Update of Market Analysis Study for the Richland Wye Area City of Richland, Washington
1. Introduction 1.1 Objectives This updated Master Plan is designed to shape the future development of the Wye area. The Richland Wye area is a 350-acre mixed-use area bounded on the north by the Columbia River, on the west by the SR 240, on the south by SR 240 and the Tapteal commercial development, and on the east by Columbia Park and the City of Kennewick. The purpose of this Report is to update the short ―market assessment‖ section of the original Master Plan and provide a current market assessment of the Richland Wye area.
The report provides a general economic and real estate guide that can be used in planning the future development of the Richland Wye area. This section of the overall masterplan report does not provide detailed development plans for individual parcels or sites, but defines the market parameters, which should guide the future development potentials of these parcels and sites. Within these defined parameters, the report offers some general recommendations for actions that the City of Richland can take to enhance the Wye area‘s future development potential.
The goals of the market assessment are:
Provide an overview of the Richland-Pasco-Kennewick MSA‘s economy. Assess the City of Richland‘s economic and fiscal status within the context of the Benton County and MSA economies.
Describe the major attributes, ownership patterns and locational characteristics of the Wye area‘s real estate market.
Provide generalized projections of likely future growth in the City of Richland and the Wye area. Present a discussion of the alternative development potentials and strategies for the Wye area.
1 Thomas/Lane & Associates economic & public policy consultants 1.2 Methods
The method of analysis used in this report consists of two parts: (a) establishing a realistic analysis of Richland‘s past and future major economic development trends, and (b) identifying the real estate absorption implications of these trends for the Wye area.
The report uses shift-share and regression (time series) analysis to identify the extent to which Richland‘s economy has grown because it (a) partook in the overall growth of all industries in Washington State, (b) enjoyed an above- average concentration of economic activity that happened to be growing across the state, (c) participated in the competitively driven growth resulting from the location of economic activity in the State, or (d) all – or parts – of each the above.
Traditional shift-share analysis is modified to include an analysis of the occupational make-up of Richland‘s work force. Many industries have both a high-tech and low-tech component. For a city such as Richland, with its high-end work force, the inclusion of occupational data is vitally important.
The second part of our approach uses real estate market analysis to identify potential absorption of land in the Wye area, including the strategic implications of such factors as infrastructure requirements, likely build-out schedules and creation of development institutions and authorities (such as a redevelopment agency).
The amount and kind of real estate developments that will be exerting a demand for space in the future is determined by projecting the numbers of employees by industry and occupation. Different industries and occupations within industries obviously require different types of real estate development.
1.3 Limits
This section of the report is of a type sometimes referred to as a ―high altitude reconnaissance‖ study. It proceeds from the view of an airplane flying over Richland at an altitude of about 25,000 feet – low enough to make out the significant, broad outlines of Richland and the Wye area‘s economic and real estate markets. This level of analysis is appropriate to updating the overall Wye Area Master Plan. To get down to detailed planning of specific parcels or sites
2 Thomas/Lane & Associates economic & public policy consultants however will require much more detailed analysis than are contained in this section of the report but may be addressed within other sections.
Finally, this section assumes:
The U.S. economy will continue to exhibit moderate real economic growth with relatively low levels of inflation. The Federal Reserve will continue to slowly increase interest rates, and both budget and trade deficits – although continuing to be large – will be brought under control. The U.S. will engage in no new wars or suffer major terrorist attacks.
The long-term relationship between the economies of the U.S. and the State of Washington will remain essentially the same as they have been for the past quarter of a century.
The long-term trend toward integration and globalization of the world‘s economies will continue, although probably at a somewhat slower pace then was true during the last decade.
3 Thomas/Lane & Associates economic & public policy consultants 2. Overview of the Richland-Pasco-Kennewick MSA’s Economy 2.1 The MSA Compared to the State’s Economy Total employment in the Richland-Pasco-Kennewick MSA grew from 78,700 workers in 1994 to 90,530 in 2003 – an average annual growth rate of 1.56 percent. Figure 1
Richland-Pasco-Kennewick Employment 1994-2003
95,000
90,000
85,000
80,000
75,000
70,000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Source: Washington Employment Security Department
The MSA‘s growth rate was quite close to the rate of employment growth in Washington State over the same period of time (1.63 percent). However, the MSA‘s employment growth, while still mostly positive, was noticeably slow between 1995 and 1998 and then started growing more recently in a very robust manner.
State employment, on the other hand, grew sharply in the decade before 2000 and slowed down more recently. As a result, MSA employment as a percent of state employment declined from 3.45 percent in 1994 to 3.09 percent in 2000 and then climbed back to 3.43 percent in 2003.
Averaged over the decade, 1994 through 2003, the MSA‘s percentage of total state employment was quite stable at 3.25 percent (with a standard deviation of only 0.14 percentage points).
