocity .................................................................................... 49
VI. Assessment of Potential ............................................................................................. 52
A. Site Need Characteristics .............................................................................................. 52
B. Gross Land Demand (Short-Term Only) .............................................................................. 56
APPENDIX: Examples of Local Governments Proactively Planning for Industrial
Development ......................................................................................................................... 63
PAGE 4 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
I. Background
A. Department of Land Conservation and Development Grant
Deschutes County received two Technical Assistance Grants from the Department of Land
Conservation and Development (DLCD) in 2010 to evaluate Central Oregon’s opportunities,
competitiveness, and ability to recruit new and locally grown firms requiring new large scale
development models. Johnson-Reid LLC, was selected from a pool of consultants to develop a
Regional Economic Opportunity Analysis (REOA). Over the course of eleven months, the REOA
then went through several iterations with the assistance of a Regional Advisory Committe e
(RAC). The RAC consisted of Central Oregon cities, counties, Johnson -Reid LLC, Business Oregon,
DLCD, Department of State Lands, Central Oregon Intergovernmental Council (COIC), 1,000
Friends of Oregon (1,000 Friends), Economic Development for Central Oregon (EDCO), Central
Oregon Association of Realtors and private area developers. The RAC met officially six times
and reviewed several iterations of the REOA before it was finalized on May 31, 2011.
B. Regional Economic Opportunity Analysis
In 2008, Bev Thacker, Industrial Lands Specialist with the Oregon Economic and Community
Development Department (now Business Oregon) stated in a letter,
“Large, ready to go industrial sites have been the state’s most significant development
challenge and one of the most noticeable changes in real estate trends in [the] last few
years.”
She specifically identified a statewide need of industrial lands of 100-200 acres in size. EDCO
identified similar challenges for the tri-county (Deschutes, Jefferson and Crook) region.
Executive Director Roger Lee and others have repeatedly stated that site selectors often will not
even visit the region if only one or two sites are available. The arrival of Facebook and Apple,
while unique in many regards, has put Central Oregon on the international map for data centers
among other potential large lot employers. However, the region lacks a supply of sites and
cities’ traditional Economic Opportunity Analyses do not account for such a land demand.
The REOA project aimed to determine if such a land demand existed in Central Oregon and, if
so, to identify the deficiency. The study concluded that there was an unmet twenty -year land
need for large lot industrial sites in the region. It also concluded that competing as a cohesiv e
region allows Central Oregon to market a larger available work force, the size of which is often
a key locational criterion for firms. While geographically separate, the study concluded that the
jurisdictions in the region can function in a manner similar to other metropolitan areas like
Reno and Salt Lake City. According to the REOA, the shared economic function within Central
Oregon supports a regional approach to economic development, particularly with respect to
large traded sector industries.
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 5
C. Ordinance 2011-017 and 1,000 Friends of Oregon Appeal
Deschutes County exercised its statutory coordinating authority (ORS 195.025) to address an
unmet regional need for large-lot industrial sites and adopted Ordinance 2011-017. Ordinance
2011-017 was intended to implement the REOA but was appealed to the Land Use Board of
Appeals by 1,000 Friends. The appeal however, was stayed in early 2012 to allow Deschutes
County, the Governor’s Office, and 1,000 Friends to explore a settlement. Spanning three
months, a settlement was ultimately reached in April. During that process, Deschutes County
also collaborated with the RAC. The settlement consisted of an agreement that the technical
document produced would not be called an Economic Opportunity Analysis (EOA) as that term
is understood in Oregon land use law. 1000 Friends agreed that the region has a need for up to
nine large industrial lots in Central Oregon and the parties agreed upon policy principles guiding
how those sites could be incorporated into existing UGBs. The settlement consisted of policy
concepts focusing entirely on Central Oregon’s short-term need for large-lot industrial sites as
well as a commitment from DLCD to initiate rule-making later in the summer.
D. Oregon Land Conservation and Development Commission Rule Making
Deschutes County received a commitment from DLCD that they would initiate the Oregon Land
Conservation and Development Commission (LCDC) rule making process. Upon
recommendations from an advisory group that consisted of the parties to the LUBA appeal,
rule-making consisted of narrowly crafted amendments to Oregon Administrative Rules (OAR)
Chapter 660 Division 24 that reinforces the short-term need for large-lot industrial sites and
allows Central Oregon cities to utilize a regional large-industrial analysis as the justification.
Documentation of the regional large lot employment need, cited in this report, is based
exclusively on excerpts from the REOA.1 Given the challenges that this project received last
year at Deschutes County’s initial adoption stage, rule -making now provides a clearer legal
framework for local governments in Central Oregon to address a known deficiency of large-lot
industrial sites. It specifically acknowledges in OAR 660-024-0040 and 660-024-0045, Central
Oregon’s short-term need for large lot employment land. After receiving support from a rule -
making committee in August, a final draft was forwarded to LCDC for their consideration in
November. LCDC adopted the rules at their November meeting and they became effective on
December 10, 2012.
Utilizing the new OARs, Ordinance 2013-002 now emphasizes Central Oregon’ short term need
for a critical mass of competitive and diverse vacant, developable industrial sites. These sites
can enable site selectors, representing potential industrial recruitment opportunities, to
consider the region. COIC has agreed to pro-actively manage, through intergovernmental
agreements, the short-term land supply of large-lot industrial sites to enable the region to
become competitive in industrial recruitment. Participating local governments will review the
1 OAR 660-024-0045(2)(a): “Analysis” means the document that determines the regional large lot employment land need within
Crook, Deschutes, and Jefferson County that is not met by the participating local governments’ co mprehensive plans at the
time the analysis is adopted. The analysis shall also identify necessary site characteristics of needed land.
PAGE 6 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
program after the short-term supply of sites have been replenished or after ten years,
whichever comes first.
II. Project Introduction
Deschutes County, in coordination with its regional partners, prepared this regional evaluation
of the economic opportunities and constraints associated with users of large industrial parcels
in the Central Oregon region. This approach recognizes the market reality that Central Oregon
currently serves as an integrated economic unit.
A regional consensus has been agreed upon to establish and pro -actively manage a regional
land supply of large-lot industrial sites to enable the region to become competitive in industrial
recruitment. This regional strategy will include individual site infrastructure improvement
assessment and implementation programs/requirements. Regional planning, management, and
governance of a perpetual large-lot industrial vacant land supply will involve Central Oregon
city and county governments (and staff) including advice and guidance from Central Oregon
Cities Organization (COCO), EDCO and Business Oregon to assure an adequate, self-renewing
regional supply of developable and competitive vacant industrial sites.
An outcome of regional significance requires a collective regional effort. This project proposes
to create and manage a regional supply of vacant , developable large-lot industrial sites to
accommodate stable, family-wage employment opportunities of local and regional significance.
Although site development will be fundamentally implemented at the local jurisdictional level,
the organization, coordination, promotion and governance of this regional industrial lands
strategy and inventory is proposed to be implemented at a coordinated, collaborative regional
level. The ultimate outcome of diversified and stable family-wage job creation will be advanced
through provision of an adequate and competitive industrial site land supply to engage the
global, national and regional industrial recruitment marketplace and successfully recruit major
employers to the region.
The Central Oregon region needs a critical mass of competitive and diverse vacant, developable
industrial sites in order for site selectors representing potential industrial recruitment to
consider the region. One or two sites in one or two jurisdictions will not be adequate to
generate regional interest or a visit according to industrial recruitment specialists from Business
Oregon. Consequently, a multi-jurisdictional cooperative effort has been initiated to pursue a
regional approach to establish a competitive supply of sites particularly design ed to address
those (unaccounted for) out-of-region (and state) industries that can locate in Central Oregon
after shopping the globe for the best large-lot industrial development site they can find. This
type of land need (or demand) is systematically missed and unaccounted for in local,
conventional industrial land needs assessments in Oregon communities.
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 7
A. Problem Statement
During the 1990s the Central Oregon region undertook a dramatic transformation from a goods
producing economy concentrated largely in wood products into a service based economy
serving a growing and diverse tourism and household base. Accelerated in-migration and
tourism growth gave way to rapid economic expansion, escalation in home prices, and a
systematic shift in the local economy from goods producing activities to service oriented
industries. While initially representing a diversification of the local economy, this shift has led
to an over-reliance upon these types of industries. During the recent recession, the regional
economy’s vulnerabilities became apparent.
Central Oregon's traditional industrial base remains active in the local economy, and the region
would like to increase its emphasis on industrial employment to strengthen that base. The
region's supply of affordable land, low cost utilities, quality of life, and organized economic
development landscape makes it an attractive option for growth in many traded sector
industries. Central Oregon economic development efforts have been negatively impacted by a
lack of readily available large-lot industrial sites. Manufacturing employment opportunities in
particular are needed to establish a diversified and thereby more stable and balanced regional
employment outlook. New manufacturing and other high value employment opportunities
require an attractive supply of vacant industrial sites to be competitive in global industrial
recruitment pursuits. New land supply methods are needed, too.
In a structural sense, globalization has changed the way manufacturers conduct business. Cost
and efficiency are the central tenets of an increasingly competitive market. Firms are
increasingly pressured to develop more capital intense production models, place a greater
emphasis on economies of scale, as well as production efficiency and flexibility. Time-to-market
for firms has become an even more crucial factor as they make decisions to locate new plants
and facilities. The result has been the emergence of a clear real estate trend, creating a global
demand for large development ready industrial sites, with the immediacy of utility services
(both public and private sector) of critical importance. Through Oregon's statewide planning
framework, this analysis is intended to evaluate Central Oregon's opportunities ,
competitiveness, ability, and willingness to accommodate recruited and existing firms requiring
new large scale development models.
Successful local and regional industrial recruitment in the 21st Century must consider global
competition factors. Communities, regions and states that focus primarily or exclusively on
outdated governance paradigms are ill suited for keeping up with fast paced global economic
and industrial marketplace changes. Industries must be nimble to be successful in the
competitive global marketplace. Manufacturers must be able to quickly produce new products
at expanded, renovated or new production facilities in “just-in-time” fashion. Often
accomplished through on-site expansion on areas reserved for that purpose, industrial site
selectors must choose sites large enough to build-in future expansion capacity. Government
must be responsive to align its regulatory and process requirements to meet market demands if
it wishes to capture the considerable benefits of high value industria l development.
PAGE 8 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
Site selectors shopping the international marketplace of large-lot industrial sites determine the
type of land supply product they will consider. For an individual vacant industrial site to be
competitive, it must be large enough to offer future expansion on-site. It must be proximate to
other competitive sites and governed by a regulatory structure that is responsive to the needs
of industry.
Within this analysis a large lot industrial site is defined to be 50 acres or larger with specific site
attributes and amenities that appeal to that industry and support its activities. This delineation
is consistent with the State of Oregon’s Certified Industrial Site program, which is Business
Oregon’s primary tool to certify and market industrial si tes as ‘project ready’ within 180 days or
less. The certified sites programs has had a distinct emphasis on large lots with an average size
of 64 acres and more than half of the lots being in assemblages of over 50 acres. There have
been 65 sites certified in Oregon since 2004 and there has been development on more than
50% of those properties. The importance of this inventory is attested by the number of
employers that have located on certified sites, several of which are summarized in Figure 1.
This activity took place despite the fact that the economy was experiencing one of the most
severe recessions in history.
FIGURE 1: EMPLOYMENT ACTIVITY ON CERTIFIED SITES (2009-2010)
Source: Oregon Business Development
So why is lot size often a critical component of a company’s site selection decision? Below are
some technical and market requirements provided by Oregon Business Development that
contribute to lot-size demanded by industrial users:
1) On average, industrial sites are only 40% to 60% developable. While the footprint for
a large facility might only be five or ten acres, requirements for setbacks, access,
parking, and environmental mitigation and avoidance (i.e. wetlands) usually require
more room than the facility itself.
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 9
2) Industries want buffering around their site for a number of very good reasons
(security, storage, and noise). This has been the case for a number of the largest
technology and green-industry related recruitments.
3) Many industries, particularly true in the fast growing clean-energy arena, require
land for expansion for their long-term business plan. While expansion space is not
always taken advantage of, it is an essential part of the site selection strategy due to
the cost of future expansion and the flexibility offered.
4) Large parcels are also a good way to build a cluster of industries around a high
profile anchor business, which proves the value of the location to other businesses
that are less willing to trail-blaze or be first into a region. The anchor businesses
often pull suppliers to the region, further enhancing their economic benefit.
5) Efficiencies can be obtained by clustering industrial users into large master-planned
business parks. Land use efficiencies can be achieved when businesses are a llowed
to develop their facilities as needed, while also having the assurance that there will
be nearby parcels available for future expansion. Energy, water, waste, and material
flows can be streamlined in a park setting where multiple businesses can take
advantage of common infrastructure investments and, in some cases, take
advantage of each other’s energy and waste streams.
The emphasis of this analysis is on “sites” as opposed to land. Firms require sites that can
accommodate their current and anticipated future needs. The traditional formula approach to
industrial land needs determination is based upon population and employment projections
applied to a square footage per employee ratio to arrive at a total acreage number. The
necessary range of parcel sizes, lot configuration, required site attributes, land banking/growth
options, and critical infrastructure factors are essentially de-prioritized, subordinated or
ignored in this traditional static acreage calculation approach. This approach can work for
residential and commercial projections, but is poorly suited to the calculation of industrial site
needs.2
For a region to be attractive enough to motivate industrial site selectors to visit, investigate and
recommend the region, it must offer a diversity of large-lot industrial sites (that are either
served or serviceable) along with all of the other needed support factors including adequately
skilled workforce, workforce training programs, worker housing, supportive local government,
utility services and transportation, and quality of life. Facebook’s recent move to Prineville was
based upon an affordable and adequate water supply, affordable energy prices, year round cool
nights to reduce cooling costs, and various local incentives. The Facebook s ite offered on-site
expansion opportunity that is already being exercised.
2 Unlike office demand, the need for most types of industrial space is difficult to determine using employment projections.
Most industrial uses generate comparatively few jobs per square foot of leasable area, and space needs have little to do with
changes in the number of jobs in production or distribution business…Warehouse and distribution demand (for example) is
usually generated by changes in corporate logistics and freight volumes, not job growth.” Real Estate Market Analysis: Methods
and Case Studies, Second Edition, ULI Press, 2009.
