Commercial building demand, prices on the rise throughout Central Valley

By Sim Risso
Business Journal Writer

July 7, 2017

 

STOCKTON — As the Central Valley gets deeper into 2017, things are trending positively for commercial real estate. Industry professionals are reporting low vacancy rates, high demand leading to an increase in leasing rates and construction on new buildings ramping up to meet that demand.

Jim Martin, Senior Vice President of Lee and Associates Central Valley Inc. has been working the local commercial real estate market for 21 years, specializing in industrial real estate. During that time, Martin has seen ups and downs in the market, but he said the current market is one of the stronger ones he can recall.

“On the industrial side, I’d characterize the demand similar to what we saw in 2006 and 2007,” Martin said. “But I would say that what we haven’t seen, which we saw in that cycle, is an over flow of supply in terms of new construction starts.”

According to a report from commercial real estate services firm CBRE, there was one commercial construction building completed in the first quarter of 2017. It was a project in Tracy totaling 381,600 square feet.

While the building in Tracy was the only one completed in the first quarter of 2017, there are nine buildings under construction totaling 3.5 million square feet. Six or seven of those projects should be completed during the second quarter of 2017.

However, filling those buildings with tenants shouldn’t be too difficult. The vacancy rate in the first quarter of 2017 was only 2.2 percent.

Brian Peterson is First Vice President for CBRE and covers the office real estate market in the Central Valley. Peterson said he expects to see more projects in the future, but the approach will be measured due to a lack of available, entitled land and developers’ desires to have the building occupied quickly.

“They’ll probably look to build in really strong submarkets or have it pre-leased to justify,” Peterson said. “I don’t think you’ll see spec-office building in the near term under construction to put a major chunk of space on the market. It’ll probably be something that can be absorbed pretty quickly after delivery.”

The CBRE report also cited an increase in the average asking Industrial lease rate. It increased 1 cent per square foot across the board to 40 cents overall.

Tom Davis, Senior Vice President for CBRE’s Central Valley Industrial Practice group, expects the price per square foot to continue to increase in the coming year.

“Rents and building prices are up compared to this time last year,” Davis said. “We expect further increases in the coming year. Almost all vacancies in the market are seeing activity.”
Peterson offered a similar prognostication in terms of office real estate.

“Office lease rates and sales prices are up year over year in most local submarkets,” Peterson said. “I don’t see any change to the trend and expect a moderate increase in pricing throughout 2017.”
There’s also been a trend where the submarkets of Tracy and Northwest Stockton are noticeably strong in the office market. Peterson said part of Tracy’s market could be influenced by the Bay Area, as well as a lack of supply driving up demand. In Northwest Stockton, the Brookside business park is in demand.

“Many buildings are fully leased or just have a couple suites available,” Peterson said. “And again, rents are going up. Each deal seems to be pushing our rates up a little higher than the last.”
Martin has noticed the same thing, with Stockton seeing an increase in demand on the industrial side.

“Historically, there’s always been a preference for Tracy, Lathrop and Manteca, given their proximity to the Bay Area. But as those markets have reached nearly full occupancy, Stockton has been the benefactor of that overflow in demand,” Martin said.

And there’s a diversity in industries driving the demand. On the office side, Peterson cited medical offices, government-related uses, financial and professional services.
Davis also mentioned a wide array of tenants are driving demand in his discipline.

“Tenant demand is very broad on the industrial side,” Davis said. “E-commerce, the electrical vehicle industry and just consumer staples, food and beverage, are the most active sectors.”
Between the demand on the limited supply currently available, the measured amount of construction adding an amount of supply to the market that can be absorbed, and the increase in price per square foot, the market is in a good place. The industry professionals expect it to keep trending that direction too.

“We’re in a healthy market,” Martin said. “Values are up, rents are up and supply is short. So there aren’t very many options, and we’re starting to get to a point now where more and more buildings that are available are getting multiple inquiries and in many cases multiple offers. We haven’t seen that for some time.”