4 Thomas/Lane & Associates economic & public policy consultants Figure 2 Richland-Pasco-Kennewick MSA Employment as Percent of State 3.80%
3.70%
3.60%
3.50% 3.45% 3.43% 3.40% 3.40% 3.33% 3.30% 3.24% 3.20% 3.18% 3.20% 3.10% 3.08% 3.10% 3.09% 3.00%
2.90%
2.80% 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Source: Washington Employment Security Department
Going below the employment totals, significant differences exist between MSA and state employment. One way to highlight the differences and similarities between state and MSA employment is through the use of location quotients (LQs). A LQ is calculated by dividing the percent of total employment in a single industry in the MSA by the same percent in the state. A LQ equaling one means that an industry‘s share of total employment is the same in the MSA as it is in the state. A LQ less than one means that the industry in ―under represented‖ in the MSA. A LQ greater than one means the industry in more heavily represented in the MSA then in the state. Because local/regional employment will almost never exactly reflect state patterns, LQs in the range of 0.90 to 1.10 should be interpreted as showing little, if any, significant difference between the MSA and state employments patterns.
Using data developed by Dean Schau, Regional Labor Economist, Washington State Employment Security Department (WSES)1, the LQs for the Richland- Pasco-Kennewick MSA compared to the state show roughly comparable employment distributions for construction, natural resources & mining; trade,
1. Dean Schau, ―Show Me the Money: Growth, Strengths and the Future of the Tri-Cities Economy,‖ (1/7/04)
5 Thomas/Lane & Associates economic & public policy consultants transportation & utilities; and government. Under representations of employment occur in manufacturing; information; and finance, insurance & real estate. Over representation of employment occurs in services.
Figure 3
Richland-Pasco-Kennewick / State Location Quotiants 2.50
2.00
1.50
1.00
0.50
0.00 Construction, M anufacturing Trade, Information Finance, Insurance Services Government Nat'l Resources & Transportation & & Real Estate M ining Utilities
Source: Thomas/Lane Associates & the Washington Employment Security Department
Going a step further down in the industry delineations reveals additional interesting comparisons:
In manufacturing, the MSA has a relatively high concentration of food manufacturing, but otherwise is almost twice as under-represented as it otherwise appears (see Figure 4).
Trade, transportation & utilities‘ employment distribution appears somewhat similar to the state, but this is really only true for retail trade (which dominates this industrial grouping‘s employment) while wholesale trade, transportation, warehousing & utilities employment is under-represented by about half compared to the state (see Figure 5).
6 Thomas/Lane & Associates economic & public policy consultants Figure 4 Richland-Pasco-Kennewick / State Manufacturing Location Quotiants 3.00
2.50
2.00
1.50
1.00
0.50
- Tot. Mfg. Mfg,except Durable Goods Non-Durable Food Mfg. Food Mfg. Goods Mfg., except Food
Source: Thomas/Lane Associates & the Washington Employment Security Department
Figure 5
Richland-Pasco-Kennewick / State Trade, Transportation & Utilties Location Quotiants 1.20
1.00
0.80
0.60
0.40
0.20
- Trade, Transportation Wholesale Trade Retail Trade Transportation, & Utilities Warehousing & Utilities
Source: Thomas/Lane Associates & the Washington Employment Security Department
Services employment is really split into two broad categories, one of which is far more concentrated in the MSA than is true statewide, while the other has
7 Thomas/Lane & Associates economic & public policy consultants roughly the same relative concentration. The category that is two to three times more concentrated consists of two industry classifications: professional, scientific & technical services (which, in the MSA, contains Pacific Northwest National Laboratory ) and waste & remediation services (Fluor & Bechtel) which are closely tied to the nuclear cleanup efforts at Hanford.
2.2. Recent MSA Growth Patterns Between 1990 and 2000, the Richland-Pasco Kennewick MSA added 17,994 new jobs, according to the 2003 Strategic Economic Development Plan prepared for Richland by Taimerica consultants.2 Over 90 percent of the total employment change during that period occurred in the retail trade and services sectors. Among the fastest growing services industries were businesses services (including IT and software) and engineering & management services.
Figure 6
Percent Change in MSA Employment Accounted for by Different Industries: 1990 - 2000 80%
70%
60%
50%
40%
30%
20%
10%
0% Agriculture Construction M anufacturing Wholesale Trade Retail trade Services, Transportation, Communications & Utilities
Source: Thomas/Lane Associates & the Washington Employment Security Department
General merchandise and food stores were the fastest growing retail trade industries.
2 Economic Development in the New Economy: Richland, Washington (Taimerica Management Company, November, 204), pg. 96.
8 Thomas/Lane & Associates economic & public policy consultants In terms of the importance of different economic sectors, the services, transportation, communications and utilities sector accounted for almost half (49 percent) of all employment in the Richland-Pasco-Kennewick MSA in 2000 – with almost three quarters of all services employment concentrated in the waste remediation, engineering and R&D services.
Figure 7
Distribution of Employment Tri-Cities MSA, 2000
Agriculture
Construction
Manufacturing
Wholesale Trade
Retail trade
Services, Transportation, Communications & Utilities
Source: Washington Employment Security Department
For purpose of comparison, Figure 8 presents a graph of the same the distribution of employment for the State of Washington.