PAGE 10 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
Table 3: Economic Impact of Employment Land
Industry/Sector
Acres
Economic
Impact Per
Acre
Basis of
Impact
Notes on Methodology
Source
Lowe's Distribution 205 $207,500 Payroll +
Multiplier
Potential Impact of Large
distribution Center in
Lebanon
Business Oregon
Solar Cluster 179 $1,400,000 Payroll +
Multiplier
Potential impact of three
firms in Portland,
Hillsboro, and Salem
Business Oregon
Genentech 75 $400,800 Payroll +
Multiplier
Potential Impact Study
Contracted for Incentives
Business Oregon
Title 4 Lands Hillsboro 3,388 $616,000 Payroll No
Multiplier
Industrial Lands in
Hillsboro based on
Employment Data
Business Oregon
Much of the recent demand for large lot industrial comes from rapidly growing industries that
are building production and research capabilities to establish global scale. Addition al demand
comes from industry looking for regional production or as a result of specific logistical concerns
(i.e. location near markets or suppliers, access to specific transportation modes). Warehousing
and distribution is an important component of the economy that keeps international ports
expanding and strengthens Oregon’s export markets for consumer, industrial and agricultural
products.
Major employers in traded sector industries (export industries) are the primary drivers of
economic growth, providing the impetus for net growth in the regional economy and
supporting a wide range of support industries. At the state and local level, policy makers
understand the importance that large-scale employers can have on the local economy. In 2007
Central Oregon was home to three firms with 1,000 or more employees and an additional five
with at least 500. The State's Industrial Site Certification Program has been a success in
coordination with active recruitment efforts. Nevertheless, suitable land for today's industrial
development forms has emerged as one of Oregon's most severe development challenges. As a
region, Central Oregon has specifically targeted basic industries with large lot industrial needs
to support the Region’s economic development objectives.
Figure 2 is a list of some of the annual economic impacts of industrial lands that is based on
operating payrolls and a multiplier that takes into effect spending by the company and its
employees in the region. These impacts are substantial and dwarf t he job and income
productivity of alternative productive land uses (i.e. agriculture, forestry). This is particularly
true in Central Oregon, which has relatively low agricultural yields per acre.
FIGURE 2: ECONOMIC IMPACT OF EMPLOYMENT LAND
Source: Oregon Business Development
Central Oregon’s efforts to identify and promote a number of large lot areas for industry is, in a
national context, relatively modest and completely appropriate for its current size, level of
support services, and current and planned infrastructure. Maintaining a portfolio of competitive
sites ranging from 50 to over 200 acres should result in substantial economic benefits and land
use efficiencies.
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 11
B. Framework for Central Oregon Regional Large Lot Employment Need Analysis
This report is designed to meet the requirements of Oregon Statewide Planning Goal s 9 and 14
and the administrative rule that implements this specific program, OAR 660-0024-0040 and
660-024-0045. This report is a Central Oregon Large Lot Industrial Land Analysis, and is allowed
under the provisions of OAR 660-024-0045(2a).
III. Community Vision
A. Regional Goal and Introduction
Regional Approach
The Central Oregon region (comprised of Jefferson, Crook and Deschutes counties) proposed
regional coordination and cooperation to attract new industrial employers. Economic activity
in the region crosses jurisdictional boundaries, as does the labor force. While geographically
separate, the jurisdictions in the region function in a manner similar to other metropolitan
areas, which often share boundaries. The shared economic function within Central Oregon
supports a regional approach to economic development, particularly with respect to large basic
industries.
Developing a regional short-term supply of large readily available industrial sites will allow
Central Oregon communities to compete for a broader range of economic development
opportunities than they are currently capable of. There are a substantial number of large firms
regularly seeking sites that are not currently available within the region, precluding economic
development organizations such as Business Oregon and EDCO from marketing the area to
these prospects. As attracting this type of activity is not currently part of region al economic
development efforts, providing an ability to appeal to this segment is seen as additive to
existing economic development efforts. In other words, the region’s jurisdictions have
developed Goal 9 compliance based on projected growth reflective of traditional patterns, and
the attraction of a large industrial user would be considered an exogenous impact to these
projections.
The primary economic development objective of this analysis is to ensure that the regional
industrial land inventory is adequate to support the specific needs of large lot industrial users.
As a result, a substantial amount of attention is paid to the site selection process utilized by
candidate firms. Large firms go through a methodical and deliberate site selection proc ess for
“development-ready” sites. Successful recruitment of these firms requires a competitive
selection of “development-ready” sites meeting a variety of physical and locational
requirements. A development-ready site, or a “shovel-ready” site, is defined as a property in
which site improvement can begin within 180 days of purchase and development application.
Such sites are either served or readily served by requisite infrastructure and utilities,
PAGE 12 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
environmental and other constraints are known and documented, and permitting can be fast-
tracked for rapid facility operations.
The geographic region evaluated in the analysis is the Central Oregon Counties of Deschutes,
Jefferson, and Crook. More specifically, the primary urban areas within this broad geographic
region include the Cities of Bend, Redmond, Prineville, Madras, Siste rs, and La Pine. Consistent
with Statewide Planning Goal 9, this process will outline the particular site needs and
characteristics associated with potential targeted industries in the region. An in-depth
inventory of potential suitable sites in the region to meet regional economic goals and
opportunities will be a subsequent work task for the jurisdictions in the region.
While not all jurisdictions are likely to need and/or desire the large lot industrial sites necessary
to accommodate these users, the regional availability of these sites is considered desirable for
all jurisdictions. As an example, a major industrial employer locating in a jurisdiction with an
appropriate site will provide employment opportunities for the regional workforce, as well as
the opportunity for support industries in other jurisdictions. Competing as a cohesive region
allows Central Oregon to market a larger available work force, the size of which is often a key
locational criterion for firms.
The need for large lot industrial sites is a regional need, with the economic development
benefits widely distributed regardless of the specific firm location. While individual jurisdictions
could work towards establishing independent land inventories to meet this prospective need, a
regional approach appeared most responsive to what is seen as a regional issue. The goal of
this regional effort IS NOT to generate an acreage calculation of needed vacant industrial land
supply BUT rather is to identify the variety and size range of vacant industrial sites needed to
make the region attractive to site selectors and competitive in the global marketplace - a
qualitative as well as quantitative outcome. This effort will provide an adequate supply of large
industrial sites to support stable, family-wage jobs in traded sectors in the short-term and to
build future job creation capacity in the long-term (through land banking and a renewing large-
lot industrial land supply) so that established employers do not have to move out of the region
to be quick, efficient, competitive and successful.
This large-lot industrial lands supply initiative exceeds the capacity of any single jurisdiction. It is
an industrial recruitment reality that in order to be competitive, regional clout and appeal along
with a critical mass of diverse, attractive sites is needed. The 21st Century site selection factors
in the global marketplace of industrial recruitment and site development prioritize:
1) Expedited site development with certainty and minimal time delay;
2) Opportunities to expand and/or diversify manufacturing activity on-site, taking
advantage of existing infrastructure and facilities investment; and
3) Availability of a high quality work force and training programs.
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 13
Central Oregon has the potential to compete well under these criteria as a region, but not as
individual jurisdictions. It is due to the Central Oregon quality of life factor that so many people
and businesses have relocated to the region in the past decade. This region has been the fastest
growing in the state. The same quality of life amenities in Central Oregon that have attracted so
many new residents is a major draw and appeal for new industries looking to locate a facility.
These industries want to locate in an appealing living enviro nment that will serve to attract and
retain talented and valued employees.
B. Community Vision Statement
The project’s Regional Advisory Committee developed a community vision, which summarizes
what the region’s economic development goals are as they particularly relate to large lot
industrial demand. The following is the stated vision:
To build a strong and thriving regional economy by establishing and actively
maintaining a competitive portfolio of large lot employment sites and
coordinating public investments, policies and regulations to support regional and
state economic development objectives.
As outlined in the vision statement, the region is concerned with maintaining a competitive
portfolio of large lot industrial sites. This is viewed as supportive of regional and statewide
economic development objectives. In addition, the vision supports a coordination of
investments and policies to this end. Consistent with this vision, the focus of this analysis is on
the establishment and maintenance of a short-term competitive supply of large lot industrial
sites that are “development ready,” which are available to allow the region to compete for
major industrial employers cross shopping the region against other potential locations.
IV. Trend Analysis
A. National Economic Trends
Introduction
The trend analysis section provides the foundation of economic information that will shape
realizable economic opportunities potential for a jurisdiction, resulting potential job growth
scenarios, and ultimately employment land need over the planning horizon. In the trend
analysis, it is understood that the region, state, and nation as a whole are currently navigating
economic conditions not seen in a generation. Ultimately, current economic conditions make it
difficult to produce highly timely national trend analysis. Johnson Reid therefore, heavily utilizes
the economic forecast "of record" by the federal government, the non -partisan Congressional
Budget Office biannual economic forecast.
PAGE 14 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
Short-Term Outlook
Gross Domestic Product
Over the previous two quarters, economic growth has stabilized with a noticeable rebound as
federal stimulus spending has filtered into the economy and businesses inventory
replenishment has spurred manufacturing activity. Growth in the first quarter measured a 3.2%
increase following a 5.6% increase during the previous quarter. However, economic growth, as
the recovery takes hold is likely to remain muted in the near term in light of existing economic
turmoil, and continued uncertainly of financial markets. On the basis of previous recessions and
recoveries, the following factors are also expected to contribute to a more measured recovery
period.3
Evidence from the United States and other countries suggest that recovery from
recessions triggered by financial crisis and large declines in asset prices tends to be more
protracted.
Changes in federal stimulus: While federal stimulus spending associated with the
American Recovery and Reinvestment Act (ARRA) may have helped moderate the
severity of the recession in 2009, its effects are beginning to fade.
Loss of investment income and more limited availability of credit are likely to limit
growth in consumer spending in the near term.
FIGURE 3: NEAR-TERM GROSS DOMESTIC PRODUCT
3 Congressional Budget Office. "The Budget and Economic Outlook" January 2010.
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 15
GDP growth during 2010 averaged a 2.9% annualized rate of growth, and is projected to expand
modestly in a range from 2.8% to 2.9% through 2013.
Employment
Since the beginning of the recession, payroll employment has fallen by greater than 7 million
jobs, reflecting both the loss of employment and a drop in the labor force. A signature element
of the current recession has been both the depth and duration of employment losses from the
peak period of the economic cycle as determined by the National Bureau of Ec onomic
Research. As of June 2010 the current recession is expected to be the deepest and most lengthy
period of sustained unemployment since the Great Depression.
FIGURE 4: NATIONAL UNEMPLOYMENT TREND
At current, unemployment remains at a seasonally adjusted rate of 9.5%, down slightly from its
October peak of 10.1%. The unemployment rate is expected to remain high, and lag the
broader economic recovery as there is significant slack in the economy. As the jobs situation
begins to recover, workers who have quit pursuing employment are likely to reenter the labor
force, delaying unemployment recovery. However, it appears that the national employment
situation is stabilizing, with the pace of year-over-year job losses declining since the first
quarter of 2009 and finally turning positive by the beginning of 2010.
PAGE 16 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
1 In Millions of Chained (2005) dollars, Seasonally Adjusted
SOURCE: Bureau of Economic Analysis
$9,050,000
$9,100,000
$9,150,000
$9,200,000
$9,250,000
$9,300,000
$9,350,000
$9,400,000
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10
Pe
r
s
o
n
a
l
C
o
n
s
u
m
p
t
i
o
n
E
x
p
e
n
d
i
t
u
r
e
s
1
FIGURE 5: YEAR-OVER-YEAR EMPLOYMENT CHANGE, UNITED STATES
Consumer Spending
While a recent upward trend is an encouraging sign of recovery, spending by households is
likely to remain constrained by slow income growth, lost wealth, and limited credit availability.
Similarly, the overbuilding of residential and commercial space and units exhibited during the
real estate bubble created sizable vacancies in both sectors. Subsequently, a rebound in
investment spending is likely to be much slower than in a typical recovery period. In the near
term consumer spending growth is expected to come in below its long-term average.
FIGURE 6: PERSONAL CONSUMPTION EXPENDITURES
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 17
Other Factors
Housing Starts have remained stable since mid-2009 and were actually up 17% in the
first quarter on a year-over-year basis. However, the current rate of housing starts
remains noticeably weak and is just over a third of the 15-year average.
Asset Prices remain highly volatile in light of broad based economic and to a certain
extent political uncertainty. Since January of 2008 the Dow Jones Industrial Average has
displayed a Hi-Low range of roughly 5,000 points.
Inflation in the United States remains low. At 1.7%, change in the Consumer Price Index
is low relative to historical averages. Reflecting a large amount of slack remaining in the
economy, inflation risk is low, and is expected to, at best, remain unchanged, and
possibly decline further in the near-term. If this trend holds true, the impact will likely
be a stable monetary policy with the Federal Reserve keeping its target rate low for
some time.
Federal Debt held by the public as a percentage of total output has reached its highest
level since World War II. Under current policies this condition is expected to exacerbate
further. Persistent deficits can have severe economic consequences, including the
crowding out of private investment, limiting the effective use of fiscal policy, and
increasing the risk of a fiscal crisis.
Long-Term Outlook
During the first half of the next growth cycle, GDP is forecasted to grow rapidly enough to close
the considerable gap between existing and potential GDP. Beyond the near -term, the United
States economy is expected to return to a typical growth cycle and growth at roughly the same
pace as potential output, averaging 2.4% annual growth between 2015 and 2020. While growth
patterns are expected to return to normal, economic growth in the coming decade is likely to
be more measured relative to historical averages. Factors moderating long-term economic
growth include:
Demographic factors are expected to create a reduction in the potential labor force and
potential hours worked, which account for three-fourths of the economy.
Federal Debt will increasingly displace business investment and thus growth in capital
services.
Total factor productivity growth is forecasted to average 1.3% annual growth, slightly
above its average rate of growth since the productivity s lowdown of the 1970s but
below the 60-year average.
PAGE 18 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
FIGURE 7: LONG-TERM GDP FORECAST
Inflation, as measured
by the PCE price index will average 1.7% annually during the latter half of the coming decade.
The Federal Reserve will continue to use its monetary influence to control inflation risk in the
next cycle. The Fed is expected to maintain the rate of PCE near the top of its target range.