U.S. home prices up 6.6 percent in May 

Central Valley Business Times
IRVINE 
July 5, 2017 

  •  Price appreciation outstripping income growth in many markets
  • Prices soaring in Central Valley
  • For renters and potential first-time homebuyers, it is not such a pretty picture

Home prices are up strongly both year over year and month over month with national prices increasing year over year by 6.6 percent from May, according to a new report Wednesday from real estate financial information company CoreLogic Inc. (NYSE: CLGX) of Irvine.On a month-over-month basis, home prices increased by 1.2 percent in May compared with April, according to the CoreLogic data.

Looking ahead, the CoreLogic “HPI Forecast” indicates that home prices will increase by 5.3 percent on a year-over-year basis by May 2018, and on a month-over-month basis home prices are expected to increase by 0.9 percent from May to June.

The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.

“The market remained robust with home sales and prices continuing to increase steadily in May,” says Frank Nothaft, chief economist for CoreLogic. “While the market is consistently generating home price growth, sales activity is being hindered by a lack of inventory across many markets. This tight inventory is also impacting the rental market where overall single-family rent inflation was 3.1 percent on a year-over-year basis in May of this year compared with May of last year. Rents in the affordable single-family rental segment (defined as properties with rents less than 75 percent of the regional median rent) increased 4.7 percent over the same time, well above the pace of overall inflation.”

“For current homeowners, the strong run-up in prices has boosted home equity and, in some cases, spending,” says Frank Martell, president and CEO of CoreLogic. “For renters and potential first-time homebuyers, it is not such a pretty picture. With price appreciation and rental inflation outstripping income growth, affordability is destined to become a bigger issue in most markets.”

Parts of the Central Valley are seeing price increases even greater than the national average. Here are CoreLogic’s reports for individual Valley markets:

Home Prices in Fresno Increase In Fresno, home prices, including distressed sales, increased by 6.9 percent in May compared with May 2016. On a month-over-month basis, home prices, including distressed sales, increased by 0.9 percent in May compared with April.

Home Prices in Stockton-Lodi Increase In Stockton-Lodi, home prices, including distressed sales, increased by 9.0 percent in May compared with May 2016. On a month-over-month basis, home prices, including distressed sales, increased by 2.1 percent in May compared with April.

Home Prices in Visalia-Porterville Increase In Visalia-Porterville, home prices, including distressed sales, increased by 5.5 percent in May compared with May 2016. On a month-over-month basis, home prices, including distressed sales, decreased by 0.4 percent in May compared with April.

Home Prices in Bakersfield Increase In Bakersfield, home prices, including distressed sales, increased by 4.9 percent in May compared with May 2016. On a month-over-month basis, home prices, including distressed sales, increased by 0.8 percent in May compared with April.

Home Prices in Metro Sacramento Increase In metropolitan Sacramento, home prices, including distressed sales, increased by 8.5 percent in May compared with May 2016. On a month-over-month basis, home prices, including distressed sales, increased by 0.8 percent in May compared with April

Home Prices in Modesto Increase In Modesto, home prices, including distressed sales, increased by 9.6 percent in May compared with May 2016. On a month-over-month basis, home prices, including distressed sales, increased by 1.3 percent in May compared with April. Home Prices in Merced Increase

Home Prices in Merced Increase In Merced, home prices, including distressed sales, increased by 11.6 percent in May compared with May 2016. On a month-over-month basis, home prices, including distressed sales, increased by 0.5 percent in May compared with April.

Home Prices in Madera Increase In Madera, home prices, including distressed sales, increased by 8.5 percent in May compared with May 2016. On a month-over-month basis, home prices, including distressed sales, increased by 0.5 percent in May compared with April.