9 Thomas/Lane & Associates economic & public policy consultants Figure 8
Distribution of Employment State of Washington, 2000
Agriculture
Construction
Manufacturing
Wholesale Trade
Retail Trade
Services, Transportation, Communications & Utilities
10 Thomas/Lane & Associates economic & public policy consultants 3 Overview of the Benton County and Richland Economies
3.1. Benton County Benton and Franklin Counties make up the Richland-Pasco-Kennewick MSA. With both the cities of Richland and Kennewick located in Benton County, it makes up approximately two-thirds of the total MSA‘s economy and work force. The structure of the two counties‘ economies is also quite different. This is evident from Table 3-1. Table 3-1 Percent Distribution of Employment Franklin Benton
County County Agriculture & Mining 31.9% 10.0% Construction 6.9% 5.4% Manufacturing 8.6% 6.1% Wholesale Trade 9.1% 2.4% Retail Trade 10.7% 14.9% Transportation 4.0% 0.9% Finance, Insurance & Real Estate 1.9% 3.7% Accommodations 2.5% 1.0% Amusement & Recreation 0.6% 2.1% Information & Educational Services 1.2% 1.8% Health Services 8.7% 5.9% Eng., Mg't, & Bus. Services 0.8% 17.1% Eating & Drinking Services 6.3% 8.1% Social & Family Services 2.4% 4.1% Repair Services 3.3% 1.1% Other Services, nec 1.3% 15.2% 100.0% 100.0% Source: WSES, percent distributions calculated by Thomas/Lane Associates
Franklin County‘s employment is more heavily concentrated in agricultural activities than Benton County. Its greater concentration of jobs in manufacturing
11 Thomas/Lane & Associates economic & public policy consultants and transportation are primarily in food processing and related activities – which are related to the county‘s agricultural base. Franklin County also has a small concentration of employment in health services.
Benton County‘s most notable concentration of employees is in engineering, management and business services, which includes both the scientific and technical work taking place at PNNL and in ―other services,‖ which includes the waste & remediation services being done by Fluor, CH2Mhill, Bechtel, and others.
3.2. City of Richland The City of Richland‘s economy is clustered in scientific, technical, and engineering activities, including waste remediation, R&D labs, and related activities. These activities are concentrated within a few large firms. The Taimerica study, for example, reports that two percent of the firms operating in Richland account for two-thirds of employment.3 While 75 percent of all private firms operating in Richland have ten or fewer workers, together they account for only ten percent of total jobs in the City. Table 3-2 Richland‘s Distribution of Employment INDUSTRY TOTAL … 100.0% Agriculture 0.2% Construction, Natural Resources & Mining 3.5% Manufacturing 4.6% Wholesale Trade 0.6% Retail Trade 7.1% Transportation, Warehousing, and Utilities 0.4% Information 0.2% Finance, Insurance & real Estate 2.4% Services 68.9% Medical 8.8% Research Services 26.9% Government 12.1% Source: WSES, percent distributions calculated by Thomas/Lane Associates
Table 3-2 is based on a third quarter 2002 data prepared by WSES‘s Regional Labor Economist. It shows that over two-thirds of Richland‘s employment is concentrated in the services sector and that more than a quarter of total
3 Taimerica, op cit, page 98.
12 Thomas/Lane & Associates economic & public policy consultants employment is engaged in some type of research activity – including professional, scientific & technical services and waste treatment and remediation services. The next largest economic sector is government, which includes the federal Department of Energy, the Richland School District and WSU-TC, as well as ongoing state, county and local public administration services. Retail trade accounts for just over seven percent of total employment.
A slightly different picture of Richland‘s economy comes from the 2000 Census. Summary Tape File 3 (STF3), which shows a detailed look at industrial distribution of employment, shown in Table 3-3. The data are not directly comparable to the WSES data since the Census reports employment by the place where workers live while WSES reports employment by the place where workers are employed.
Total services in the Census data are just below 60 percent of total employment, with professional, scientific, management, administration, and waste management services equaling almost 30 percent of the total. Retail trade equals about 10 percent.
Table 3-3 Richland‘s Distribution of Census [STF-3] Employment INDUSTRY TOTAL … 100.0% Agriculture, forestry, fishing and hunting, and mining: 0.7% Construction 5.2% Manufacturing 5.3% Wholesale trade 2.3% Retail trade 9.7% Transportation and warehousing, and utilities: 5.7% Information 2.1% Finance, insurance, real estate and rental and leasing: 3.7% Professional, scientific, mgn‘t, adm, and waste mgn‘t services: 29.8% Educational, health and social services: 19.9% Art, entertainment, recreation, accommodation and food services: 7.2% Public administration 4.6% Source: U.S. Census 2000 (STF-3), percent distributions calculated by Thomas/Lane Associates
The Census also reports the occupational distribution of workers living in Richland, and these are shown in Table 4. Almost 51 percent of Richland‘s workers are employed in management, professional and related occupations.
13 Thomas/Lane & Associates economic & public policy consultants About 34 percent are employed in non-professional white-collar occupations (i.e., sales, office and service occupations) while about 15 percent are employed in some type of blue-collar production or extraction occupation.