Long-term unemployment is expected to average 5% during the latter half of the decade,
roughly equivalent to what is considered to be the natural rate of unemployment. Over the
next ten years, the U.S economy is expected to add over 14 million employment positions
according to the Bureau of Labor Statistics (BLS). The national economy is forecasted to
continue its exhibited trend toward more service oriented industries. A staggering 62% of new
employment is expected to be concentrated in only two industries, Education & Health
Services, and Professional & Business Services. Over the forecast-term, only the Manufacturing
and Mining & Logging industries are expected to contract in size.
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 19
FIGURE 8: NATIONAL EMPLOYMENT FORECAST BY INDUSTRY 2010-2020
Factors affecting economic growth moving forward
Financial Markets: The financial situation of many banks remains delicate; however, the
risk of further deterioration is moderating. Ease and cost of credit is likely to be more
limited moving forward, but far improved from current conditions.
Monetary Policy: The Federal Reserve is likely to continue aggressive monetary support
for the economic recovery until the risk of higher inflation outweighs the risk of
economic deterioration. The recent economic crisis saw the Fed take a larger and more
nontraditional role in its monetary influence, namely the purc hase of large amounts of
mortgage backed securities on the open market. This has created a more complicated
view of Fed influence and monetary policy actions. With nearly twice its pre-recession
asset holding, the Fed can now withdraw monetary influence by either raising its target
Federal Funds Rate or reducing its asset holding.
Fiscal Policy: The fiscal impacts of the ARRA have already begun to wane and are
expected to turn negative by 2011. Moving forward, mounting federal deficits could
limit the government's fiscal capabilities in the long-term while placing upward pressure
on tax rates.
Investment: Inventory levels are beginning to equalize, and firms are more likely to
increase production to more closely match sales. However, the spread between ho using
vacancies and housing starts remains high, and a rebound in housing investment is
unlikely until later in the cycle. Investment in durable equipment and software is
expected to lead the recovery. Many industry sources predict a “pent up” demand for
PAGE 20 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
facilities and equipment that will materialize in terms of companies seeking immediate,
development-ready locations.
Consumer Spending: Growth is expected to remain protracted through 2011.
Persistently high unemployment will limit income growth and dampen consumer
spending growth even further.
B. State Economic Trends
General Industry Trends
Oregon experienced exceptional employment growth between mid-2003 and 2007. Growth
began slowing towards the end of 2006 and continued through 2007. The Oregon Employment
Department’s employment estimates for second quarter 2010 indicate that Oregon is following
the U.S. economy with decreasing job losses and a turning point in the unemployment rate.
Figure 7 demonstrates how closely tied the Oregon economy is to economic trends at the
national level. Since 1939, Oregon has tracked the peaks and valleys of the U.S. economy. Also
illustrated is improved diversity in Oregon’s economy as evidenced by alleviation of the
volatility that plagued Oregon during the 1980’s recession.
FIGURE 9: U.S. AND OREGON HISTORICAL EMPLOYMENT TREND: 1939-2009
Oregon’s economic growth since 2005, but prior to the current precipitous slowdown, is due in
large part to explosive growth in exports. For example, between first quarter 2007 and first
quarter 2008, Oregon exports increased by 23.7%, more than six points higher than the U.S.
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 21
growth during the same period. Oregon’s export growth is primarily due to export growth in
agricultural products which grew by 82.2% and computer and electronics products which grew
by 24.8%. Computer and electronics account for nearly 40% of total Oregon exports. Several
other industries experienced high growth in exports during the same period: Waste and Scrap
(+71.6%), Nonmetallic Mineral Products (+54.0%), Chemicals (+47.6%), Primary Metal
Manufacturing (+31.0%), Miscellaneous Manufactured Commodities (+26.0%) and Wood
Products (+23.8%).
Industry Analysis
The first quarter of 2010 represented the first positive quarterly job increase since 2008. Figure
8 outlines a breakdown of Oregon's primary industries, where they appear to be in the cycle,
and forecasts of growth over the near-term. Almost all service sectors posted seasonally
adjusted job growth in early 2010. Housing market dynamics are expected to continue dragging
down the Construction and Financial Activities Sectors in the near-term, but growth should turn
positive in 2011. A similar trend is anticipated for Oregon's Wood Products industry. Positive
spots in the economy include High-Tech Manufacturing, Food Processing, and Education &
Health Services.
PAGE 22 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
FIGURE 10: OREGON ECONOMIC CONDITIONS AND ESTIMATES BY INDUSTRY
Economic Recovery Prospects
In the State of Oregon, the consensus among economists is that the State economy is holding in
a soft-patch period, as federal stimulus and inventory investment fade by the th ird quarter of
2010. Businesses are beginning to feel better about the economy, while persistently high
unemployment has kept consumer sentiment down. However, the outlook for Oregon is
positive relative to other parts of the nation. In the most recent pub lication of the Federal
Reserve Bank of Philadelphia's Coincident Index of Economic Indicators, Oregon posted a 1.2%
improvement, ranking 13th in the country and 1st in the West. Moreover, according to the
Oregon Office of Economic Analysis (OEA), Oregon's risk of slipping into recession is now
currently below the 50% mark for the first time since late 2007.
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 23
FIGURE 11: FEDERAL RESERVE BANK OF PHILADELPHIA'S COINCIDENT INDEX OF ECONOMIC
INDICATORS
Employment Factors
Similar to trends at the national level, the State of Oregon began exhibiting a decrease rate of
job losses (on a year-over-year basis) beginning by mid-2009. However, at the state level jobs
have yet to turn positive but are certainly trending in a positive direction. The State's
unemployment rate has moved in a positive direction, down to 10.5% from a 2009 peak of
11.6%, seasonally adjusted. Nevertheless, Oregon's rate remains elevated relative to the
national average.
PAGE 24 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
FIGURE 12: YEAR-OVER-YEAR EMPLOYMENT CHANGE, STATE OF OREGON
Over the longer-term, Oregon’s economic growth is expected to outpace growth at the national
level. By 2018, the State’s employment is expected to grow by over 14% with Oregon's
population growing by 9% over the same interval. Additionally, Global Insight, a national leader
in economic forecasting, project's Oregon's Growth State Product to have the second highest
growth rate in the nation in the coming years. Oregon’s high growth prospects are due to a
number of factors:
Population growth, primarily due to net in-migration
Relative location near Canada and Asian countries
High commodity prices
Export growth
Business Cost Advantages
Affordable housing
Biotechnology and Clean Technology
Renewable Energy and Sustainable Development
Quality of life
State tax incentives, including the Single Sales Factor Tax
Through 2017, the OEA forecasts 223,000 new jobs in the Oregon economy. Mirroring national
forecasts, a significant share (41%) are expected to fall in Professional & Business Services and
Health Services. The state is expected to add over 25,000 new manufacturing jobs based on the
2010 base, roughly 8,000 of which are expected to be high wage High Tech Manufacturing jobs.
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 25
FIGURE 13: FORECASTED EMPLOYMENT GROWTH BY INDUSTRY, STATE OF OREGON 2010-2017
Risk Factors
While signs of systematic economic recovery are emerging, the State of Oregon still faces
notable downside risk in key sectors. Housing and real estate remain weak, and Oregon's
dependence on the stability of export markets is a regular con cern. Other factors which could
affect the Oregon's economic outlook include:
Credit Markets: While conditions are improving, consumers and businesses are still facing
greater difficulty getting loans relative to the previous cycle. This is also a risk re flected
nationwide.
Prolonged Housing Market Weakness: While signs are emerging that the housing market
has hit bottom, a full housing recovery remains several years off. However, Oregon has
fared better than most western states, and if the economic recov ery beats expectations,
Oregon will be better off than most of the region.
Fading Inventory Cycle and Federal Stimulus: Much like in the national analysis, these two
metrics are credited with propping up the economy over the previous two quarters. With
support broadly expected to wane, uncertainty is on the horizon.
Global Economic Conditions: As mentioned previously, Oregon's economy is highly export
based and Oregon has above average exposure to global economic conditions, particularly
conditions among its major trading partners. Expectations for economic growth in Asian
countries such as China are a positive sign for Oregon.
Construction
Manufacturing
Wood Products
High Tech
Transportation & Equipment
Retail Trade
Wholesale Trade
Information
Professional & Business
Health Services
Leisure & Hospitality
Government
SOURCE : Oregon Office of Economic Analysis (OEA)
16,900
25,600
4,300
8,000
1,500
13,800
12,700
3,100
54,800
37,600
15,600
18,400
-10,000 20,000 30,000 40,000 50,000 60,000
Jobs
PAGE 26 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
Energy Prices: Currently low energy prices relative to the previous cycle will be a short-term
boon for the economy, as businesses with the ability will chase cost savings. However, price
increases are expected to return commensurate with broad based economic recovery, and
maintaining a cost based competitive advantage is likely to be central to Oregon's economic
development success.
C. Local Trends and Conditions
Economic Factors
The Central Oregon economy was historically dominated by Wood Products Manufacturing and
Natural Resources. In recent decades, this changed dramatically as population influences and
tourism activity spurred growth in service oriented industries and manufacturing diversity.
Central Oregon became among the fastest growing regions in the West. A ffluent new residents
attracted to the region's quality of life brought wealth from outside the region, fueling demand
for services and housing with the infusion of their disposable income. Central Oregon was
among the hardest hit regions in the state during the current recession, with unemployment
rates remaining near 15% in the current quarter, significantly higher than the statewide
average.
FIGURE 14: COMPARATIVE UNEMPLOYMENT ANALYSIS 2003-CURRENT
Several key factors have contributed to both the depth and duration of Central Oregon's
economic weakness. Firstly, industries that supplied goods and services to Central Oregon's real
estate development market and served a rapidly growing population were largely responsible
for its robust economic expansion. With the bursting of the housing bubble in 2007, the
concentration of the regional economy dependent on real estate development created an
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 27
economic contraction as dramatic as its rise. Central Oregon has lost one in four construction
jobs since the peak of the cycle.
Secondly, Central Oregon's new service concentrated economy is far more susceptible to
changes in consumer sentiment and disposable income. The national recession's impact on
tourism markets, consumer spending, and the acquisition of vac ation properties or second
homes compounded Central Oregon's decline. The Central Oregon economy was highly
dependent upon “discretionary” activity, which tends to be very cyclical.
Thirdly, unemployment in Central Oregon has remained persistently high in part as the result of
continued population growth attracted to the region’s quality of life. Central Oregon
maintained positive in-migration through 2009. Coupled with stagnated employment growth,
this in effect has kept unemployment high by maintaining higher labor force levels.
Population
Central Oregon's dramatic Population rise was largely the effect of significant in -migration.
During the 2000-2009 decade, Central Oregon averaged 4.0% annual population growth while
adding more 65,500 new residents. Despite an influx of retirement age residents, 55% of
residents are working age between the age of 25 and 64. This is consistent with the statewide
average.
FIGURE 15: LOCAL POPULATION GROWTH TREND
The City of Bend is the primary population hub in the region, accounting for 37% of the regional
population and 44% of growth during the last decade. Over the next 20 -years, the OEA
estimates Central Oregon will continue demographic growth at a 2.1% annual pace adding
45,000 new residents by 2020. However, this State developed rate of growth may be slightly
PAGE 28 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
conservative in nature, Deschutes County's 2004 coordinated population forecast is projecting
47,000 new residents in Deschutes County alone over the same interval.
Education
An area’s level of educational attainment is often used as a proxy for the skill level of the
population base. From an economic development perspective, Central Oregon is consistent
with regional averages, with 29% of the working age population having at least a bachelor’s
degree. However, a 2010 study of Central Oregon's (Deschutes County) competitiveness
evaluated Central Oregon in light of a sample of competitive economic peers in the west. The
study found Central Oregon to be in the middle of the road relative to its pee rs. An educated
and skilled workforce is a competitive asset among Central Oregon's target industries. An
inability to "stand out" in this metric may limit the region's ability to recruit employers within
specific industries.
FIGURE 16: COMPARISON OF EDUCATIONAL ATTAINMENT
Wages
Since 2002, wage levels in Central Oregon have averaged a 3.2% annual rate of growth,
comparatively better than a 2.8% annual growth rate at the State level. Deschutes County's
average 2009 wage level of $35,295 was well below the statewide average. Lower relative wage
rates coupled with housing affordability concerns can limit the region's ability to attract a high
quality workforce to the region.
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 29
FIGURE 17: CENTRAL OREGON WAGE TRENDS
V. Target Industry Analysis
A. Large-lot Trends and Dynamics
Changes in global business patterns have pressured firms to develop more capital intense
production models, placed a greater emphasis on economies of scale, as well as production
efficiency and flexibility. The result has been the emergence of a clear real estate trend,
creating a global demand for large development ready industrial sites. As such, large,
development ready sites have emerged as one of Oregon's most severe development
challenges.
Workforce characteristics, quality of life, proximity to large U.S. West Coast markets, and
coordinated public involvement and recruitment have landed Oregon "on the radar" of many
large-scale projects shopping for sites in the United States. Many of these projects have been
concentrated in cutting edge industries important to the State of Oregon's economic
development targets. The state and region have had measured success in the placement of
large-scale projects, with lack of suitable sites (size & infrastructure), lack of market cho ice, and
time duration to entitle and develop sites commonly cited as development constraints.
Large scale global firms represent an important prospective economic development engine for
the state and region. Global scale firms have the ability to open n ew markets, bring cutting
edge technology to the region, are associated with high wage jobs, and expend significant
capital investment. As an additional benefit, the high assessed value of these projects
contribute significantly to the stability of the tax base that allows provision of necessary
services to all residents of the region. Therefore, the goal of this process is to evaluate Central
Oregon's opportunities for large scale economic growth in light of statewide planning goals and
practices, as well as land and infrastructure availability.
SOURCE: Oregon Employment Department, Covered Employment Survey
$28,253
$29,124
$30,091
$31,491
$33,324
$34,315
$35,047 $35,295
$20,000
$22,000
$24,000
$26,000
$28,000
$30,000
$32,000
$34,000
$36,000
$38,000
2002 2003 2004 2005 2006 2007 2008 2009
Av
e
r
a
g
e
A
n
n
u
a
l
W
a
g
e
$40,740
$46,233
$35,295
$20,000 $27,500 $35,000 $42,500 $50,000
Oregon
Portland Metro
Bend MSA
Average Annual Wage
PAGE 30 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
Large-Lot Trends
Shifting global market factors have increased the need for large lot industrial sites over the last
several decades. Warehouse properties have substantially increased in size as distribution
reflects increasing returns to scale as well as the concentration of production in larger
production facilities. Production facilities are also increasingly scaled for global as opposed to
regional or national needs. The following are examples of recent ware house projects that have
located to the State of Oregon, as compiled by Business Oregon:
Jurisdiction Tenant Site Size Square Footage
Albany Target 175 acres 1.3 million
Hermiston Wal Mart 200 acres 1.3 million
Lebanon Lowes 204 acres +1.3 million
Salem Home Depot 50 acres 500,000
As shown in the preceding table, the emerging module for distribution facilities now regularly
tops 1.0 million square feet of building area, with site sizes in excess of 200 acres. Over 55
projects have shopped the State of Oregon over the last ten years with site demand over 50
acres, averaging over 5 new projects per year. Business Oregon currently has 10 estimated
outstanding leads in this size category.