Blaze Fast-Fire’d Pizza Announces Grand Opening of New California Central Valley Location

Central California

May 8, 2017
www.franchising,com

Blaze Fast-Fire’d Pizza, the fast-casual concept known for its chef-driven menu and casually hip restaurants, today announced that it will open a new Central California location, in Clovis on May 11. The Clovis restaurant is located at 1840 Herndon Ave., features a 2,500-square foot interior with interior seating for 51 and exterior seating for 26, and is located in the Buchanan Crossroads Center at Herndon and Fowler Avenues. To celebrate the grand opening, the Clovis restaurant will offer FREE build-your-own artisanal pizzas on Thursday, May 11th from 10:00 a.m. to 10:00 p.m. to anyone who follows Blaze Pizza on Instagram, Twitter, or Facebook. Blaze also has additional central valley locations in Lodi (1537 Lower Sacramento Road), Tracy (2976 W. Grant Line Rd.), and Stockton at the Weberstown Mall (4950 Pacific Ave).

Blaze Pizza is a modern day “pizza joint” that has been inspiring excitement and cultivating fanatics for its custom-built artisanal pizzas, freshly made salads, blood orange lemonade and s’more pies since it opened its first location in 2012. Each restaurant features an interactive open-kitchen format that allows guests to customize one of the menu’s signature pizzas or create their own, choosing from a wide selection of carefully sourced, high-quality ingredients – all for around $8. The generously-sized 11″ pizzas are then sent to a blazing hot open-flame oven – the centerpiece of the restaurant – where dedicated pizzasmiths ensure that the thin-crust pies are fast-fire’d and ready to eat in just 180 seconds. Each restaurant makes its own dough from scratch using a recipe developed by critically-acclaimed Executive Chef Bradford Kent (the “Pizza Whisperer”), which requires a 24-hour fermentation period to produce his signature light-as-air, crisp crust. For pizza fans with specific dietary needs, Blaze Pizza offers gluten-free dough and vegan cheese. The Clovis restaurant will also feature a selection of wine and craft beer.

To create the perfect vibe inside the Clovis restaurant, award-winning design architect Ana Henton has added several unique, modern touches, including an oversized wall graphic custom-built to suit the space. Additionally, in support of the company’s commitment to “Intelligent Choices for Our Pizzas, People & Planet”, the Clovis restaurant will use both recycled and sustainable materials and energy-efficient LED lighting, and will feature eco-friendly, compostable packaging.

“At Blaze, we’re all about creating an engaging dining experience where guests can enjoy artisanal pizza that’s both fast and affordable,” said Jim Mizes, president & COO of Blaze Pizza. “The authenticity of our food, plus a service culture that genuinely focuses on the happiness of our guests and crew – have been key to our popularity and expansion.”

The newest Blaze restaurant is looking forward to building strong roots within the community, offering a spot where guests can connect, create and enjoy. To that end, the restaurant promotes a turnkey fundraiser program that returns 20 percent of an event’s proceeds back to the organization, helping schools, sports clubs and other local groups “cause a scene for a good cause.”

The Clovis Blaze Pizza location will be locally owned and operated by DAMM Fine Pizza LLC, a franchise group developing locations throughout Central California.

Developers unveil plans for lifestyle center at East Hills Mall

Central California

January 18, 2017
By James Burger
Bakersfield.com

The new owners of the East Hills Mall announced Wednesday plans to renovate the property into a 350,000-square-foot “destination open-air lifestyle center” with restaurants, shopping and a brand new movie theater.

Local developers Chris Hayden and Mark Shuman of MarkChris Investments and Craig and Grant Carver of C & C Properties Inc. purchased the northeast Bakersfield mall in December.

On Wednesday they described their plans for turning the faltering mall into a destination shopping center.

Their plans call for a dramatic change to the complex. The center of the mall would be demolished and converted to an open-air courtyard with a fountain anchored by the new movie theater and flanked by shops and restaurants. The theater appears from plans to sit on the same footprint as the current Regency Theaters.

“We are looking forward to providing Bakersfield and especially northeast Bakersfield an exciting, first-class shopping and entertainment experience,” Craig Carver said in a statement. “Our design inspiration is a blend of mid-century modern and contemporary-style architecture so it will uniquely stand out in the market.”