Table 3-4 Richland‘s Occupational Distribution OCCUPATIONAL TOTAL 100.0% Management, professional, and related occupations- 50.8% Service occupations- 12.5% Sales and office occupations- 21.5% Farming, fishing, and forestry occupations 0.6% Construction, extraction, and maintenance occupations- 6.2% Production, transportation, and material moving occupations- 8.4% Source: U.S. Census 2000 (STF-3), percent distributions calculated by Thomas/Lane Associates
14 Thomas/Lane & Associates economic & public policy consultants 4. Overview of the Local Real Estate Market
4.1. Specialization Within the Tri-Cities Market Area
The Tri-Cities real estate market area is self-contained and somewhat specialized. It is isolated within Southeastern Washington, and it is not a part of, or even near, another large concentration of competitive urban real estate. This attribute gives the Tri-Cities real estate market its self-contained character.
Businesses would choose the Tri-Cities market as a location for one of several general reasons:
to be located near to the Hanford complex or the labor force that has been attracted to it, to take advantage of opportunities provided by the growing, processing and production of the region‘s agriculture/viniculture, to locate warehouse/distribution/production facilities central to the Pacific Northwest‘s economy with relatively easy access to the northern Rockies, eastern Washington/Oregon, and inland British Columbia (via US 395, I-90 & I-82), and to serve the existing and expected population and businesses in the Tri-Cities area.
Industrial and business parks associated with the Hanford complex of scientific- industrial facilities dominate the Richland portion of the Tri-Cities area. Richland, and to a lesser extent Pasco and Kennewick, offer a range of price levels for newer and older residential areas, including the recently developed Columbia Point mixed-use area. Much of Pasco‘s real estate is used for the storage, processing, and manufacturing of agricultural and other resource-based products. Kennewick is the location of a regional shopping mall that is surrounded by many other freestanding retail buildings and strip-shopping centers. In addition, Kennewick also provides a location for significant ―suburban style‖ quality office space that is near its retail concentrations.
15 Thomas/Lane & Associates economic & public policy consultants All three of the Tri-Cities communities have older downtown areas that are diffuse and struggling. Richland has a long linear downtown/central business district composed of three parts: (1) an ―uptown‖ area located near an old strip shopping center of the same name left over from the post-war new town period that also includes retail activity located in several smaller, but newer shopping centers along George Washington Blvd; (2) a recently revitalized ―downtown‖ area; and (3) a ―central business district‖ that includes the city and federal government complex along with a concentration of medical facilities around the Kadlec Medical Center.
All three of the communities also have concentrations of suburban type retail shopping centers adjacent to I-182. Recent developments in the newly developing suburban portion of Pasco, the Queensgate area of south Richland, and southern suburban areas of Kennewick are rapidly adding significant retail space. Pasco also has a small but emerging business park area proximate to the airport.
Washington State University‘s Tri-Cities campus is located in north Richland near PNNL and the Hanford contractors. Columbia Basin Community College is located near the airport in Pasco.
Also near the Pasco airport is a 1960‘s-era hotel complex that in the past served as the main regional convention center. A major outdoor event and recreation complex is located in close proximity to the newer suburban areas in Pasco.
A recently completed convention center complex in Kennewick is expected to attract major meetings. Kennewick also has a multi-events arena near the new convention center, its airport and regional mall. Long linear shoreline parks and recreation spaces in Richland, Kennewick and Pasco along the Columbia River are a major regional recreational resource featuring the river shoreline.
The federal government has plans to (a) lower the flood control levee along the Columbia River in the Wye area and (b) revitalize that stretch of shoreline for open space, park, and recreational uses.
Freeways link the three Tri-Cities communities. These freeways also divide, separate, and (to some extent) isolate portions of each community‘s real estate markets. Two freeways run north-south through the Tri-Cities area. The US-395 corridor connects older areas of Pasco and Kennewick. The I-182 freeway corridor links newer areas of all three communities. The Wye area is located near
16 Thomas/Lane & Associates economic & public policy consultants the I-182 corridor and adjacent to SR-240, which is a main east-west connector through Kennewick and Richland. A major widening of SR-240 and rebuilding of the bridges over the Yakima River between Richland and Kennewick is currently under construction. This re-alignment and reconfiguration of the SR- 240 freeway in the area will provide better access to the Richland Wye area.
While each community has an airport with significant land around it for development, only the airport in Pasco has scheduled interregional service. Pasco‘s industrial areas make the most use of the Columbia River for transportation/shipping.
4.2. Overall Growth in the Tri-Cities Area
No publicly available consolidated data tracking the absorption of commercial/industrial real estate for the Tri-Cities could be found. Table 4-1 illustrates the general trends in multi-family and non-residential construction activity using building permit data obtained from the City of Richland.
The pattern for both multi-family and non-residential construction activity is one of wide variation from year to year. This pattern is consistent with the cyclical nature of the regional economy in the Tri-Cities. During the past five years there has been a noted increase in non-residential activity. Due to rising household incomes and lower interest rates, multi-family construction appears to have slowed relative to the single-family construction.
In addition to the general specialization of economic and real estate activity within the Tri-Cities metropolitan area, there is a noticeable degree of real estate specialization among the typical segments of the local real estate market. Much of the development in place has occurred in an era of post-war land-use planning. This has tended to separate uses. There are also some emerging trends, which are discussed below. An understanding of these market trends is useful for defining the opportunities (and challenges) for the future development of the Wye area.