Manufacturing has also shifted to larger site needs, with examples including Genentech,
SolarWorld and Intel’s new expansion in Hillsboro. Each of these required sites are in excess of
50 acres in size, with Intel’s located on land held in reserve adjacent to a currently opera ting
facility. While these projects show a need for large sites, they also speak to a desire for even
larger sites than immediately needed to provide flexibility. While Intel didn’t immediately need
the land used for their recent expansion when building the initial Ronler Acres facility, the
flexibility provided by this excess property made the site more competitive vis-à-vis alternative
locations that had a greater probability of limiting future expansion options.
Business Oregon estimates that they see approximately 15 serious inquiries a year for large
scale manufacturing sites. Combined with warehouse/distribution inquiries, Business Oregon
sees over 20 annual inquiries a year statewide for large lot industrial sites. As not all leads are
picked up by Business Oregon, one would expect the overall activity to be significantly higher.
Economic Development for Central Oregon (EDCO) is currently working with 72 companies
seriously considering a location in Central Oregon, of which five would require a site 20 -50
acres in size, while three would require a site in excess of 100 acres. Industries that have
contacted EDCO for large acreage sites include the following:
Distribution and warehousing;
Data centers;
Renewable energy equipment manufacturing;
Energy production facilities (biomass, solar, geothermal, synthetic fuels);
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 31
High technology; and
General durable goods manufacturing.
Johnson Reid completed a survey of industrial brokers active within the State of Oregon in
2010, asking a series of questions with respect to market activity for large lot industrial sites.
These surveys revealed the following:
Industrial brokers surveyed fielded an estimate of eleven 50+ acre parcel queries
annually over the last ten years, largely by technology manufacturers and
warehouse/distribution users.
Technology manufacturers comprised 35% of all 50+ acre site queries over the last
decade, indicating continued viability and continued growth potential for the cluster.
For every public lead that generated a large site query fielded by a broker, private
brokerages fielded nearly 3 large site queries independent of public economic
development involvement.
The State loses at least one large site query annually due explicitly to site unavailability,
however Johnson Reid concludes more are also likely lost due to site unavailability but
limited broker involvement and firm confidentiality prevent verification.
Almost one of every three sites purchased by large users over the last ten years has not
yet realized development. In other words supply capacity should include at least 33%
land investment and “transaction demand” capacity to enable firms adequate choice for
the large site market to function.
In summary, Business Oregon fields over 20 inquiries annually for large lot industrial land, while
EDCO fields an additional amount. If the broker experience holds true, the actual volume of
prospective site queries is in excess of 80 annually statewide.
Importance of Large-Lot Supply and Market Choice
Oregon is entering an increasingly competitive dynamic in the recruitment and retention of
global large scale employers and producers. In their search for suitable site locations for
business expansion, firms typically follow a site selection process and evaluation of regional
characteristics and livability, workforce/industry dynamics, operating costs/incentives, and
availability of a selection of sites ready for immediate development. A development-ready site,
or a “shovel-ready” site, is one in which site improvement can begin within 180 days of
purchase and development application. Such sites are served by requisit e infrastructure and
utilities, environmental and other constraints are known and documented, and permitting can
be fast-tracked for rapid facility operations. Many large business location searches are
conducted by hired site selectors; their task is to present their clients with a “short list” of
feasible options. Because of their mandate, site selectors admittedly look for reasons to
remove sites from consideration because of some inadequacy in characteristics; their job is not
to keep sites in consideration based on promised improvements in any deficient condition.
PAGE 32 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
Johnson Reid has organized this process
into a simple model that follows the
progression of firms' decision criteria in
location analysis. In addition to
identifying a progression of selection
criteria, Johnson Reid have found land
diversity and market choice to be of
particular importance. Industrial
recruiters at Business Oregon and other
entities around the state strongly assert
that a lack of sites puts Oregon at a
distinct competitive disadvantage relative
to competitor communities across the
nation. The consensus has emerged that
a general lack of development-ready sites
to choose from eliminates a city or region from contention very early in the site selection
process. Moreover, market choice among several sites further preserves price stability and
transaction certainty that tends to deteriorate in a single-seller scenario, threatening placement
of potential firm.
Additional industrial development and business trends affecting large-lot industrial demand
include:
Companies trending toward expanded portfolios.
Among key industries such as high-tech/renewable energy manufacturing and
biosciences, evolving production models requiring substantial capital investment and
reinvestment have created a need for land capacity beyond current needs. Firms require
land holdings with flexibility and expansion capacity. The value of this flexibility to a
firm exceeds the marginal cost of holding land for many firms, leading to firms seeking
sites often well in excess of immediate space needs.
Higher fuel and energy costs are forcing firms into more regionally distinct operations
for sourcing their raw materials and/or distributing their finished products.
Large, available vacant structures are a popular commodity for some industries where
time-to-market is a critical element of location decisions.
Location incentives are playing an increasing role in location criteria, at least in the
context of “leveling the playing field” among competitor lo cations.
Low cost, high capacity existing utility infrastructure is emerging as a deterministic
quality in site criteria for many targeted industries; if capacity does not currently exist it
must be available within the project timelines for sites to remain in consideration.
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 33
For most companies making location decisions, land is a “means to an end”; that is, they need
the land to locate some kind of facility so they can produce the product or service that is their
primary business. They want:
Diverse sites in a region to choose from in the early stages of their search; most
companies want to pick and choose.
A single point of contact/negotiation; companies are not interested in protracted
negotiations with multiple parties; they want the process to be as quic k and painless as
possible.
Prospects are very concerned how the land procurement process affects their project
time lines and ultimate time-to-market of their product; often, in fact, the actual land
price is of lesser consideration to the company than how quickly and easily the
property transaction moves forward.
Prospects are highly unlikely to be patient when it comes to services (water,
wastewater, power); the availability of service needs to fit into the project timeline,
and not be a roadblock issue.
Assembling multiple smaller parcels into a cohesive “large lot” product can be a very difficult task.
Among the barriers to land assemblies are:
Property owners unwilling to sell (for many reasons: price, tax impact, sentimental
value, replacement costs, and viable alternative locations).
The sheer cost of the land; owners have an inflated expectation, or perhaps only one
ownership out of a larger site assembly is a problem.
Ownership interests are fractured (often true in family inheritance situations); this issue
often is combined with absentee ownership, so that owners don’t really have a “stake”
in the transaction and its impact on the community.
Regulatory environment (zoning, environmental overlays, mandated parcel size).
Infrastructure demands caused by land assembly, and the commensurate ability to
finance necessary improvements.
Legal issues, including clear title, easements, and encumbrances.
As these possible barriers are viewed from the standpoint of the business making a location
decision, it is not difficult to perceive why multiple parcels often represent a “deal -killer” to
companies who do not have the time, patience, or expertise to wade through a possible
quagmire of issues.
The key to the site selection process is that it is essenti al for candidate sites to be truly
development-ready instead of simply “buildable”. A general lack of development -ready sites to
choose from eliminates a city or region from contention early in the site selection process. In
addition, firms in the site selection process prefer to have multiple options within a region that
PAGE 34 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
meet their criteria. Ideally this would include multiple ownerships, as well as multiple
jurisdictions. This allows for competitive pricing, a wider range of options, as well as making
the area more attractive for site visitation.
Competitive Inventories
While the State’s land use system is concerned with meeting demand over the next 20 -years, of
more critical importance is the availability and maintenance of a competitive inventory o f
readily available sites. As the Central Oregon region considers new, large industrial site supply,
the region specifically seeks to provide a supply of large, development -ready sites that is
competitive with other markets nationwide.
Johnson Reid prepared a number of surveys over the last several years, documenting the supply
of development-ready site inventory (180-day) marketed by national competitors. Johnson
Reid would underscore that at least two of the competitors shown – Albuquerque and Austin –
have identified replacement industrial land supply exceeding a thousand acres according to
officials interviewed. The City of Hillsboro is also actively working towards increasing its large
lot industrial acreage inventory.
Many site selectors will require the ability to review multiple options in the region in order to
reduce the risks associated with varying levels of environmental mitigation, local government
policy, site avoidance factors and planned levels of infrastructure utility investment.
Central Oregon competes with regions across the country that offer significantly greater
development-ready industrial land supply, selection, diversity, and lower land cost. Continued
inability to factor competitiveness as borne out by surveyed indust rial broker activity, including
diversity of large industrial site supply and competitive cost, sacrifices the region’s long -term
competitiveness for these key industries. As noted by EDCO, “with many options (depending
upon the geographic scope of the search) we have seen a resistance by site selectors, corporate
real estate professionals and company representatives to invest the time and travel to visit the
region without more than just one or two large lots to consider.”
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 35
B. Strengths and Challenges in the Central Oregon Economy
In June of 2010 Deschutes County and the consultant team moderated the Central Oregon
Industrial Lands Forum. Participants in the forum discussed economic development trends at a
national and regional level, as well as specific opportunities and challenges for Central Oregon.
In this section, the findings of this session are summarized, as well as additional input from the
Regional Advisory Committee and the consultant team. The Central Oregon region has a
number of strengths with respect to economic development, including the following key
attributes:
Quality of Life – The region’s extensive recreation amenities and commercial services
base are a substantial advantage. While the concentration of destination r esorts in the
area attest to the attractiveness of these assets, their existence also supports a much
more substantial services amenity base than the full-time population could support.
This makes it easier to attract executives as well as a quality work force. With
advancements in telecommunications, firms are more footloose now than traditionally,
and quality of life criteria play a greater role in location decisions.
Access – The Central Oregon communities serve as the commercial hub of a much
broader rural area. In addition, Highway 97 provides a major north/south alternative to
Interstate 5. Central Oregon’s location makes it a natural commercial services hub for a
very broad area. While Highway 97 is not perceived to be of equal value as Interst ate 5
as a north/south link, its function is equivalent and sometime superior for many
prospective firms.
Commercial Air Service – The Redmond Municipal Airport provides commercial service
links, while Bend, Madras and Prineville have general aviation airports. This is
supportive of firms making location decisions for quality of life reasons, while still
maintaining a functional and convenient link to major metropolitan areas.
Rail – The region has made major investments in the Regional Freight Depot, supported
by Connect Oregon grants.
Natural Resource Proximity.
The primary challenges facing the area are related to scale and accessibility. While the region
as a whole has a significant population base, none of the jurisdictions are considered large
enough to meet many firms initial screening. In addition, Central Oregon’s distance from the
Interstate system is a major impediment for many prospective firms.
The competitive characteristics of Central Oregon can be strengthened through a regional
approach. Individual jurisdictions in the region are too small to be considered viable candidates
for many of the targeted firms. The region acts as a cohesive economic unit, sharing work force
and commercial amenities, and should be marketed as such to increase its perceived scale in
the market. The following is a more detailed profile of the individual strengths and challenges
PAGE 36 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
facing each of Central Oregon's major communities with respect to the suitability for large -lot
industrial.4
Madras (Jefferson County)
The City of Madras has some strong industrial sites near the airport, including large lot
industrial properties with rail access. The City’s position at the intersection of Highways 26 and
97 provides logistical advantages, particularly for firms needing access to the Portland
metropolitan area and Interstate 84. The airport is also a major facility that provides an
amenity for certain businesses. Within Central Oregon, the Madras area is at the northern edge
of the population and economic base, placing it at a disadvantage for regional distribution as
well as for firms looking for large work forces.
Strengths/Advantages Challenges/Disadvantages
Industrial airport The Oregon Transportation Planning Rule is
an issue on Hwy 97
Airport has improvements scheduled There is no a continuous 4-lane highway
between Madras and Bend
Available industrial sites proximate to rail Relative skill set of work force
Opal Springs provides ample water Some areas do not have large surplus of gas
and electricity
Strong agricultural and manufacturing section
businesses
Most proximate to the Portland metro area
Most proximate to I-84
Highways 97 and 26 run through middle of
Madras
Development costs substantially than other
Central Oregon cities
La Pine (Deschutes County)5
La Pine is Oregon’s newest City, incorporated in December 2006. La Pine has a state certified
shovel ready site and is well-suited for the REOA short term plan. Past challenges with the
water and sewer districts have been resolved by mutual agreement between the La Pine Water
and Sewer Districts and the City of La Pine.
4 Profiles gathered from the June 28, 2010 Central Oregon Industrial Lands Forum.
5 During the adoption process for Ordinance 2011-017, stakeholders from La Pine wanted La Pine's strengths and weaknesses
to reflect new information.
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 37
Strengths/Advantages Challenges/Disadvantages
State of Oregon Certified Shovel-ready 50+ acre
industrial site available and proximate to rail
Sewer and water districts – in transition to
the city. To be absorbed by the City early
to mid-2012
Neighboring small and medium sites available for
a variety of options
Transportation challenges; TSP to be
completed by mid-2012
The most favorable electric rates in Central
Oregon
City codes adopted and scheduled to be
implemented early 2012
More than adequate water and sewer capacity
for new industry Need large “keystone” employer
A new flexible land use code and supportive city
leaders
The county is in control of some industrial sites
Enterprise Zone, for tax relief for new or
expanded industry
La Pine is well connected to 3 major economic
hubs - Central Oregon, Eugene and Klamath
County. Conveniently located near Highway 97
and Highway 31. Highway 58 is 27 miles to the
south and is a direct route to I-5 and Eugene.
BNSF rail mainline thru industrial park. Near
passenger rail line. “Best Rail Industrial site in
Central Oregon.”
Low housing costs. Riverfront homes, ranches,
and community neighborhoods are available.
La Pine has a large labor pool of skilled labor and
diverse population with extensive work
experience as indicated by large amount of
commuters traveling north.
Hub of Central Oregon’s year-round outdoor
recreation paradise. Gateway to Cascade Lakes
National Scenic Byway, Newberry National
Volcanic Monument and National Oregon
Outback Scenic Byway.”