The plans show room for 10 major retail shops fronting on pedestrian walkways, not the interior space of the mall, as well as plenty of other smaller retail and restaurant space.

They show the addition of five new, smaller buildings along the Mall View Road frontage like those that typically contain stand-alone restaurants and banks in other Bakersfield shopping centers.

Carver said the owners are in lease negotiations with several national and regional retailers and restaurants as well as a national theater chain. He did not name names, which is typical before final deals are struck.

Reconstruction is scheduled to start in the “second quarter or early third quarter” of 2017 and be finished roughly a year later. Current tenants will move out by March 3, a press release said.

It said those tenants will have an opportunity to relocate to the new shopping center at current market lease rates.

The project will need city approvals before it can move forward.

Paul Johnson, a principal planner with the City of Bakersfield, said the property is currently zoned for a planned commercial development.

If the developers choose to proceed under that zoning, they would need to submit plans to the city for review and get approval by both the Bakersfield Planning Commission and the Bakersfield City Council.

If the developers choose to rezone the property, they would have to undergo a more extensive zone change process, which could include environmental review up to and including an environmental impact report, Johnson said.

He said formal plans have not been submitted to the city for review.

East Hills Mall, built in 1988, sits between Mount Vernon Avenue and Oswell Street. There are 250,000 people in the project’s primary trade area and about 500,000 people in a 10-mile radius, said Duane Keathley, senior director/principal at Cushman & Wakefield/Pacific Commercial Realty Advisors.

“This redevelopment has been a long time coming,” he said in a statement. “It’s great news for the people of east Bakersfield and for the city of Bakersfield in general. It will be an impressive retail and entertainment center.”

Wonderful Real Estate Signs 10 Year Lease for 400,000 SF BTS Facility at Wonderful Industrial Park

Central California

Published on Jason Gremillion
Wonderful Real Estate

We are excited to announce our newest success at Wonderful Industrial Park. WRE has signed a 10 year lease for a new 405ksf BTS facility. WRE worked closely with the tenant over the past two months utilizing WRE’s ProCore software to create a seamless and expedited design process. The result will allow WRE to commence construction by mid-June 2017 and deliver the completed facility by February 2018!

$1 Billion Neighborhood

Central California

March 31, 2017
Manteca Bulletin
Dennis Wyatt

The 209’s most unique — and what could become the most prestigious — residential address will become available this spring.

River Islands at Lathrop plans to sell the first of 990 lots set aside for custom executive-style homes overlooking the San Joaquin River, Paradise Cut, and the Old River that will also back up to an 18-mile greenbelt park along the water’s edge encircling the 11,000-home planned community.

Lots will range in size from 8,000 to 20,000 square feet and will start at $200,000. To put that in perspective if all of the lots were to sell for $200,000 regardless of size or factoring in inflation over the years it takes for all to be sold, it represents $198 million in land sales alone.

And given the expectations the homes will all exceed $1 million, River Islands will one day be ringed by $1 billion worth of homes.

River Islands Project Manager Susan Dell’Osso indicated initial plans will be to develop 65 lots with no more than 10 lots ever being offered at one time. River Islands is likely to roll out the lots in conjunction with various phases over the community’s projected 20-year buildout.

Dell’Osso said the lots will be offered for a period of a month or so to the 250 people that are on an interest list before they are made available to the general buying public.

When completed it will be the largest concentration of executive-style homes in the Great Central Valley if not Northern California outside of well-to-do enclaves such as Atherton when it is based on housing style and not simply price. There are $1 million homes in San Jose, as an example, that are previously owned KB tract homes that have been closing escrow as well as 60-year-old flattops with less than 1,800 square feet in Marin County.

The homes on the River Islands custom lots will be at least three times the median home value in Lathrop ($357,000) and Manteca ($345,000). To get a financially comparable property in the Bay Area it would have to sell for more than $3 million.

