UPS & Amazon offer huge boost to Visalia Industrial Park
After 2 years of construction activity United Parcel Service (UPS) plans to open their new 450,000sf distribution hub on Plaza at Riggin in the Visalia Industrial Park early next month. UPS spokesperson Kim Krebs says when it opens the “new Visalia package sortation and distribution center will create more than 625 new full-and part-time well-paying jobs.”
Contractors are packing up now after erecting the 88 acre complex that includes several outbuildings, a truck maintenance facility, fuel center, customer service center and entrance station besides the main tilt-up concrete building with its advanced package sorting conveyor system. UPS bought the land in summer of 2017 from CapRock Partners adding 30 acres last fall from the same party. But wait,as they say ..there’s more.
Right next door to UPS there is some surprise news from another mega-shipper. Amazon is the unnamed mystery logistics center that is now under construction with a 1.3 million square ft distribution center of their own – one of their “fulfillment centers” that typically employ 1000 or more. Amazon has not announced the Visalia project but the contractor on the job Gray Construction based in Kentucky is an Amazon contractor and at the job site today.The company secured the city building permit.
Blake Steel with Gray Construction says this will be the third Amazon center he has worked on and says they will be complete in 11 months. Some 300 construction workers will be needed during the busiest months of the Visalia project.
A typical scenario played out in Fresno with the distribution center built and open in less than a year. In Fresno’s case “During peak times, the fulfillment center ships over 1 million packages per day and has created over 3,500 jobs within the immediate area” says a report. If Fresno has one, Bakersfield too now has seen completion of a 4-story Amazon complex near their airport, expected to open September 6,according to the Bakersfield Californian.
The new general manager told the press there “This is one of the most advanced buildings that Amazon has,” he said, adding that the building — four stories, each about the size of 11 football fields — is the company’s 26th “fulfillment center” in California.” Make that the 27th – counting Visalia. Like UPS, Amazon is not just hiring robots to do the work. Amazon has more than 110 active fulfillment centers in the US and more than 185 centers globally. Now we are on the map
Property owner Newport-based CapRock Partners has been working on this 1.3 million “spec building” for over a year and just received City of Visalia approval to begin construction with grading of the empty site starting last week. Electric power to the site for construction is being added this week to the new address- 3315 N Kelsey.The building has a million sf at ground level and a 300,000sf mezzanine.
CapRocks’ President Patrick Daniels said he could not comment who the tenant was for the big building, what will be by far Visalia’s largest – almost 10 Costcos for comparison. Daniels has been working on their 640 acre industrial park – they call it the Visalia Logistics Center – since 2006 when he first visited Visalia drawn by developer Richard Allen and his successful effort to bring in VF Corp to Visalia in 2005. VF, a major local employer, is another big UPS customer who came to town because UPS ships by ground from Visalia to most of California in less time than almost all other competitive locations. Scores of other firms have suggested that is why, they too, chose Visalia.
With the coming of these two new shippers, the City of Visalia already is planning to widen Riggin from Plaza to Shirk in coming months as well as punching Kelsey north that will allow Amazon street access.The Riggin and Kelsey intersection will now be signaled. Riggin is already busy with truck traffic with the new connection to Highway 99 ( Betty Drive Interchange) that fully opened in the past year.
As for jobs at Amazon the Bakersfield location is a close model, offering warehousing jobs paying $15 to start, the company says, and full-time employees immediately qualify for comprehensive health benefits as well as a 401(k) program with a 50 percent company match. Amazon also offers to pay 95 percent of tuition for college courses in in-demand fields, regardless of whether that education relates to their current job with Amazon.
Amazon.com also said last week it received federal approval to establish a fleet of drones and will begin limited tests of package deliveries to customers in the U.S., although a number of key steps remain before widespread use of the technology will be allowed. Besides drones, both UPS and Amazon promises a green fleet of delivery vehicles based in the Visalia Industrial Park.
What will be the impact on government of a new Amazon logistic center here? A summary of Amazon’s 2019 U.S. taxes they reported includes:
•Over $1 billion in federal income tax expense.
•More than $2.4 billion in other federal taxes, including payroll taxes and customs duties.
•More than $1.6 billion in state and local taxes, including payroll taxes, property taxes, state income taxes, and gross receipts taxes.
•Last year alone, Amazon collected and remitted nearly $9 billion in sales and use taxes to states and localities throughout the U.S. The recent enactment of “marketplace laws” by 40 states allows Amazon to legally collect state and local sales and use taxes on behalf of third-party sellers who sell their goods on their platform.
If Amazon is the golden boy company, UPS and their stock has been on a tear recently as well, propelled by a surge in e-commerce activity this year as a result of COVID. UPS stock has doubled since May.
UPS is developing more so-called super-hubs across the US handling more shipments using highly automated technology.The trend is continuing as demand for same-day service accelerates fueled by more internet shopping and door-to-door delivery. The company is gearing up for the holiday shipping season 2020 in Visalia a year earlier than Amazon will do here – for the holiday season of 2021. With all those internet orders a recent analysis expects that e-commerce will require more than 3x the logistics space of brick-and-mortar sales, according to 2019 data.
Global e-commerce sales are projected to more than double to $6.5 trillion by 2023, according to Statista. The Boston Consulting Group estimates U.S. e-commerce sales will double too, to $1 trillion, growing at six times the rate of all retail transactions.
Those projections came before the coronavirus pandemic, which has prompted an explosion in online shopping by people avoiding brick-and-mortar stores because of stay-home orders or fear of being infected by the virus. Best Buy recently reported that e-commerce sales grew 242% from the year-ago quarter and now represent 53% of total sales. VF Corp recently posted e-commerce earnings enjoying a surge as well.
The side-by-side locations of UPS and Amazon in Visalia may encourage a mutual feeding frenzy in our future. Amazon is UPS’ largest customer, accounting for almost 12% of UPS’ $74 billion in revenue last year. Besides taxes, payroll and the job impacts of the double powerhouses of UPS and Amazon, the developments will clearly draw more companies to Visalia say officials. Already 5 more spec buildings are nearing completion within a country block of the two centers.
CapRock itself has 300 more acres just to the north of the Amazon/UPS sites and Fresno developer John Brelsford ,who already has a dozen tenant-filled big buildings in the industrial park, has 150 acres at the NWC of Plaza and Riggin. CapRock too has plans to build another 500,000sf spec building just north of Amazon.
The coming of all this new industry along the city’s northern edge is going to further juice homebuilding in this area and spur other development along Riggin that now ties to Hwy 99 – a continuous 4-lane artery.To the west of Plaza, Brelsford plans several million square feet of new industrial space and sources say Tevelde has long range plans to annex land not yet in the city north of Riggin,plenty more land almost to Hwy 99.