Prineville (Crook County)
While the City of Prineville is located at the eastern edge of the Central Oregon region, it has
strong rail access and relatively easy truck/auto access to Redmond, Madras and Bend. The
Regional Freight Depot represents a major public investment. The Ci ty has a reputation as
being business friendly, and the recent siting of Facebook has raised the jurisdiction’s profile in
economic development circles. The area has excellent and affordable housing stock. While the
City has a number of industrial sites, many of these are either poorly located or constrained.
The City has historically competed well within the region as a relatively low cost location with a
strong labor force, but this advantage has diminished somewhat with the declines in the
region’s real estate markets. Sites at the western edge of town are best located to serve
regional needs.
PAGE 38 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
Strengths/Advantages Challenges/Disadvantages
Ease of permitting Sites are a distance off Hwy. 97 and Hwy. 126
has limited capacity
Rail access/freight depot – City owned and
operated short line rail service and the
Regional Freight Depot
Grade differentials in sites make some easier
to serve via rail (lower level) than others
(higher level)
General aviation airport adjacent to industrial
properties with expansion underway
Ochoco Lumber mill site bordered by 2
highways so “double indemnity” for any
development activity triggering TPR issues.
Recognized as future mixed use site.
Larger, available workforce
Potential large lot industrial lands not
protected under current zoning from splitting
into smaller parcels.
Somewhat warmer climate, but cool evenings Water supply challenges
Community welcoming of
development/newcomers/jobs
Prineville is centrally located to
Redmond/Bend with relatively lower
priced land for industrial use to other Central
Oregon area
Facebook data center under development at
airport location causing high interest by other
firms seeking future locations
Bend (Deschutes County)
As the largest city in Central Oregon, Bend is most commonly cited as the desired location for
new firms considering locating in the region. The City offers a wide range of commercial
services and executive housing options, and as a result of recent trends, provides affordable
housing as well. The current scarcity of industrial land in the city is the primary challenge to
future economic development, with sites that are small, expensive and often facing substantial
transportation problems. While Bend has the greatest level of services and scale, i ts vacant
industrial land inventory is severely limited.
Strengths/Advantages Challenges/Disadvantages
Largest metro area in region Scarcity of industrial land
Regional employment center Price of industrial land
Most “urban” of regional cities Overall costs to develop
Immediate access to natural amenities Relatively complex/sophisticated permitting
process
Central Oregon Community College main
campus Water and sewer capacity limited
Good communication infrastructure TPR is an issue
Juniper Ridge master-planned mixed-use
community
Ongoing “discussions” with LCDC about UGB
expansion (remand, negotiations, etc.)
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 39
Redmond (Deschutes County)
The City of Redmond serves as a major hub of the region, and the commercial airport provides
a key advantage. The community has historically seen land prices somewhat below Bend, and
is well situated to serve the region due to its central location. The area has some small and
medium sized industrial sites, and the range of commercial services trails only Bend in the
region.
Strengths/Advantages Challenges/Disadvantages
Commercial airport
465 acres located in the industrial area in the
city limits currently in holding zone of Open
Space Park Reserve – rezoning prevented by
TPR.
Available water/wastewater capacity Affordability of industrial land coming back
into line with market
Good telecom infrastructure
Can large public entity land holdings
(irrigation district and DSL) be brought into
play?
Central regional location allows workforce
drawn from all over region
TPR is always a factor when land is being
considered for development
Available small/medium sites The diverse public entities that own land
might have different objectives
COCC technology center
Family-centric, stable community
Enjoys a business friendly reputation; Ease
and speed of permitting
BNSF rail mainline through town
Prineville freight depot/short line railroad
Sisters (Deschutes County)
The City of Sisters is located at the western edge of region, and is poorly situated for serving the
broader region and capitalizing upon the depth of the workforce. The community does offer a
strong amenity base for its size, as well as extensive executive housing options nearby.
Strengths/Advantages Challenges/Disadvantages
Natural amenities Small community (2,000 population)
Small airport Possible expansion land not in city limits
Streamlined permitting process Transportation system needs funding, but
some elements coming into place
Large parcels abut city limits Available lots are plotted into small parcels in
industrial parks
Community is interested in/supportive of
economic development
80 acre Forest Service site in town might
become available which could trigger TPR
issues
Just joined Redmond’s E zone Possible water/wastewater limitations (not
really clear)
PAGE 40 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
C. Target Industry Opportunities in Central Oregon
Led by the Economic Development for Central Oregon (EDCO) in participation with local
leaders, the Central Oregon region has gone through the lengthy process of identifying specific
industry sectors for business recruitment, retention, and entrepreneurial support. Several of
these industries have had successful results to-date, while others are relative young in Central
Oregon. In the summaries below, Johnson Reid draws largely from EDCO's evaluation of
industries in Central Oregon as well as extensive research and evaluation produced as a part of
the Oregon Business Plan.
Renewable Energy Development: Renewable or clean energy development is a global industry
on the rise. In 2008 Global Insight forecasted U.S. employment growth related to "green
industries" would reach 2.5 million over the next ten years. In Oregon, solar manufacturing has
been an early entrant, taking advantage of Oregon's existing and highly related semiconductor
industry and proximity to large U.S. West Coast markets. Central Oregon currently has a small
but diverse cluster of renewable energy related industries ranging from solar power and fuel
cells to wind power and biomass production.
Aviation/Aerospace: There is an existing concentration relating to Redmond's airport and
Bend's metro area. Specifically, Lancair has been operating in Redmond since 1992. Oregon's
aviation industry includes 200 firms providing manufacturing, first and second supply chain
services, and product distribution. Oregon's kit plane manufacturers also provide over 70
percent of all of the kit planes sold within the U.S. each year to global customers.
Software: Oregon is home to more than 1,500 software com panies, and is particularly strong in
the areas of: electronic design automation, financial solutions, open source, educational and
training software, embedded software and healthcare applications. Central Oregon itself is
home to over two dozen established software engineering firms. Software development firms
are typically smaller in scale, where quality of life and telecom infrastructure is important.
However, the Central Oregon region and the State of Oregon face both human and financial
capital challenges to further development of the Software/IT cluster.
Biosciences:
Oregon’s bioscience industry has over 600 companies and research institutions. Biosciences
include research and development, medical devices, medical diagnostics, human and animal
therapeutics, pharmaceuticals, reagents, research services, bio-agriculture, bio-fuels, and
medical software operations. Bioscience is a $2.5 billion traded sector industry in Oregon. While
Oregon is not seen as a bioscience hub nationally, Central Oregon is home to a segment of
Oregon's promising bioscience future, specializing in pharmaceutical research and
development. However, biosciences are highly workforce dependent and are often related to
large scale higher education resources, which are currently absent in the region.
Data Centers: Data centers are an emerging economic development engine in Oregon bringing
significant capital investment to regional communities. The Central Oregon region offers key
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 41
critical components in the recruitment of data center projects, specifically affordable electric
power, municipal water and sewer capacity, robust telecom infrastructure, ability to attract
technical talent to operate data center facilities, and a climate that can significantly lower
power usage. These factors were instrumental in EDCO's recruitment of both Bend Broadband’s
Vault project and Facebook's $188 million investment in Prineville.
Recreation Equipment: Oregon is home to some of the world’s most recognized brands in
footwear and sports apparel. Locally headquartered firms include Nike, Columbia Sportswear
and the North American headquarters of Adidas. Additionally, hotbed recreational regions such
as Hood River and Central Oregon have long seen start-up recreational equipment firms flourish
into significant contributors to local economies. Central Oregon specifically is home to diverse
range of mountain, river, and recreational vehicle and equipment manufacturers.
Higher Education: Central Oregon is just beginning the process of establishing planning efforts
in the establishment of a higher education facility in the region. Local policy market and
economic development professionals realize the broader importance of higher education on
workforce quality, culture, and business development. Higher education facilities are typically
campus style development requiring large affordable sites with good telecom and
transportation infrastructure. Sites need to be proximate to population centers.
Regional Distribution Centers: Central Oregon can play a role in distribution, with Highway 97
representing an option to the I-5 Corridor. Option planning is taking a larger role in logistics and
is expected to play a bigger role in diversifying risk away from a single supply route.
Wood Products: The Wood Products cluster is a long standing economic driver in Central
Oregon. The cluster includes primary and secondary wood products, machinery manufacturing,
paper & pulp manufacturing, wholesaling, and business management. Where Central Oregon
was once a primary wood products region, secondary wood products manufacturing now
accounts for 25% of all manufacturing employment in the region. While wood products have
largely been a low growth industry over the last decade, the Central Oregon region is targeting
additional value-added firms. Moreover, innovated new-age primary lumber production models
have emerged in recent years of which Central Oregon would have a distinct competitive
advantage.
D. Site/Resource Characteristics of Key Development Classes
Figure 18 highlights specific land, workforce, and operations characteristics among key
industrial classifications in Central Oregon. For this stage in this analysis, Manufacturers fall
under a single category, whereas subsequent drafts will explicitly underscore development site
needs and characteristics of specific industries.
PAGE 42 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
FIGURE 18: KEY INDUSTRIAL LAND/INDUSTRY CHARACTERISTICS
SOURCE: EDCO
The findings in Figure 18 reflect the findings in the progressive criteria "funnel model". With the
exception of data centers which have highly unique utility requirements, availability of a
qualified and ample workforce is of upmost importance. For some industries such as
Distribution and Warehousing, access to transportation networks is a key concern.
Targeted Industries with Large-Lot Needs
While it is unlikely that several industries being targeted by communities within the Central
Oregon region will generate significant demand for large-lot industrial land, some sectors have
a demonstrated track record for creating enormous exogenous absorp tion of properly-zoned
industrial sites. For example, software, recreational equipment and aviation/aerospace all have
precedent for large corporate campuses: respectively Microsoft in Redmond, Washington; Thor
Industries in Elkhart, Indiana; Cessna in Wichita, Kansas. Typical companies, however, require
building footprints well under the 40-50 acre threshold we have defined as a large lot industrial
site. These needs are generally met by the existing land use process in Oregon.
Industries requiring large acreages that hold promise for the Central Oregon region include:
Data centers
Warehouse/distribution centers
Select high technology/biosciences operations
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 43
Changing economic conditions and global trends are impacting each of these industries,
creating opportunities for rural and small metropolitan areas. The tri-county region already has
established operations in each of these sectors and precedent for large -acreage users. The
Appendix contains a summary of other geographic areas where each of th ese sectors has grown
from a similar small foundation to become national leaders – some in a relatively short period
of time. Additionally, any one of these sectors has the potential to create the exogenous
demand that would trigger the need for additional large, industrial-zoned land in Central
Oregon since so few of these sites exist – particularly in the region’s largest cities.
Central Oregon Viability for the Data Center Industry
According to global data center site selector David Aaroe, (co-founder and principal, Fortis
Construction), Central Oregon has all the elements to rival Central Washington as a top location
for the data center industry in North America. Other site selectors from across the country are
already focused on the tri-county area as a result of Oregon’s largest data center project with
the construction of the Facebook campus at Prineville (currently 125 acres, 300,000 sf).
A key component that could lead to explosive growth in the Central Oregon area is enormous
Bonneville Power Administration power transmission lines that transport electricity from
hydroelectric generation the Columbia Gorge to California. These transmission lines are located
such that Prineville, Redmond, Bend, and La Pine all become viable locations for the data center
industry. This steady, inexpensive base load electric power is in high demand by the data
center industry.
Low cost, high capacity power is at the very top of the site location criteria list for the data
center industry. The ability to quickly and reliably add load to the system is also critical. As
quickly illustrated by the national district-by-district map below, tri-county rates are well below
the national average for electricity in all sectors. For industrial customers, Central Oregon
providers offer rates up to nearly 20% below the national average and 50% below neighboring
California where considerable data center activity is currently centered.
“The combination of low cost—not the lowest—reliable electric power, incentives, telecom capacity and
the area’s climate could make the Central Oregon area as competitive as any in North America for the
data center industry.”
2011 presentation by David Aaroe, Principal, Fortis Construction
A leading global data center site selection firm
PAGE 44 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
FIGURE 19: INDUSTRIAL POWER RATES
Another key factor is the requirement for robust telecom infrastructure. Over the past 12
years, more than $100 million in infrastructure has been invested in the region, including a sel f-
healing fiber loop for incumbent provider CenturyLink (formerly Qwest), numerous fiber rings
by competitive local and regional providers and multiple Points of Presence (POP). With
multiple telecom routes via San Francisco, Portland and Seattle, the tri-county region’s access
to markets in Asia is especially good.
Perhaps one of the greatest natural assets the area possesses for data centers is the significant
year-round cooling factor offered by the high desert climate. Simply stated, cool nights yea r-
round and low humidity enable data centers to use less power for cooling servers —making the
center much more cost efficient. Reasonable power costs, power savings made possible by
the region’s climate, the lack of a sales tax in Oregon and meaningful incentives (property and
incomes tax exemptions) all combine to make the Central Oregon region a globally competitive
location.
Because of the significant investments characterized by data ce nters both in mission critical
infrastructure and physical plant (typical cost per square foot is $1,000), most companies
require large industrial sites for future expansion. The current inventory of appropriately zoned
sites with proximity to needed infrastructure in Central Oregon is potentially uncompetitive,
and as such could be a major impediment to further growth of the sector for next 10 -15 years.
The economic development community recognizes that most jobs come from existing
companies, and fostering entrepreneurship and retention expansion of existing traded -sector
companies is a major focus of regional efforts. Recruitment of new companies in new and
existing industries, however, is an important component of any successful economic
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 45
development program and diversification strategy. New companies bring a diff erent mix of
professional and technical talent to communities that can spawn other businesses and
technologies. Intel’s expansion to Hillsboro in the late 1970s is a good example in Oregon. At
that time it was a recruitment project, but in the subsequent decades the global leader in
semiconductor technology and production spun off more than 100 companies that significantly
contributed to the overall diversification of Oregon and of course many well -paying jobs.
Central Oregon Viability for the High Technology Industry
While the Central Oregon region clearly has different attributes than either the Hillsboro or
Austin examples outlined in the Appendix, it does have some of the key components that make
the high technology sector a viable option for industry targeting. Several important technology
sectors have a foothold in the region including:
Semiconductor and peripherals manufacturing (Microsemi, TriQuint Semiconductor,
Nanometrics)
Renewable/alternative energy equipment and software (Advanced Energy, Idatech, PV
Trackers, E1, InEnTec)
Software (Vertex, GL Solutions, Navis, Manzama, AudetteMedia, Team Unify)
Biosciences (Bend Research, MediSISS, Agere Pharmaceutical, Phillips, Accelrys).