There is nowhere in the Central Valley where you can buy a home site next to a river that overlooks it. That’s because other locations where homes are sold next to the river have their view blocked by towering levees. The custom home sites at River Islands are on top of 300-foot wide super levees — at least six times wider than a typical levee. They have been certified to withstand the maximum flood that the Army Corps of Engineers rate levees for which is a 200-year flood or an event that has a 1 in 200 chance of happening in any given year.

Dell’Osso said the state is in the final stages of reviewing plans for the greenbelt looping River Islands. Besides a path suitable for bicycling, walking, and jogging plans call for exercise par courses throughout as well as planting native shrubs and vegetation.

It will also be universally accessible meaning anyone including non-River Islands residents can use the greenbelt. It also could end up with one — or no — interruptions. Last year River Islands modified the original design for the main entrance via the new bridge across the San Joaquin River so that the greenbelt trail would be connected by a bridge that is now in place across the four-lane road.

The current access road from Manthey Road will eventually be closed eliminating that disruption in the loop trail. The future western access to River Islands may also have a bridge across it to allow the entire trail not to have to cross a road.

That is something that the valley’s existing premier urban riverside trail — the American River Parkway in Sacramento — can’t claim.

To get an idea how far the 18 mile River Island loop trail would be, it is 18.5 miles from downtown Manteca to downtown Modesto.

While the exact name of the trail hasn’t been selected, Dell’Osso said it will be named after Lathrop’s quintessential couple — Bennie and Joyce Gatto.

CT Realty Acquires 345-Acre Industrial Parcel in Stockton, Plans $135MM Build Out

Central California

The Registry
Posted on

CT Realty (CT) has acquired 345 acres of industrial land within the master-planned NorCal Logistics Center in Stockton, Calif., with plans to develop 4.4 million square feet of high-clearance distribution, e-commerce/logistics and advanced manufacturing buildings. The project, which breaks ground this month, includes an unprecedented amount of speculative construction for Northern California.

Valued at $135 million, the first phase of development includes approximately 1.7 million square feet in three buildings, including a 1,122,341-square-foot building that will be the single largest spec building developed in Northern California. Two additional buildings of 388,183 square feet and 186,944 square feet will complete Phase 1. Beyond the planned development, NorCal Logistics Center has sites available for build-to-suit developments ranging in size from 100,000 square feet to more than 1.9 million square feet.

“We view this as a long-term development opportunity to assemble a world-class logistics campus in one of the strongest markets in America,” said Carter Ewing, managing partner of CT Realty. “The dynamics of California’s Central Valley region, with an industrial base of more than 185 million square feet, mirror the favorable activity we have encountered over the last three years in Southern California and other major distribution markets in Dallas, Atlanta and Chicago.”

NorCal Logistics Center, which is already home to General Mills, Fresh & Easy and Fox Head, is located in the heart of California’s Central Valley industrial market and serves an extension of the global logistics supply chain infrastructure directly linked to West Coast ports in Oakland/Stockton, Los Angeles/Long Beach, Portland, Ore., and Seattle/Tacoma, Wash. The project is proximate to key intermodal facilities operated by Burlington Northern Santa Fe and Union Pacific railroads, and is accessible to SR-99, I-5, I-205 and I-580, linking to all major Northern California markets and strategic Western U.S. destinations.

“The evolution of modern logistics infrastructure, including inland ports, sea ports and commercial rail systems, has changed the dynamics of how containerized cargo is distributed nationwide and throughout the world,” added Ewing. “Investing in buildings that are strategically located near this infrastructure is integral to meeting the demands of today’s most progressive logistics users, and this is at the heart of our national strategy. The locational attributes of NorCal Logistics Center give us confidence that this will become one of the premier master planned logistics parks in the entire Northern California market,” added Ewing.

CT and related development partnerships are developing speculative and build-to-suit Class A logistics buildings for some of the largest industrial users in America. The company has acquired or developed 7 million square feet of industrial buildings in the U.S. over the last 36 months, experiencing strong leasing activity from projects that have been well received in their respective markets.