To develop successfully, the Wye area will have to compete with, and be competitive to, other parts of the Tri-Cities regional real estate market.Table 4-1 Richland Building Permit Data: 1994-2004. Value of New New Value of Multi- Non-residential Construction Year Multi-family Family Permits Building Permits Non- Units (000’) Permits Residential (000’s)
17 Thomas/Lane & Associates economic & public policy consultants 2004* 39* $ 7,027* 91* $ 16,652* 2003 33 13,212 135 27,178 2002 39 44,826 112 27,849 2001 131 10,802 88 31,057 2000 9 17,074 47 30,219 1999 41 2,489 42 7,996 1998 24 2,723 38 10,438 1997 20 2,127 46 17,369 1996 3 321 69 16,983 1995 102 9,366 78 25,617 1994 1 -na- 8 3,578 Source: City of Richland, 2004 * Data available through October of 2004
Table 4-2 (Parts a and b), provide an overview of the real estate market segments found within the three Tri-Cities communities. The segments that are highlighted are those that currently exist and could potentially be attracted to the Wye area of Richland. The single-family market segment is not included, as this type of use is not envisioned to be a major part of the Wye area‘s redevelopment. Multi-family residences and condominiums, however, might be.
Several of the local real estate professionals interviewed regard the ―Hanford‖ area as a separate market segment of its own, as they do the heavy and light industrial uses that predominate in the Pasco sub-market. Until recently, the regional mall and the surrounding areas of Kennewick were considered the retail core of the Tri-Cities region. As recent growth has proceeded in the Tri-Cities, real estate uses have begun to disperse, especially retail uses. There is only one area within the Tri-Cities where there is any concentration of ―festival‖ retail4, and that is found in Richland‘s downtown area. This area has the only scale of building patterns typical of pedestrian-friendly type retail -- mostly single story commercial with few residential uses above the first floor level. This area is located adjacent to Richland‘s major riverfront park and near the Columbia Point mixed-use development and is also near a number or tourist and recreational
4 Festival retail refers to a shopping as entertainment environment, and includes the presence of such amenities as boutique shops, eating and drinking places with outdoor accommodations, street furniture and attractive signage.
18 Thomas/Lane & Associates economic & public policy consultants attractions. Other recreational, tourist and public assembly attractions are either located on the river shoreline or in public buildings in Pasco and Kennewick.
Tables 4-2a and 4-2b summarize the location of real estate uses that are currently available and could compete with sites in the Wye are:
4.3. Real Estate Market Attributes
There are a number of attributes of the overall Tri-Cities real estate market that will affect the potential of the Wye area‘s redevelopment potential. The following is a listing of overall factors that affect real estate in most of the sub- markets and locations within the Tri-Cities, including Richland.
Land availability – A striking characteristic of the Tri-Cities, especially the areas south of the Columbia River (Richland and Kennewick), is that there are literally thousands of acres of raw vacant land available. While the abundance of land at relatively low prices is a good for attracting firms from outside the area, it does not lead to dense development or to building for speculative or rental markets. Such abundance of cheap developable land makes the redevelopment of previously developed areas relatively expensive because of the relocation, demolition, infrastructure replacement costs involved.
Land ownership patterns – The overwhelming amount of available land is held for sale by public entities including the Ports of Kennewick and Benton, the Kennewick Irrigation District, and the City of Richland. The development incentives for these public owners are not the same as those for private landowners.
Owner/users and commercial condominiums – in smaller metropolitan areas, office development is an emerging trend. In addition, there has been a noted dispersion of office industries throughout the State of Washington relative to larger metropolitan areas. Other than the real estate sub-market associated with Hanford, most private development occurs in small separated office buildings in Richland and Kennewick. There is a large concentration of free- standing owner-occupied, low density, high quality office buildings near Columbia Center Mall; a small concentration near the Pasco airport, and a scattering of small office buildings (plus a few multi-story office buildings) in north Richland and along Jadwin Way and George Washington Boulevard in downtown Richland. Government agencies, Hanford-related tenants, and
19 Thomas/Lane & Associates economic & public policy consultants medical organizations occupy many of the buildings in this latter portion of the market. A noticeable portion of these smaller and higher quality buildings are condominiums.
