Hotel, Shopping Projects Highlight Construction
By Mark R. Madler
Business: The Venture Commerce Center office park.
The slowdown in the overall economy isn’t necessarily slowing down Palmdale.
Last month ground was broken for a new Embassy Suites hotel, a seven-story structure that will be the tallest building in the city when completed.
Not far away work continues on the multi-story Palmdale Regional Medical Center expected to open later this year. New shopping areas remain under construction, including one on the east side of the city that includes one of the first Super Target stores in southern California.
The city has big plans on the horizon – a power plant and a conference center to host large meetings.
All this activity takes place as a drop in retail revenues, building permit fees and property tax revenue forced two rounds of layoffs of city staff – 11 workers in February, and 39 in March. An additional 20 unfilled positions remain vacant.
Like other areas of the region the real estate market has nosedived, leading to notices of default on mortgage payments and foreclosures. Empire Land, master developer of the Anaverde community filed for bankruptcy protection, raising doubts on the construction of an agreed to school and fire station.
Still, Palmdale Mayor Jim Ledford remains confident that future is bright, stating that the long-term projects of the power plant and conference center will not sink or swim on an upturn or downturn in the economy.
“We are the beneficiaries of an area growing outside of its boundaries,” Ledford said.
It’s a scenario Palmdale has been through before.
In the early 1990s, the aerospace and defense contractors making up some of the largest employers in the Antelope Valley lets thousands of workers go due to cutbacks in defense spending.
Job loss is less a factor in the current downturn as much as the real estate bust and the credit crunch.
The difference between a stock market slowdown and one involving real estate is the length of the recovery, which is longer for real estate, said Mel Layne, president of the Greater Antelope Valley Economic Alliance.
A year ago, about 70 percent of Valley homeowners receiving notices of default on a mortgage payment redeemed themselves. That number dropped to 40 percent in the first quarter of 2008 which indicates to him that owners either cannot re-work the loan or cannot sell their home, Layne said.
In the next six months, the Antelope Valley should expect weak home sales and consumer spending and soft job growth, said Mark Schniepp, a principal with the California Economic Forecast in Santa Barbara when giving his economic forecast before business leaders and public officials in Lancaster in April.
Despite that prediction, chain retailers and restaurants will need workers when they open their doors this year pushing up the already abundant numbers of hourly employees in the service sector.
True, Lockheed Martin and Northrop Grumman are among the largest employers in the city but there is only one each of those. Fast-food restaurants, drug stores, and retail outlets have multiple locations spread across Palmdale and into Lancaster.
The Los Angeles County portion of the Antelope Valley had more than 13,000 wage and salary jobs in the retail trade sector in 2007. The lodging and food service sector had 7,100 jobs that year, according to Schniepp’s report.
The Palmdale Gateway shopping center will open on 70 acres on the east side of the city, with a Super Target, Staples and Home Depot among the anchors. The stores in the center are expected to draw shoppers from throughout the southeast Antelope Valley.
This and other retail projects move forward even as sales decreased by 5.78 percent in the third quarter of 2007, the most recent data available. In 2006, total retail sales topped $1.7 billion in Palmdale.
A Staybridge Suites has been proposed by Phil Barney, the owner of the Holiday Inn, and a Hilton Garden Inn opens this year. When the Embassy Suites opens in 2009 it will be the first full-service hotel to open in Palmdale in several years.
Filling existing and new hotels is not expected to be a problem, with aerospace firms taking rooms during the work week and weekends filled by those coming to take part in sporting events, such as soccer or softball tournaments.
“Lockheed Martin puts in thousands of room nights alone,” said David Walter, the economic development manager. “There are not a lot of hotels they contract with. Embassy Suites will be one of those.”
While Ledford concedes there is a heavy emphasis on service industry jobs in the city, he adds that job growth is an evolution. The restaurant and retail jobs service an immediate need, he said.
With a retail infrastructure in place, light industrial development is expected to follow; the type of companies employing residents that keep wages in the local economy.
In 1999, the city bought property that it turned into a 99-acre business park, selling off the individual lots. Some companies in the park, such as U.S. Pole and Delta Scientific relocated to Palmdale from the San Fernando Valley.
The city now has plans for a second business park at Avenue M and 10th Street West.
Palmdale is a great opportunity for companies to invest because they can purchase for the same amount that they can lease in other areas of the Los Angeles region, Ledford said.
The city also owns 600 acres at Avenue M and Sierra Highway as the proposed location of a power plant.
A 500-megawatt natural gas-powered turbine will sit on half the property and a solar array will take up the other half.
A city-owned plant provides a stable source of local power and allows for cost savings for residents and companies alike, Ledford said.
“Power generation will be necessary for us to move forward,” Ledford said.