Former Base Becoming Destination

Riverside Press Enterprise03/12/04

FORMER BASE BECOMING DESTINATION ECONOMY: Adding Stater Bros. to the tenants at the Norton site bodes well for San Bernardino’s status.

By ADAM EVENTOV / The Press-EnterpriseWith the addition of Stater Bros. headquarters, the former Norton Air Force Base and San Bernardino are gaining momentum as a destination for major commercial real estate projects. Stater Bros. plans to purchase about 160 acres at the former base to relocate its headquarters and distribution center. The grocer is expected to build two warehouses and an office building totaling about 2 million square feet. It would be the third high-profile company, behind Kohl’s and Mattel, to build at AllianceCalifornia, a 500-acre redevelopment project by Texas-based developer Hillwood. The additions of Kohl’s, Mattel and Stater Bros. are setting the stage for future development, said John D. Kasarda, cargo and logistics expert and a professor at the University of North Carolina, Chapel Hill. “Success breeds success. It’s about branding,” Kasarda said. Jack Brown, chairman, president and chief executive of Stater Bros, said Thursday that he felt Norton was a viable headquarters site because he was familiar with the area. But other companies likely will consider the former base because other business already chose San Bernardino, Kasarda said. “Kohl’s put us on the map. Mattel proved Kohl’s was not a one-off deal, and Stater Bros. validates the concept,” said John Magness, Hillwood senior vice president. Officials from the Inland Valley Development Agency have been working with Stater Bros, Hillwood, existing base tenants and the Federal Aviation Administration to assemble enough land to accommodate Stater Bros. project, estimated at more than $100 million. “It’s a land deal,” said Tim Sabo, attorney for the Inland Valley Development Agency, the joint powers authority responsible for redeveloping the base and surrounding areas. Although Hillwood is the master developer of the former base, the company’s involvement is limited to selling 80 acres of land to Stater Bros. At 160 acres, the Stater Bros’ project dwarfs Mattel’s 40-acre warehouse site and Kohl’s 59-acre distribution center. Land availability is a key factor in attracting major projects, especially as demand for land along Interstate 10 absorbed many parcels, said Stuart Gabriel, director of the USC Lusk Center for Real Estate. Site’s plan evolved San Bernardino fell into an economic pit with the closure of the Kaiser Steel mill and sustained a number of economic losses that took billions of dollars out of the city’s economy and eliminated more than 20,000 jobs. The biggest loss was the 1994 closure of Norton Air Force Base, which killed 10,000 jobs. After the closure, the city and the development agency entertained a number of redevelopment plans that varied from high-tech manufacturing and research to international trade to an amusement park. “Our consultants missed where the market was going,” Sabo said. Almost a decade later, the market ended up in warehouse and distribution. In the past five years, demand for large distribution centers and land needs has pushed development east to San Bernardino and Redlands. That bodes well for Hillwood for a number of reasons. Companies will look at AllianceCalifornia because of the tight market. But the project also offers a way for companies to move goods among warehouses, trucks, trains and planes. Both Magness and Sabo believe the adjacent airport, nearby freeways and rail yard will help attract future tenants. Brown said he chose the former base because of its proximity to freeways, its location in the town where he grew up and because a seven-mile move wouldn’t disrupt the lives of more than 2,000 Stater Bros. employees, he said. “It was a business decision of the head and of the heart,” Brown said. In addition to being a major tenant at AllianceCalifornia, Stater Bros. is expected to share about a third of the $10 million cost to landscape the industrial park and install infrastructure at the base, Sabo said. However, the deal between Stater Bros., Hillwood and the Inland Valley Development Agency is still in negotiations, Sabo added.