20 Thomas/Lane & Associates economic & public policy consultants Table 4-2a Tri-Cities Real Estate Market Segments Tourism- Retail- Light Heavy Location Office Space Multi-family Recreation- Commercial Industrial Industrial Visitor Richland: Scattered-some in Limited: Extensive Extensive Scattered, if Not much Horn business park primarily serves development development available, mostly available, Rapids & settings in adjacent and large and large in areas between limited to golf Hanford northern portion employment amounts of amounts of Richland‘s central courses and RV north areas of Richland land for more land for more business district parks, incidental and Hanford/Horn opportunities Rapids areas; along river, e.g. some newer at WSU-TC residential development in edge areas Richland: Modest and Strip shopping Not present Not present Scattered within Limited Central scattered centers of and not and not the three areas of lodging and business locations in various ages appropriate appropriate the linear CBD visitor district central parts of throughout the facilities in the CBD and ‗Uptown‘ (CBD) CBD some adjacent nears section of medical/hospital Richland; small proximate to complex; tenants concentration of river access primarily ―festival‘ retail amenities government, in the Hanford related ‗Downtown‘ and medical area of Richland Richland: Limited mostly Limited mostly Not present Not present Large Golf courses Columbia along George located in strip nor nor Concentration of and restaurants Point Washington Blvd centers along appropriate appropriate mostly higher end and hotels near George of new multi- river Washington family and Blvd condominiums Table 4-2a
21 Thomas/Lane & Associates economic & public policy consultants Tri-Cities Real Estate Market Segments [Con‘t] Retail- Light Heavy Tourism- Location Office Space Commercial Industrial Industrial Multi-family Recreation- Visitor Richland: Scattered mostly Emerging Not present Not present Emerging and Few Scattered Queensgate associated with neighborhood nor nor scattered multi- wineries retail and resident shopping appropriate appropriate family serving centers and large format facilities Richland: Small with range Mostly Smaller Small Regional bus Few scattered Informal along Wye Area of quality from with range of scattered base smaller and older river new to much quality from heavy with larger older older new to much commercial apartment older; on large and light complexes in strip-shopping industrial eastern end center on mostly in Columbia western area Center Blvd along river North and near SR- 240 interchange with Columbia Center Blvd north
22 Thomas/Lane & Associates economic & public policy consultants Table 4-2b Tri-Cities Real Estate Market Segments Light Heavy Multi- Tourism- Location Office Space Retail-Commercial Industrial Industrial family Recreation- Visitor Pasco: I-182 Suburban style lower New concentration emerging Limited Concentrated Scattered and Large outdoor Corridor density concentrated near near I-182 Exit 9 at Road 68 Scattered in in Port of reemerging in recreation area airport northern city Pasco areas, Northwest near I-182 Exit areas near near I-182 & areas of Pasco 12 and near freeway lower US 395 near I-182 airport scale intersection Pasco: within Smaller and scattered Smaller and scattered, with Smaller and Large Smaller and Not obvious I-182 beltway concentrations at and near scattered concentration scattered freeway exits on I-182 in Port areas east and along river Kennewick: Large concentration in Large concentration of older Small Located in Large Arena, Columbia areas adjacent to the suburban style strip-shopping concentration limited concentration community Center Mall Columbia Center Mall; centers and in large format (―Big near Vista amounts near in areas center and area areas to the west near I-182 Box‖) in areas adjacent to the Field airport Vista Field adjacent to the growing and SR- 240 are of a Columbia Center Mall; and in and in adjacent Columbia number of typical suburban style and areas proximate to the west near small business Center Mall; lodgings mostly good quality and in I-182 and SR-240 parks areas to the facilities east small buildings west near I- of the 182 and SR- Columbia 240 Center Mall Kennewick: Scattered in older eastern Scattered in older eastern areas Scattered in Scattered in Scattered in Outdoor and The rest areas near river and US 395 near river and US 395 also in older eastern older eastern older eastern waterfront newer areas south of city near I- areas near areas near areas of city opportunities 82 and US 395 river and US river and US and newer along 395 395 areas south of Columbia city near river River Park and and US 395 Clover Island.
23 Thomas/Lane & Associates economic & public policy consultants
Development climate – Recent years have produced a sustained positive development climate propelled both by Hanford-related activities and the growth in the rest of the local economy. The cyclical experiences of the past, as well as the size of the regional market, have produced a gradual and incremental patterns in most real estate market segments. These patterns featurer the predominance of owner-users, shopping centers being an exception.
Columbia Center Mall and environs – A significant portion of the Tri-Cities non- industrial real estate activity occurs in areas around the Columbia Center mall. Some real estate planning and business professionals consider the Wye to be part of this market area because of its physical proximity.
Geographically and from the perspective of transportation infrastructure, the Columbia Center mall area is centrally located and accessible from most areas within the Tri-Cities MSA. In some ways it functions as the central business district of the region (i.e., the region‘s concentration of retail, office, recreation, tourist and commercial activity); however unlike most central business districts, it is not an area of dense development. Instead, it has a suburban horizontal character.
Often surrounding most central business districts there is an area of general-purpose real estate occupied by businesses needing to be close to the central business district, but that do not have to be in the higher priced buildings where their clients/customers are located. The Wye area has the potential to draw these types of businesses.
The environs near the Columbia Center regional mall have attracted many retail establishments that want to be close to a regional mall, but not in them. The relatively newer (past twenty years) ―Big Box‖ or large format freestanding retailers have been attracted to this portion of the Tri-Cities. As the Tri-Cities grows, this type of retail will want to disperse to locations close to freeway exits. The Queensgate area in south Richland, the Clearwater and Southridge areas in Kennewick, and the Road 68 area in Pasco are locations that will compete for the types of retail currently in the Columbia Center mall area.
Speculative/rental/lease – Large business and office park developments have not been prevalent as a real estate pattern in the Tri-Cities. The exception is the Hanford area in north Richland. Real estate developers tend to make a significant portion of their profit
24 Thomas/Lane & Associates economic & public policy consultants by buying land, securing needed permits, building facilities, leasing-up and then selling their projects to long-term institutional investors. In a market with lower priced and abundant land this process tends to be more difficult; and speculative developers interested in selling to institutional investors are rare.