“NorCal Logistics Center represents the calculated expansion of an industrial logistics strategy we began implementing aggressively across the country five years ago,” said J.C. “Watty” Watson, managing partner of CT.

CT has capitalized much of its acquisition and development activity with Diamond Realty Investments (DRI) the U.S. real estate investment arm of Japan-based Mitsubishi Corporation. Both DRI and CT have 25-year histories in development and investment.

“We are delighted to again combine forces with DRI in this exciting new venture,” added Watson. “Together, we have almost 4 million square feet under construction and another 10 million square feet in our development pipeline on land that we own across America.”

The project is designed by Ware Malcomb, a premier architectural design firm with global experience in logistics and distribution facilities. Construction financing is provided by Cal Bank & Trust and Fifth Third Bank.

CT acquired the NorCal Logistics Center parcel from Arch Road, L.P., a partnership controlled by Minnesota-based Founders Properties and represented in the transaction by Darla Longo, Barbara Emmons Perrier, Rebecca Perlmutter, and Michael Kendall of CBRE National Partners. CT was represented by Cushman & Wakefield’s Kevin Dal Porto, Blake Rasmussen, John McManus and Tyler Vallenari, who will provide ongoing leasing, sales and market support services.

Rubber recycling plant coming to Stockton

STOCKTON

Rubber recycling plant coming to Stockton

Nov 11, 2016
By Joe Goldeen

STOCKTON — A national producer of crumb rubber made from recycled tires and used for rubberized asphalt and sports fields is in the process of converting its Stockton warehouse into a full-fledged manufacturing facility that eventually could employ 20 workers or more.

Newport Beach-based CRM Rubber credited a $286,000 sales tax exemption made possible by AB199, authored by Assemblywoman Susan Talamantes Eggman, D-Stockton, and signed by the governor in 2015, in part for its choice to expand its presence at the Port of Stockton.

“Assemblymember Eggman’s bill was extremely helpful in bringing our company to the Stockton area. We had been considering an additional tire recycling plant in Northern California for some time and the promise of a sales tax exemption in AB199 was important in that decision,” said Brian Wong, CRM Rubber’s chief financial officer.

Eggman said creating new jobs in the recycling industry “is the point of the whole bill. This has been and will continue to be one of my legislative focuses.”

She said CRM Rubber had been getting ready to go to Canada before the tax exemption was made possible.

“We feel like this program will be pumping $200 million into the local economy. Everybody who applies (for the exemption) must demonstrate that it will be a net gain for the state of California,” Eggman said. To date this year, more than $16 million in tax exemptions has been granted statewide. By the end of the year, that could rise to between $18 and $20 million.

Wong said CRM Rubber’s current Stockton warehouse at 1404 S. Fresno Ave. — site of the former Hormel Foods processing plant — is currently being used as a transit station with three employees. No manufacturing is going on there yet.

Fresno looks to win cosmetics company’s distribution center – and jobs that go with it.

Fresno

Fresno looks to win cosmetics company’s distribution center – and jobs that go with it.

NOVEMBER 15, 2016 3:12 PM
BY TIM SHEEHAN

ULTA Salon, Cosmetics & Fragrance Inc., a major retailer of cosmetics and fragrances, is eying Fresno as the site for a 670,000-square-foot distribution center that could employ as many as 1,300 workers and fulfill internet sales orders throughout the West.

And on Thursday, the Fresno City Council is being asked to approve up to $18 million in economic incentives over the next 30 years to help seal the deal with the Illinois-based company.

A 38-acre patch of vacant land at the northeast corner of East and Central avenues, in southern Fresno’s industrial fringe, is under consideration for the project, said Larry Westerlund, Fresno’s economic development director.

The financial incentives would be in the form of partial rebates of property taxes paid by ULTA Inc. on the improved site, as well as partial rebates of sales taxes on goods sold through the center. But the package is contingent upon ULTA not only developing the site at an estimated $110 million, but also making good on creating new, long-term, full-time jobs for workers at the site.