This small but successful and diversified group of high technology companies provides a
foundation on which to build a broader industry, provided that other site location
fundamentals are in place.
The Central Oregon region scores well on most critical location factors. Power rates are among
the lowest in the nation and nearly half of those in neighboring California. Not all communities
are equally prepared, but generally water and wastewater capacity is adequate to
accommodate high technology industry needs. Oregon’s property tax incentives offered
through the Enterprise Zone program generally favor high technology projects with significant
capital expenditures, much as it benefits companies in the data center industry. Higher
education infrastructure to develop local scientific and technical talent needs improvement
within the region, and is currently considered by site selectors to be a barrier, however many
technology companies acknowledge that most talent recruitment today is done on a national or
international basis. Access to local technical, engineering, and scientific coursework and
degrees are a plus and can be a swing factor between one site or another, however an area
with quality of life and some technical talent can attract other technology employers. It
happened in Hillsboro and Austin not because of the university infrastructure there, but
because other site location factors worked (access to power, water & wastewater facilities) and
there were well educated people who chose to live there or could be recruited from other
places.
PAGE 46 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
A potentially significant barrier is the lack of large industrial lot options that have proper zoning
and necessary infrastructure, specifically in Bend and Redmond which have been of greatest
interest for companies, site selectors and corporate real estate professionals. That Bend, one
of Oregon’s seven largest cities and among the fastest growing (both in terms of net jobs the
past decade and population), has no industrial -zoned lots over 20 acres would be inconceivable
in most states.
According to EDCO, the sector with the most activity in terms of location decisions and new
production facilities in the past five years has been renewable energy equipment and related
manufacturers. Included are solar power panel fabrication (thin film and silicon) polycrystalli ne
refinement, and solar power generation– all which require large acreages with appropriate
zoning. Biomass and gas-fired electric power plants also have a need for large industrial
acreage, but usually prefer a rural location if adequate infrastructure c an be developed cost
effectively. While existing computer and electronics manufacturers in the area have historically
operated in facilities on acreages less than 40 acres, there are many examples in Oregon and
across the country where once small high technology firms have grown into large campuses.
Hewlett-Packard in Boise, ID and Corvallis, OR; Micron in Boise, Microsoft in Redmond, WA all
serve as excellent examples of local companies that organically grew into large, multi-building
campuses that greatly exceed the 40-50 acre threshold established by this REOA.
Central Oregon Viability for the Warehouse and Distribution Industry
Because of its removed location from major interstates, the tri-county has not historically been
a target for the warehouse and distribution industry. Still, some significant distribution
activities do occur – primarily tire distribution by the Les Schwab Company, which has over 2
million square feet under roof at its warehouse operations in Prineville. There, tires and auto
components manufactured globally are consolidated and distributed to 400+ stores in a seven
state area. The company is the #1 highest volume customer for the Port of Portland and
operates one of the largest distribution operations in Oregon.
In addition to this warehouse, several durable goods manufacturers in the
area have larger-scale distribution nationally from their Central Oregon
location, including Bright Wood Corporation, Deschutes Brewery,
Keith Manufacturing, Contact Industries, Jeld-Wen, and
Advanced Energy (PV Powered). Online retailer Altrec.com also
consolidates and distributes orders directly from its Redmond,
OR warehouse and does so cost competitively vis-à-vis other
west coast locations.
Over the past decade, consolidation has been the dominating
trend in warehouse and distribution – fewer but larger DCs located
in strategic geographic area – to achieve greater efficiencies and cost
advantages offered by economies of scale. With the sharp rise in fuel
prices in recent years, industry experts are predicting that the
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 47
industry could migrate to smaller facilities serving smaller distribution areas. Key to this more
dispersed model is the availability of rail to more cost effectively transport goods
(approximately ⅓) within the regional distribution area. Rather than the 11 or 9 state model,
respectively, offered by Salt Lake City, UT or Reno-Sparks, NV the smaller 5 to 7 state model
successfully utilized by Les Schwab for the past 50 years might prove more cost effectiv e with
$5-6 dollar per gallon fuel prices.
Led by the Prineville Railway, the nation’s only municipally-owned short-line railroad, Central
Oregon has been working to expand its ability to provide logistics and freight connections
between Class I railroads and traditional truck distribution models. Over the past several years,
the Prineville Railway has invested nearly $10 million in a new freight depot, track, and railcar
handling equipment to efficiently transfer rail freight to trucks either for final destination
delivery or for warehousing. With ongoing global upward pressure on oil prices, these projects
could be the beginning of a wave of investments in to accommodate a growing transloading
facility. Planning is already underway for a unit -train switch yard upgrade adjacent to the
UPRR/BNSF mainline just on the northern borders of the Redmond UGB and expanded
warehouse and distribution facilities in Prineville.
E. Regional Large-Lot Demand
Long Range Employment Forecast
Figure 20 outlines estimated growth in employment projected by the Oregon Employment
Department (OED) for the Central Oregon region. The OED’s most recent projection estimates
employment growth by industry over a 10-year horizon beginning in 2008. For the purposes of
this analysis, Johnson Reid applied the State's 10-year growth rates to 2010 base year estimates
of employment by industry and extrapolated growth through 2030.
“In general, companies will respond to the higher fuel prices by expanding their distribution networks to
include additional DCs, but it remains to be seen just how big the impact will be. Some will tweak th eir
networks by adding one or two DCs or relocating one or two of them in order to economize on freight -
miles and fuel consumption.”
2010 report by ProLogis, a leading global provider of distribution facilities
PAGE 48 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
FIGURE 20: BASELINE LONG RANGE EMPLOYMENT FORECAST
Over the next 20-years the Central Oregon region is expected to add roughly 22,208 new
employees according to State projections. The bulk of projected growth is expected to fall
within the Health, Leisure & Hospitality, and Professional & Business Services sectors. However,
State level projections are often demographically driven methodologies, developed for long
range budgetary and government planning purposes. They very rarely reflect the qualitative
economic development goals of local jurisdictions and economic development agencies. For
example, as mentioned above, EDCO and the tri-county region have committed to the broad
based recruitment, retention, and organic expansion of the region's Software/IT industry, which
is generally under the Information NAICS classification. However, this economic development
goal is not reflected in the State's forecast of Information e mployment. In other words,
aspirational goals, policies, and dedication of resources have real direct impacts on the path of
economic development likely in a local geography.
More importantly is an inherent disconnect between any trended forecast methodol ogy and
the potential demand for large-lot industrial employers. By nature, large industrial placements
are "game-changers", whereas a single placement can change the economic landscape of a
community. The employment impacts are not reliably "forecastable ." Communities are best
served by providing a range and supply of suitable options for prospective recruitments in
addition to organic expansions. This is particularly prevalent in today's landscape, where firms,
products and even entire industries shopping Oregon for suitable sites did not even exist a cycle
ago. The Facebook placement in Prineville is a prime example of a firm and industry that did
not exist even 10-years ago. While large lot users may reflect growth of existing industries, they
are more often reflective of a regional, national or global site selection process, and are
competitive in nature. A survey of site selection professionals found that large firms go through
a methodical site selection process for “development-ready” sites and that agencies seek to
maximize quantity and selection of large “development-ready” sites for successful employer
recruitment. A development-ready site, or a “shovel-ready” site, is one in which site
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 49
improvement can begin within 180 days of purchase and develop ment application. Such sites
are served by requisite infrastructure and utilities, environmental and other constraints are
known and documented, and permitting can be fast -tracked for rapid facility operations. If all
these conditions cannot be met in accordance with project time frames, sites will not be kept
on the list for further consideration. The key to the site selection process, therefore, is that it is
essential for candidate sites to be immediately development-ready instead of simply
“buildable.” Furthermore, a general lack of development -ready sites to choose from eliminates
a city or region from contention early in the site selection process. Until sites win
development-ready status, they are not truly effective supply for large industrial sit e demand as
viewed by firms seeking to potentially locate in the region. It is critical to keep in mind that the
site selection process begins as a process of elimination; it only becomes selection after a short
list of potential sites that meet all pertinent criteria has been created.
Industry Placement Velocity
For the reasons cited previously, a matrix is included, showing recent target industry
placements, large and medium nationwide, in addition to industrial recruitment activity in
Oregon to demonstrate a snapshot of large-lot characteristics and the velocity of recruitments
handled by Business Oregon.6
6 Oregon Business Development , 2010
PAGE 50 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
FIGURE 21: SELECTED LARGE LOT RECRUITMENTS IN OREGON AND SOUTHERN WASHINGTON
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 51
FIGURE 22: MATRIX OF RECENT MAJOR TARGET INDUSTRY PLACEMENTS
SOURCE: IronWolf
It should be noted that Business Oregon’s database reflects only a subset of overall activity in
this market, with many firms making decisions without contacting the agency, o r working more
directly with regional economic development agencies such as EDCO.
Industry/Activity Company Location Land/Site Size
Renewable Energy
Solar; plant for solar panels and power systems Xtreme Power/Wixom, Michigan 320 acres
Vestas Colorado (3 locations)Brighton= 176 acres
Windsor=75 acres
Pueblo= 800 acres
Wind: plant for concrete tower bases Tindall Newton, KS 144 acres
Solar: facility for R&D and panels Green 2V Rio Rancho, NM 124 acres
Wind: plant for nacelles Siemens Hutchinson, KS 108 acres
Batteries: plant for leaf batteries Nissan Leaf Batteries Smyrna, TN 72 acres
Solar: plant for solar receivers Schott Solar Rio Rancho, NM 80 acres
Aviation/Aerospace
787 fuselage Boeing Charleston, SC 1.2 million sq. ft. (building only)
Parts depot Lockheed Martin Papillion, NE 85,600 sq. ft. (building only)
R & D Lockheed Martin San Diego, CA 158,000 sq. ft. (building only)
Service Cessna Valencia, Spain 152,000 sq. ft. (building only)
Drone production General Atomics Sabre Springs, CA 193,000 sq. ft. (building only)
Helicopter training academy Bell Helicopter Ft. Worth, TX 160,897 sq. ft. (building only)
Helicopter hangar addition Bell Helicopter Amarillo, TX 97,678 sq. ft. (building only)
Software/Information Technology
Software testing Galmont Consulting Lexington, KY 4,000 sq. ft. (building only)
Global software development facility HSBC Burnaby, BC 146,000 sq. ft. (building only)
Company H.Q.Projekt202 Austin, TX 8,500 sq. ft.
Software support Microsoft Austin, TX 10,000 sq. ft
Innovation and technology center Microsoft Reston, VA 63,000 sq. ft. (building only)
Computer lab Microsoft Redmond, WA 57,000 sq. ft. (building only)
Office space Microsoft Bellevue, WA 1.34 million sq. ft. (office lease)
Bioscience & Medicne
Pharmaceutical development facility Analytical BioChemistry Laboratories Columbia, MO 90,000 sq. ft. (building only)
Corporate campus Biogen Idec RTP, NC 176 acres
Fill and finish facility Genentech Hillsboro, OR 75 acres
Insulin manufacturing facility MannKind Danbury, CT 251,875 sq. ft. (building only)
Mammalian cell culture proteins Pfizer County Cork, Ireland 130,000 sq. ft. (building only)
Contract manufacturing Cook Pharmica Bloomington, IN 250,000 sq. ft. (building only)
Data Centers
Data center E bay South Jordan, UT 250,000 sq.ft. (building only)
Data center Oracle West Jordan, UT 200,000 sq. ft. (building only)
Data Center National Security Agency Camp Williams, UT 200 acres
Data Center Cisco Systems Allen, TX 140,000 sq. ft. (building only)
Data Center Apple Maiden, NC 500,000 sq. ft. (building only)
Data Center Target Brooklyn Park, MN 111,800 sq. ft. (building only)
Data Center Equinix El Segundo, CA 177,000 sq. ft. (building only)
Data Center Advanced Data Centers Sacramento, CA 500,000 sq. ft. (building only)
Data Center Facebook Prineville, OR 147,000 sq. ft. (building only)
Data Center Microsoft Quincy, WA 470,000 sq. ft. (building only)
Higher Education
Innovation Center Western Michigan U.Kalamazoo, MI 69,000 sq. ft. (building only)
Aviation programs Western Michigan U.Battle Creek, MI 92,000 sq. ft building and 20 acres
Treyburn Corporate Park North Carolina State U.Raleigh, NC 256 acres
Biomedical campus U of Arizona and A.S.U Phoenix, AZ 28 acres
Campus expansion University of Memphis Memphis, TN 250,000 sq. ft. (building only)
Campus expansion for student housing SMU Dallas, TX Redevelopment of bakery facility
Campus expansion Duke Durham, NC 1.3 million sq. ft. (building only)
Recreational Equipment
Factory store Danner Boots Portland, OR 59,000 sq. ft. (building only)
Paddle craft production Johnson Outdoors Old Town, ME N/A
Custom skis Wagner Custom Skis Telluride, CO N/A
Sports research lab New Balance Boston, MA 3,000 sq. ft. (building only)
Wind: plants in Brighton-blades and nacelles Windsor-blades
Pueblo-towers
PAGE 52 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
Total Leads 53
Central Oregon Did not Make Minimum Criteria 37 of 53
Made Minimum Criteria 15 of 53
Got to the Site Visit State 4 of 53
Firm Located in the Region 1 of 53
SOURCE: EDCO and Business Oregon
RECRUITMENT LEADS FOR CENTRAL OREGON
June 2008 -June 2010
Over the previous two years Central Oregon has seen a total of 53 major recruitment leads
evaluate the region. The majority of leads ended quickly as the region did not me et the firm's
minimum criteria. Most commonly, the region missed on lack of Interstate highway
transportation routes, lack of large acreage parcels, or specific infrastructure limitations.
However, the region did make it to the visitation process in four o f the 15 instances it passed
the first criteria round with one, the Facebook placement, actually locating in the region.
FIGURE 23: SUMMARY OF INDUSTRIAL RECRUITMENT LEADS
As noted previously in this report, Central Oregon’s lack of appropriate sites largely precludes it
from competing for many prospective leads at it is unable to meet the minimum criteria
specified.