Land prices and rents levels – Interviews with real estate professionals and published reports indicate that commercial land at well located sites in the areas around the Wye area sell for $2.50 to $6.00 per square foot. The land in the Port of Kennewick‘s Spaulding Business Park goes at $2.75 to $3.25 per sq. foot. Office and better commercial building space rents at up to $20.00 per square foot in the Gage Blvd area west of the regional mall. Less desirable/locations and older buildings draw $8.00 to $16.50 per square foot.
The re-development of the Wye area will by necessity fit into, and to some degree be framed by, these overall regional real estate market patterns.
25 Thomas/Lane & Associates economic & public policy consultants 5. Real Estate & Location Analysis of the Richland Wye Area
5.1. Current Land/Real Estate Uses in Wye Area
Current land/real estate uses within the Wye area are a combination of single family residences, multi-family apartment complexes, vacant land, local and regional retail, heavy industrial (the Benton-Franklin Transit bus base), light industrial, small offices, public waterfront/park recreational, and heavy commercial. This latter category, a type of commercial real estate that typically does not have customers or clients visit the business, tends to emphasize the repair and servicing of small, high valued equipment and machinery. This type of real estate typically does not need the amenities of shopping centers or business parks. Parking for trucks and service vehicles is desired, but large amounts of landscaping and higher quality signature buildings are not. Heavy commercial uses are attracted to areas adjacent to CBD‘s. Heavy commercial is a notable current use among the businesses in the Wye area of Richland.
There is significant vacant land that is ready for development within the Wye area. The Port of Kennewick has developed the 30-acre Spaulding Business Park, and is seeking to sell parcels for development. There is a large, vacant, and presumably buildable lot — the site of a former drive-in theater — along Columbia Park Trail immediately to the northeast of Spaulding Business Park, on the east side of Georgia Avenue across from the marina containing the Columbia River Journeys jet boats. Removal of some of the more seriously deteriorated buildings and clean up of outside storage would produce more vacant space. In addition, there are some smaller vacant sites within the area. Significant public ownership exists in addition to the roadways, utilities corridors and port‘s holdings. The regional Benton Franklin transit system has their major facility there. The area along the Columbia River contains a shoreline area, a flood protection levee and City parklands, and there may be some parcels available as a result of the freeway reconfiguration and new interchange that would be owned by the State.
5.2. Physical Description
The following are key physical characteristics of the Wye area.
The area generally slopes to the north from the south affording views to the river and north beyond the river to West Pasco, as well as to the east and also toward Saddle
26 Thomas/Lane & Associates economic & public policy consultants Mountain. Sites at the top of the hill and near the freeway have views back across the freeway and up the hill to the Columbia Center Mall area. Much of the Wye area does not have significant tree coverage.
There are two major arterials: the east-west Columbia Park Trail Boulevard and North Columbia Center Way along with Steptoe Boulevard, South of Columbia Park Trail leading to the Tapteal Development.
A major exit/entrance to the SR-240 freeway exists central in the site at North Columbia Center Way. The configuration of this interchange will be altered significantly as a result of the proposed widening of the freeway.
Columbia River Park (a large regional park recreational facility) and the City of Kennewick form the Wye area‘s boundary on the east side. The SR-240 freeway forms the area‘s boundary on the south and west, while the Columbia River delineates the area‘s northern boundary. Residential and public ownerships bound the Wye area on the east.
Interviews with public officials reflected that there may be some concerns about contaminated soils issues though the area since has been used as storage for autos and parts as well as commercial/ industrial vehicle and machinery repair services. Access to the rest of the MSA via SR-240 is easy from the south side of the Wye area and access to SR-240 is also relatively easy from the west end.
There is a small boat launching and marina facility on the river near Bateman Island and Columbia Park Marina.
Other than these attributes there are no other apparent or outstanding features that are obvious.
5.3. Ownership Patterns There are several key property owners, who are either owner-users or who have acquired land for future or potential development or redevelopment. Owner-users include: Port of Kennewick, the Benton-Franklin Transit System, the City of Richland, U.S Army Corps of Engineers, State of Washington, and many local businesses and residents.
Properties that could be developed quickly are: the Port of Kennewick‘s Spaulding Business park, the owners(s) of the vacant ―drive-in‖ theater site, two individual property owners who own a large strip shopping center (Columbia Center North) and major parking areas plus parcels in the southeastern corner of the Wye area along Fowler Avenue east of the North
27 Thomas/Lane & Associates economic & public policy consultants Columbia Center Way. There is a large linear site on the south (Tapteal) side of the SR-240 freeway owned by the Robert Young Company. While this prime site is considered part of the Wye Master Plan area, it is physically and functionally separated, and is not included in our analysis.
In short, there is private sector interest in redevelopment. Once sites are assembled, the challenge of development will be less daunting to them.
5.4. Locational Attributes The Wye area has several strategic locational characteristics that provide potential developers and businesses with important real estate advantages. These characteristics include:
A central location within the Tri-Cities MSA at the intersection of a major freeway corridor. Several existing businesses in the Wye area stated that their location choice was based on being able to get to all parts of the Tri-Cities MSA quickly and easily.
Proximity and sight lines to the Columbia Center Mall and the large concentration of the retail commercial and other real estate attractions in that area. Some regional real estate professionals and businesses in the Wye area consider that proximity a significant asset for locating in the Wye area.