ULTA Inc. is the division of the company that deals with distribution centers and e-commerce. To qualify for the incentives, ULTA would have to create the equivalent of at least 500 full-time jobs; if the company fails to reach that mark by the end of 2022, ULTA would have to repay whatever rebates it had received to that point.

“The company estimates that their initial workforce would consist of 642 full-time employees with up to 700 part-time employees at peak times of the year,” according to a staff report to the City Council.

ULTA SALON, COSMETICS AND FRAGRANCE INC. IS THE LARGEST BEAUTY RETAILER IN THE NATION WITH MORE THAN 900 STORES IN 48 STATES.

The property is currently just outside the Fresno city limits. But Fresno County’s Local Agency Formation Commission last week approved Fresno’s application to annex the site, clearing the way for the city to offer the economic incentives.

An economic analysis commissioned by the city estimates that even after paying the incentives, Fresno stands to realize $42 million in additional sales and property taxes over the next 25 years.

“The thing that sometimes gets lost in the mix is that currently that property provides very little economic benefit to the county or to the city,” Westerlund said. “It’s an empty field. Everything we’re doing is contingent on having that property built up with a $100 million facility.”

“If we don’t do the project, the amount (of tax revenue) is still almost zero,” he added. “All of this is on a net-gain basis.”

The property is owned by G3 Development Co., which also built the nearby North Pointe Business Park, which was being pitched by the city as the site for Nordstrom to operate a much-sought-after e-commerce fulfillment center. But in June, Nordstrom cited “the pace of change in retail” in delaying its plans for at least four years.

Westerlund said the city has been working with the Parnagian family, owners of G3 Development, on the annexation plans. Earlier this year, the City Council approved “pre-zoning” the site from its agricultural designation under the county’s zoning rules to industrial purposes in anticipation of bringing the property into the city’s jurisdiction.

Consultants for ULTA reached out to the city several months ago to inquire about available sites, but Westerlund said officials didn’t learn who the potential client was until this fall. Of several sites that were examined throughout the western U.S., Fresno has now been deemed ULTA’s preferred site, setting the stage for the company’s request for the incentives.

“We’re first up,” Westerlund said. “If some of the contingencies don’t hit, they could go to a second or third site.” Among those other contingencies are coming to terms on a deal for the property; approval by Pacific Gas & Electric Co. for discounted energy rates for new or expanding businesses; and approval of $8 million in CalCompetes state tax credits by the Governor’s Office of Business and Economic Development. The CalCompetes committee is expected to approve those tax credits at a meeting in Sacramento on Thursday afternoon.

ULTA Salon, Cosmetics and Fragrance Inc. is the largest beauty retailer in the nation with more than 900 stores in 48 states. The company’s stock is publicly traded on Nasdaq under the stock symbol ULTA. Its net sales through the first six months of 2016 were more than $2.1 billion, a 22.8 percent increase from 2015’s first half. ULTA operates distribution centers in Illinois, Arizona, Pennsylvania, Indiana and Texas. Its net profit for the first half of 2016 was $181.9 million, compared to $141.1 million in the first half of 2015.

The company’s second-quarter earnings report also included ULTA’s projected outlook to grow its e-commerce sales by about 40 percent.

“When you look at them, you realize they’re pretty big, and they’re growing like crazy,” Westerlund said. “And one of the big things they’re working on is growing their internet business.”

The company told the city it expected sales through a Fresno e-commerce and distribution center to amount to about $66 million in the first year of operation in 2018, according to a staff report to the City Council.

The ULTA proposal is the first big project to come through the city’s development pipeline since the City Council approved Councilman Lee Brand’s Economic Expansion Act, which includes the tax rebates and other economic incentives for major job-creating projects that are being considered for ULTA.

The $18 million cap on incentives for ULTA shows just how far Fresno has come in the types of inducements it wields for big-time developments that hold the potential for creating hundreds, if not thousa
nds, of jobs.

About 20 years ago, when Fresno was fighting to lure Gap Inc.