VI. Assessment of Potential
A. Site Need Characteristics
Site needs for the targeted large lot industrial users are inherently difficult to assess based on
the high level of uncertainty in industrial recruiting. Site requirements for specific industries
are discussed in this section, but there are a great number of site requirements that are
generally common among most major industrial users.
Business Oregon maintains a matrix of site needs for major industry sectors that they are
actively recruiting. While the matrix is not limited to large lot users, the requirements outline
provide guidance with respect to site requirements by major industry group. The following
table summarizes key site characteristics required and preferred by several major development
types. While key characteristics are often listed as preferred, these may be required by specific
firms or used as screening variables to differentiate competition. The Central Oregon region
expresses a desire to maintain a competitive portfolio of sites, which would imply sites having
preferred as well as required characteristics.
A more generalized summary column is included, showing large lot site requirements. This
recognizes that while one may target specific industries, the nature of large lot demand and
firm characteristics is highly variable. The generalized site requirements summarize key
characteristics that are broadly valued by the identified industries .
PAGE 53 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
FIGURE 24: INDUSTRIAL DEVELOPMENT PROFILE MATRIX7
7 Business Oregon and Johnson Reid
PAGE 54 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
As outlined in the preceding table, site requirements can be grouped into several broad
categories. The following is a brief summation of the basic categories of site requirements:
PHYSICAL
Size – Large lot demand is defined in the context of this analys is as sites 50-acres or
above. Sites of significantly larger size provide greater flexibility, as they can meet large
site needs as well as providing the ability to be subdivided.
Slope – Industrial development has a very limited capacity to deal with slop es. This is
particularly true in areas such as Central Oregon, in which the geology makes grading
costly.
Configuration – Rectangular sites provide for the most efficient layouts. Sites with
irregular configurations need to be larger to accommodate simil ar levels of
development.
INFRASTRUCTURE
TRANSPORTATION
o Auto/Truck
Interstate
Highway
Major Arterial
o Rail
o Marine Port
o Airport
General Aviation
Commercial
International
UTILITIES
o Water
o Sewer
o Natural Gas
o Electricity
o Telecommunications
Major communications capacity
Route diversity
Fiber optics
LOCATION
WORKFORCE
o Locations within acceptable distance of appropriately scaled labor market
Housing options for workforce and executives
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 55
SPECIAL CONSIDERATIONS
Availability - Owner willing to sell at market consistent price
Ownership – Willingness to hold, front infrastructure investments
Flexibility – Ability to meet a variety of demands
Site Certification – Not necessary, but criteria should be at least inclusive of the
certification criteria
Funding – Viability of funding necessary infrastructure to support development
Sites designated to meet the regional demand for large lot industrial uses should be able to
meet most of these criteria where practical. While physical and workforce issues cannot be
addressed by actions of an individual jurisdiction, the remaining locational criteria largely
involve infrastructure investments, which can be actively targeted to enhance the supply of
competitive sites. Additionally, jurisdictions actively engaging property owners in discussions
about land price, lot configuration, and investments necessary to make sites usable can provide
a context for owners’ readiness to sell their property.
Outside of size and configuration, the following are key characteristics associat ed with a
competitive land supply for Central Oregon, which should be considered as the criteria under
which sites are evaluated to meet identified needs. This list of criteria reflects input from
EDCO.
Availability: The site must be under ownership of an entity that is willing to sell the site at
market-appropriate pricing. Sites controlled by unmotivated or unrealistic owners are of
little use for the stated community economic development objectives.
Infrastructure:
Utilities – Municipal water and sanitary sewer, electric power, natural gas and telecom in
capacities needed for specific companies or industries are critical. The ranking and
magnitude needed for each varies from industry to industry. If nearly all utilities note d
above are not in place or proximate to the site, and without some existing unused capacity,
most companies will not consider a community (or that site at least) further. Most private
businesses, even large ones, are not coincidentally experienced developers, and even with
experience their timelines for projects are such that they are unwilling and/or unable to
wait while major infrastructure projects are executed by public sector entities.
Transportation – Most projects, with a few exceptions, have significant transportation and
logistics aspects. It is important to note that the current access approval process in Oregon
(whether on a state highway or not) is a significant barrier to economic development in
general and large lot development specifically. The Transportation Planning Rule (TPR) and
relationship with LCDC approval is specifically creating the greatest problems for land
development in the Central Oregon region.
PAGE 56 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
Workforce: Throughout the tri-county area, the question for larger projects is first and
foremost about quantity of available workers. Bend or the Deschutes County MSA is
often the smallest area in the field of consideration during a site selection process.
Quality can also be an issue, but at the end of the day, communities have little influence
on either, at least at the point when companies come looking. The current
unemployment statistics, which indicate an available workforce, could indeed make
Central Oregon attractive to prospective employers if there are available sites to
accommodate them.
Education & Training: Some companies are keenly interested in higher education
opportunities both for the overall workforce and continuing education of their
employees. That the Central Oregon region has been underserved for both higher
education and training opportunities is a factor noted by several large projects in the
past as a concern.
Incentives: While Oregon is not a “big player” in the incentives game nationally, the
state does have in place several incentives that favor large, capital intensive projects.
Specifically, few areas have the type of property tax incentives Oregon offers that can
exempt these taxes for 3-15 years. Nearly all Central Oregon industrial areas have
access to these incentives through the enterprise zone and/or Strategic Investment
Program. At the same time, Oregon does not have the type of payroll or jobs -based
incentives available as in other places in the country.
B. Gross Land Demand (Short-Term Only)
From an economic development perspective, Central Oregon seeks to offer a range of readily
developable sites that are supportive of regional and statewide economic development
objectives, as well as competitive with alternative regions.
The demand for large industrial sites within Central Oregon cannot be derived using typical
employment projections by industry, extrapolating future anticipated growth patterns based on
historical patterns. Establishing and maintaining a competitive large lot in dustrial inventory is
intended to expand upon the range of potential economic development opportunities that
Central Oregon can compete effectively for. Central Oregon as a region will be competing for
large lot recruitments within a broader context that will likely include Idaho, Washington and
Northern California. The following table provides a profile of firm changes by size of enterprise
within this broader area over a one year period.
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 57
FIGURE 25: BIRTHS, DEATHS, EXPANSION & CONTRACTION OF FIRMS, 2006-2007
As shown in the table, firms with 500 or more employees represented 14% of total firms in
2006, but 47% of total employment. Firms over 100 employees represented 19% of firms and
62% of total employment. While the net change in establishments in these si ze ranges is
significant, the number of births (new firms) exceeds the net change in establishments by
384%. For firms with 500 or more employees, births exceed the net change by 554%. Firms
primarily become prospective recruitment targets when they are formed or find their existing
facilities or business environment inadequate. As a result, the number of births (which can
include new firms as well as firms expanding into a new classification) is a key indicator of the
depth of potential market demand. The following table summarizes a profile of firms by size
range in the Western Unites States in 2008. This shows close to 27,000 firms with 100 or more
employees, of which 10,800 are in industries that are historically considered to be industrial
oriented. The nature of industrial space usage is highly variable, and many industries not
historically associated with industrial space now utilize this type of space. An example of this
would be industries previously categorized under information, which would i nclude major
employers that have recently located on industrial space such as Facebook and Google.
PAGE 58 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
FIGURE 26: PROFILE OF FIRMS BY SIZE RANGE AND INDUSTRY, WESTERN UNITED STATES, 2008
A similar profile for Central Oregon shows a total of 70 firms with more than 100 employees.
This represents 0.9% of total firms in the area. If the regional profile was consistent with the
Western United States, with 2.2% of firms having 100 employees or more, the region would
have a total of 162 firms of this size. For firms having 500 employees or more, this number
would increase the firm total from 7 to 17 in Central Oregon.
FIGURE 27: PROFILE OF FIRMS BY SIZE RANGE AND INDUSTRY, CENTRAL OREGON, 2008
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 59
Firms sized at 500 employees or larger can be a general pro xy for large lot industrial site
demand. The Central Oregon region currently accounts for 0.27% of firms of 500 employees or
more in the Western United States. The ratio of large firms in Central Oregon relative to the
overall number of firms (0.09%) is less than half the ratio in the broader Western United States
(0.21%). Using the current profile of firms by size in the Western United States and Central
Oregon, combined with birth and expansion patterns summarized in Figure 25, Johnson Reid
can generate a model of annual large firm location activity in the region.
FIGURE 28: ESTIMATED ANNUAL LARGE FIRM LOCATION ACTIVITY
Assuming Central Oregon retains its current mix of firms, one could expect average annual large
firm activity of 3 location decisions per year, or 15 over a five year horizon. Not all of these will
require new sites, as many will be able to expand at exis ting locations or locate in vacant or
underutilized existing facilities. If Central Oregon’s share of large employers mirrored its share
of overall employment, the level of annual estimated activity would increase to 7 firms. It
should be noted that the demand for large lot industrial land is also a function of supply. In
other words, if no sites are available to accommodate these users the region will get none of
these users. What is modeled is a prospective demand, assuming that a competitive inventor y
is available and maintained, allowing the region to capture a “fair share” of market activity.
Economic recruitment benefits from some degree of market choice. Firms evaluating
prospective locations are a more likely to consider Central Oregon if multiple appropriate sites
can be seen in a single trip. As outlined in the vision statement, the region is hoping to
establish and maintain a “competitive portfolio” of large lot industrial sites. This would include
an inventory of readily available and appropriate sites consistent with baseline criteria, allowing
the region to clear the initial site selection screening. To the extent that multiple prospective
sites are available in the region, Central Oregon’s competitive position would be enhanced as
PAGE 60 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
site selectors prefer to have multiple options before physically visiting an area such as Central
Oregon.
Business Oregon is mandated by ORS 197.717 (2) to “provide a local government with state and
national trend” information to assist in compliance with ORS 197.712 (2)(a).” The department
has reviewed the Central Oregon area, and made the following recommendations:
Given its current size and expected growth, it is not unreasonable to assume that
the region being examined as part of the current Central Oregon Large Lot
Economic Opportunity Analysis should have a mix of large lot sizes for potential
employers and site selectors to choose from. Such a mix would have at least
multiple ready sites in the 200, 100 and 50-acre plus acreage ranges in order to
meet expected 20 year land supply needs.
Working with EDCO and Business Oregon, the following matrix of large-lot site needs has been
developed.
FIGURE 29: RECOMMENDED COMPETITIVE LARGE LOT INDUSTRIAL INVENTORY
50-100 ACRES 100-200 ACRES 200+ ACRES TOTAL
SHORT TERM
Number of Sites 3 2 1 6
Jurisdictions 3 2 1
The preceding table summarizes what has been determined to be a regionally and nationally
competitive portfolio of large industrial lots. A readily available and developable inventory of
six large sites in at least three separate jurisdictions will provide for choice to prospective
industries or site selectors.
Maintaining an appropriate short-term available lot supply that is readily developable is a key
priority for the region, and strongly affirmed in the community vision. Projecting the demand
for industrial land in this size range is inherently highly speculative, as it is a thinly traded and
highly competitive sector. In other words, with fewer transactions and multiple areas
competing for these transactions, there is an unusually high degree of uncertainty in any
forecast. The degree of uncertainty can be offset by emphasizing short term ready supply, with
a mechanism to replace supply in a timely manner when needed. While this may be achieved
during a periodic review, there should also be provisions for more rapid response if the market
supports it.
In the professional opinion of the economic development professionals contributing to this
analysis, a competitive portfolio of industrial sites would include a collection of large industrial
parcels in some selected communities, and a major, centrally located large-scale development
near the region’s geographic and workforce center, and where key infrastructure is in place and
has excess capacity. This would be optimally located on the north end of Bend, but
infrastructure challenges will make this choice problematic for at least the short -term. The next
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 61
most optimal location is on the southern end of Redmond, east of Highway 97. The area has
few neighbors, possible secondary transport access and most of the municipal and franchise
utilities with excess capacity.
Another three large lot parcels available throughout the region is also recommended as part of
a competitive portfolio. These sites would be 100 to 200 acres in size, and located in three
distinct jurisdictions. Recommended jurisdictions include Bend, Prineville and La Pine. The City
of Madras has available land within its current UGB for a large lot industrial user. What is
important from an economic development perspective is maintaining a short-term inventory of
appropriately sized and located lots available to the market in any given period. From a market
perspective, sites need to be readily developable with infrastructure in place or readily
available, controlled by a willing seller and appropriately priced.
The following are additional factors that should be considered in establishing and maintaining a
short-term competitive supply:
It should be noted that while Johnson Reid is evaluating large lot site needs as
independent of the need for smaller sites, the targeted employers are often “game
changers”, which will generate a range of associated site needs within the region for
suppliers and support businesses. While likely smaller in scale, the ability of the region
to serve associated industrial growth is seen as critical.
Land banking is a relatively common pattern in large lot industrial land use. Firms often
seek sites that are well in excess of their immediate needs, but capable of supporting
later expansion of their operations. While land is being “banked” by an employer is not
developed, this sequestered land is not available to the market and subsequently of
limited use in economic development efforts. In effect, banked land should be treated
as though it were held by an unwilling/uncooperative seller, as per earlier discussions in
this report. While it may serve longer term needs, it should not be counted towards
meeting short term needs.
The ability to cost effectively serve sites with adequate infrastructure should be a key
determinant in their usefulness for economic development. Industrial land is
characterized by relatively low values per square foot, providing limited ability to be
burdened with off-site infrastructure costs. In addition, even when fiscally viable,
infrastructure provision may only be available in a time frame that is inadequate to
meet identified needs. Certain industrial users can have significant offsite impacts
associated with their operations. These operational externalities may make cause
conflicts with neighboring uses, limiting the appropriate locational options for these
types of firms.
While the research indicates a range of large lot site sizes and characteristics are needed
within Central Oregon, a degree of flexibility should be maintained. A property that
would allow for a range of partitioning options for large lot industrial would be
PAGE 62 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
considered to be highly desirable. As an example, a 400 acre site that can be subdivided
into parcels as small as 50 acres would have the ability to accommodate either a very
large user, or a series of smaller users. This would provide more flexibility in terms of
potential configurations than two 100 acre sites and four 50 acre sites.
Maintaining a competitive short-term inventory of sites in the region will require regular
replacement of sites as consumed, with modifications made to determinations of appropriate
inventory based on available information and periodic reviews. The short-term available
inventory is most critical in economic development efforts.
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 63
APPENDIX: Examples of Local Governments Proactively
Planning for Industrial Development
PAGE 64 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
INDUSTRY FOCUS: DATA CENTERS
Community: Quincy, Washington (Grant County)
Population: 2000: 5,044 | 2010: 6,750 | % Change: +33.8%
Number of 50+ acre industrial sites absorbed 1990 -2000: 0
Number of 50+ acre industrial sites absorbed in past decade: 5
Number of 50+ acre industrial sites now available: 6
Key Industry Site Location Factors:
Proximity to large capacity, low cost power
Access to municipal water and sewer (large capacity)
Mission critical telecom infrastructure (speed and capacity)
Large acreage industrial sites (with proximity to utilities)
Climate conducive for lower cost cooling
Meaningful incentives, tax climate
Economic Outcomes
In 2004, the rural town of Quincy, WA was essentially 100% agriculturally based economy in a
county with some of Washington’s highest chronic unemployment rates. The community had
no technology companies operating there and, as a result, no local technology jobs. Poverty
rates also ranked among the highest in the state. A key asset the community did have that
aligned well for the data center industry was the fact that it had over 5 00 megawatts of
stranded electric power capacity resulting from closure of several foundries within Grant
County. Rates set by the local PUC were also very attractive for large users – among the lowest
in the country. The community and county overall had numerous large industrial sites that
could accommodate significant projects such as Microsoft’s 1.5 million square foot data center
facility.
Today, there has been an 8 percentage point improvement in the unemployment rate and six
major technology companies (Yahoo!, Microsoft, Dell, Intuit, T-Mobile & Ask.com) have a
presence in Quincy.
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 65
While critics (most of which are outside community) make arguments that the jobs produced
for the electric power used is a poor economic development tradeoff, the reality is that these
centers would be built somewhere to accommodate market demand for mobile devices, online
computing capacity and Internet-based software and professional services. The community, via
its local and professional economic development organizations, had tried to attract other
industries with little success. The data center industry has brought sustained economic activity
that is benefiting most residents.
Other economic impacts in Quincy and Grant County, WA include:
$2.9+ billion in facility construction and IT infrastructure investment
275 average construction jobs since 2004 (peaks exceeding 600)
200 full time direct hire positions with technology companies
250 full time contract employees for facility maintenance (ongoing)
Capital investments alone from data center development hav e added considerably to the local
property tax base, which supports local government, schools and special districts.
Of importance was the fact that Washington’s land use system was able to accommodate six
new large acreage industrial users in a very concentrated timeframe. Oregon’s current land use
law would never allow a community of 6,000 residents to have such an inventory, especially
given a historical lack of demand for such development property. Nonetheless, the availability
of this inventory was integral in the area attracting major new employment concentrations.
INDUSTRY FOCUS: HIGH TECHNOLOGY
Community: Hillsboro, Oregon (Washington County)
Population: 2000: 70,187 | 2010: 91,611 | % Change: +30.5%
Industry Target: High Technology
Number of 50+ acre industrial sites absorbed 2000 -2010: 6
Number of 50+ acre industrial sites now available: 5
Key Industry Site Location Factors:
Proximity to large power capacity at low cost
Access to municipal water and sewer (large capacity)
Large acreage industrial sites (with proximity to utilities)
Proximity to technical, scientific talent (existing critical mass & higher education)
Meaningful incentives, tax climate
Economic Outcomes
Home to Intel, Hillsboro has been planning for and working toward growth of its high
technology employment base for more than 25 years. Utilizing a large and renewable resource
PAGE 66 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
from its Coast Range watershed, Hillsboro offers the semiconductor, bioscience and renewable
energy equipment manufacturing industry a valuable resource for process water. Additionally,
the community is strategically located to tap significant electric power transmission capacity in
the Portland metro area, which is also another com mon thread in high technology
manufacturing.
Intel opened its first Hillsboro facility, Hawthorn Farm in 1979. This campus was followed by
the opening of the Jones Farm location near the airport in 1982 and the Ronler Acres location in
1994. The Ronler Acres development was the result of a substantial effort by the City to
assemble a site with multiple ownerships to provide for a large lot industrial opportunity. Along
with several smaller campuses, Intel Oregon had approximately 15,500 employees, ma king it
the largest Intel site and the largest private employer in Oregon. Intel is directly or indirectly
responsible for more than 100 spin-off high technology companies and has played a leading
role in attracting other national and international high technology manufacturers to the
Hillsboro area (TOK America, Tokai Carbon, Lattice Semiconductor, FEI Company, Sun
Microsystems, Epson, etc.).
Significant capital investments in infrastructure and physical plant characterize these high
technology companies. For these reasons, large, well-served industrial sites are required.
Recent examples include pharmaceutical giant Genentech (75 acres), Solar World (93 acres),
and TriQuint (32 acres). In 2007, SolarWorld AG acquired the Komatsu silicon wafer producti on
facility in Hillsboro. The Komatsu site is approximately 93 acres total, and included 480,000 sf
manufacturing and approximately 60 acres of excess land for additional fabs or support
buildings. SolarWorld has since built an additional 500,000 sf module manufacturing facility on
the site. TriQuint Semiconductors has a 32-acre corporate campus in Hillsboro, which
manufactures semi-conductors (4” to 6” wafers) and offers integrated technologies for wireless
and base station communications applications. Complete engineering design, manufacturing,
testing, research and development are included at this facility. TriQuint has completed thee
expansions at their Hillsboro HQ since 2006.
FEI Intel
Ronler Acres
Campus TriQuint
Semiconductor
Genentech
Intel
James
Farm
Campus
SolarWorld
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 67
Hillsboro has continued to plan for future industrial development of its high technology cluster.
The City has strategically focused industrial development efforts in the northern section of the
City and is supporting that decision through zoning, industria l infrastructure, and transportation
access. Despite having approximately 850 additional buildable acres within the City’s North
Industrial Area (Shute, Evergreen, and Helvetia Industrial Areas), the sites have been hampered
by multiple ownership patterns, wetlands and natural resource issues, and lack of
infrastructure.
The City has completed a strategy intended to prepare approximately 700 acres of vacant land
in the North Industrial area for development. The strategy addresses the key challenges to
development in this area including infrastructure concept design and funding; mitigation of
wetlands and environmentally sensitive lands; and land assembly (with the goal of providing a
100 acre site that is truly “shovel ready”). The city also realizes tha t high quality and reliable
infrastructure (roads, water, sewer, electricity) is necessary. Millions of dollars are being
invested, or are programmed for investment by local utility suppliers in phases over the next 10
years to accommodate development of these key industrial lands.
While Hillsboro is one of the best positioned communities from an industrial land perspective,
only two or three other options exist for large lot users in within cities in the greater Portland
area, a metro with nearly 2 million residents. That Hillsboro is preparing for the future with an
inventory of large-lot industrial land positions it for future success. It is hard to imagine how
the community could accommodate additional large technology -based companies (either
through recruitment or from organic growth of existing businesses) without such an inventory.
Community: Austin, TX (Austin County)
Population: 2000: 656,562 | 2010: 790,390 | % Change: +20.4%
Number of 50+ acre industrial sites now available: 11
Key Industry Site Location Factors:
Proximity to large power capacity at low cost
Access to municipal water and sewer (large capacity)
Large acreage industrial sites (with proximity to utilities)
Proximity to technical, scientific talent (existing critical mass & higher education)
Meaningful incentives, tax climate
Economic Outcomes
Austin is considered to be a major national center for high technology development and
manufacturing. Among its largest employers are Dell, Freescale Semiconductor, IBM , Apple,
Advanced Micro Devices, Silicon Labs, Hewlett-Packard, Google, AMD, Applied Materials, Cirrus
Logic, Cisco Systems, eBay/PayPal, Bioware, Intel, Samsung, Silicon Laboratories, Oracle and
PAGE 68 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
Rackspace. The proliferation of technology companies has led to the region's nickname, "the
Silicon Hills", and spurred development that has greatly expanded the city. Austin is also
emerging as a hub for pharmaceutical and biotechnology companies; about 85 companies in
the bioscience industry are based in Austin. While the presence of some of the companies
noted occurs in more intensive developments (high rise buildings in a downtown location), the
majority of technology employers in the Austin area have considerable space for their
operations.
INDUSTRY FOCUS: WAREHOUSE & DISTRIBUTION
Community: Hermiston, Oregon
Population: 2000: 13,154| 2010: 16,795 | % Change: +27.7%
Number of 50+ acre industrial sites now available: 8
Hermiston is a progressive, growth-oriented urban center for an area based economically on
distribution warehousing, agriculture, food processing, utilities and other light
industry. Centrally located, Hermiston has become a transportation center accessed by
Interstate Highways I-84 (east to west) and I-82 (north and south) as well as rail and river
transportation systems. As well as large properties up to and including a 300 -acre site that is
subdividable with railroad spur frontage. The City will work with developers of industrial and
commercial business that create job opportunities for local citizens to assist with location of
infrastructure to appropriate sites. The Port of Umatilla has helped in the development of
industrial parks in the area, and has recently attracted a new Amazon facility on their nearby
McNary property.
Key Industry Site Location Factors:
Clean water
Economical power
Transportation access (Interstate and Columbia River)
Advanced communications
Room to grow
Economic Outcomes
The City of Hermiston strong locational attributes and readily available industrial land supply
has supported growth in agricultural processing, utilities and distribution/warehousing. Major
employers include:
Wal-Mart Distribution Center – 850 employees
Lamb Weston – 700 employees
Hermiston Foods (NORPAC) - 500 employees
Marlette Homes – 450 employees
Union Pacific Railroad - (315 employees)
Good Shepherd Health Care System - (358 employees)
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 69
Community: Morrow County, Oregon
Population: 2000: 10,995 | 2010: 11,175 | % Change: +1.6%
Number of 50+ acre industrial sites now available: 2,500 subdividable
acres
The Port of Morrow has led economic development efforts within
Morrow County. The Port serves the industrial community by continually
developing its three industrial parks, and offers assistance with financial
services. Connections to the local labor market are also provided. The
Port offers industrial building sites from 1 to 2,000 acres in size as an
economical alternative to metropolitan areas.
Key Industry Site Location Factors:
Clean water
Economical power
Transportation access (Interstate and Columbia River)
Advanced communications
Room to grow
Economic Outcomes
Building on its reputation as a prominent food processing center, the Port is also home to fiber
and seed processing industries, lumber processing and transportation facilities. Port tenants
include:
McGinn Brothers Trucking
Morrow Cold Storage
Devin Oil
Oregon Hay Company
Oregon Potato
Pacific Rock Products
Portview Ranches
Rivercrest Farms, Inc.
Tidewater Terminal Services
Vanco
Watts Brothers Re-Pack Facility
PAGE 70 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
Community: Reno, Nevada (Washoe County)
Population: 2000: 180,480 | 2010: 225,221 | % Change: +24.8%
The greater Reno, NV area has grown over the past two decades into a
significant regional distribution center for the West Coast. Its geographic
location provides optimal service to a six to nine-state area, but most
strategically to California – the most populous and largest state economy in
the United States. Warehouse and distribution is a major industry and
source of employment in the Reno-Sparks area, comprising nearly 13% of all
jobs. The area has established a large Foreign Trade Zone (FTZ) of nearly
7,500 acres and many large-scale distribution centers have a presence in the
Reno-Sparks area including:
PetSmart (990,000 sf)
MEPT USA (700,000 sf)
Kmart
JCPenney
Toys R Us (300,000 sf)
Barnes & Noble (642,000)
Husqvarna
US Ordinance
Patagonia (171,000 sf)
Walmart (890,000 sf)
Urban Trends (clothing) – 430,000 sf
Sherwin-Williams
Starbucks (160,000 sf)
Snap-on Tools (120,000 sf)
Several of the large scale distribution centers have
located in the Tahoe-Reno Industrial Center (TRIC), a
110,000 acre industrial park is among the largest in
the nation. Since 2000, TRIC has attracted 83
companies and construction of nearly five million
square feet of warehouse and industrial buildings.
The park also markets that it has 900 megawatts of
power available for companies. The development is
well served with rail and highway access, but prior to
its conception, the rural area east of Reno had no
historical industrial development – giving credence
to the “build it and they will come” strategy
employed more famously at the 7,000 acre Research
Triangle in North Carolina.
DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS PAGE 71
Community: Salt Lake City, Utah (Salt Lake County)
Population: 2000: 898,387 | 2010: ,029,655 | % Change: +14.6%
Key Industry Site Location Factors:
Strategic geographic location for target metropolitan markets
Access to multiple interstate and rail transportation systems
Availability of low cost, large acreage land
Meaningful incentives, tax climate
The Salt Lake City, UT area is geographically positioned to serve an eleven-state area in the
Western U.S. with one day truck service – making it a hub for the nation’s distribution industry.
Key factors supporting Utah’s status as a distribution destination include an extensive freeway
system with more than 43,155 miles of highways and roads; a major rail system with more than
1,400 miles of railroad track stretching throughout the state; an international airport handling
over 550 million pounds of air cargo and air freight annually. Salt Lake City is also a Customs
Port of Entry, serving as a full-service port city. Utah’s low operating costs and available labor
force make Utah an attractive location for the distribution industry. Over 1,500 trucking
companies have a presence in the state.
A long list of companies have large scale distribution operations in the greater Salt Lake City
area, including:
The Hershey Company (chocolate food
products) – 600,000 sf warehouse
Overstock.com (consumer products) -
950,000 sf warehouse
Sephora USA (beauty products) - 320,000
sf warehouse
U.S Foodservice (wholesale food
products) – 265,000 sf warehouse
Huish Detergents (private label
detergents) – 200,000 sf warehouse
Icon Health & Fitness (exercise equipment
mfg. & distribution) – 300,000 sf facility
Lifetime Products (sports equipment mfg.
& distribution) - 2.6 million sf complex
Nestle USA (packaged frozen foods)
Merit Medical Systems (medical devices, supplies)
Nu Skin Enterprises (beauty products) – est. 400,000 sf warehouse
PAGE 72 DESCHUTES COUNTY CENTRAL OREGON LARGE LOT INDUSTRIAL LAND NEED ANALYSIS
RC Wiley Home Furnishings (furniture manufacture and distribution) 860,000 sf
warehouse
ICU Medical (medical devices and supplies) – 450,000 sf facility (140,000 sf distribution)
Walmart (large scale retailer)
Easton (sporting goods) – 140,000 sf distribution
Salt Lake City and surrounding communities have planned for growth of this industry, which has
seen considerable expansion in the past two decades. Nearly all of the distribution centers
noted above require large scale industrial parcels for initial build ings and future growth.