Visibility from the SR-240 freeway is a positive for businesses that need to draw support from passing traffic. This attribute could also be an attractive feature for a firm that wants its corporate image announced and visible to the region‘s residents and businesses.
Close proximity to the river is a positive business amenity, as well as a potential recreation asset. It contributes value to both residential and non-residential real estate within the Wye area.
The Wye area is adjacent to one of the last stretches of unimproved shoreline on the Columbia River. The City of Richland and the U.S. Corps of Engineers plan to make it more accessible as a recreational attraction by lowering the levee along that stretch of the river. This should also add value to the real estate in the Wye area.
Relatively easy and quick access to the Port of Benton‘s Richland airport, Kennewick‘s Vista Field airport and the scheduled air service at the Pasco airport is another potential valuable locational attribute for sites within the Wye area.
28 Thomas/Lane & Associates economic & public policy consultants However there are several locational aspects of the Wye area that provide a challenge for development and redevelopment. These include: The Wye area‘s close association with the regional mall is tenuous, particularly if the regional mall has problems like other malls around the country with maintaining competitive retail strength within a region in the face of new forms of dispersed retail, especially large format retail. This could also be a challenge if the trend of moving resident-serving retail to outlying locations within the region continues. If the future development of the Wye area is less oriented to retail development, its association to the mall is less of a potential problem.
Separation from the main areas of Richland by the Yakima River delta and I-182 plus separation from the rest of the MSA by the SR-240 freeway and the Columbia River limit the practical access to the Wye area to only a few points.
The current image presented to the traffic on SR-240 and historic reputation of the Wye area (as being low income, low amenity and crime ridden) present challenges for some types of future development. The location of a concentration of new auto dealers‘ sales, service and storage lots along the southern and freeway visible edge of the Spaulding Business Park cuts both ways. It is a strong identification and reinforces the area as a retail site. It may not add much to enhancing a higher quality mixed-use ‗urban village‘ image for the area however. Some of this ambiguity could be managed by site and amenity design and separation from the north sloped portion of the business park.
The word ―challenge‖ was selected advisedly in the above list since none of the disadvantages are crucial to all types of real estate development and none of the locational disadvantages seem insurmountable.
5.5. Reasons Current Uses Located in the Richland Wye Area Interviews with current businesses in the Wye area produced a range of responses to questions about why they were located there and/or why they stayed. The reasons included:
Central location within the Tri-Cities regional market.
Location near the mall reinforced their retail reputation and destination.
Proximity to and identification with the river and territorial views, recreation and regional attraction of the Columbia River and its outdoor, open space and recreational facilities.
29 Thomas/Lane & Associates economic & public policy consultants Cheaper land and buildings.
As one might expect, the businesses and property owners interviewed that were located in the Wye Area had a better opinion of it than almost everyone else. They thought reports of crime and drug problems were overstated. They pointed to the restaurants and retail stores located in the Wye area and their ability to attract customers from throughout the Tri-Cities MSA. They also pointed to the draw of the marina, boat launch, fishing and recreation facilities as a strong positive that counters any of the negative historical images; and said that when freeway construction displaced businesses, most desired to stay in the area. In addition, they pointed to the presence of a number of well-kept owner-occupied single-family commercial buildings that are sprinkled throughout the area. They also remarked favorably about the small but cohesive community nature of the area.
The following are potentials that form a firm basis for development and redevelopment in the Wye area:
Significant planned and proposed public and private projects in the master plan area.
Significant number of property owners who have major amounts of property assembled.
Basic real estate locational advantages within the Tri-cites regional market.
Existing and planned infrastructure improvements. Existing viable, though small, businesses.
Significant areas that could change, i.e., older and modest single family and commercial buildings, and underutilized sites and buildings.
5.6. Challenges, Opportunities and Uncertainties for Wye Master Plan Area
If no concerted action, other than the enforcement of the City‘s zoning and land use regulations and planned public infrastructure improvements occur, the Wye will continue to provide an area for low-income housing, and a place for less expensive and convenient locations for smaller businesses. Market forces will eventually fill in the land that is currently available. This process will probably be slow, given the nature of the overall real estate development patterns in the region. However, there are enough large to medium sized parcels in the Wye area that it would not take very long to have a major transformation occur.
Should the City of Richland decide to put forth a major redevelopment effort for the Wye area, there are some short term and less expensive activities that can and should be undertaken, including:
30 Thomas/Lane & Associates economic & public policy consultants Identification and organization of the key property owners in the Wye master plan area.
Examination of state laws and application of public-private financing mechanisms for redevelopment and blighted area actions, such as the Community Renewal Act‘s mandates, local improvement district, and potential of a public development authority as a vehicle for redevelopment.
Complete information and data gathering to reduce areas of uncertainties related to physical site and infrastructure improvement, as well as design and costing of appropriate infrastructure improvements for the Wye area. Segmentation of the Wye area into parts that could provide a sharper focus for specific appropriate real estate market segments and/or implementation actions.
Organize and staff multi-year, multi-jurisdiction, multi-constituent planning process for the area to assure continuity.
Assure periodic constructive input from the local real estate development, marketing and property management sector, periodically revisiting the Wye area‘s zoning and regulatory approach and leaving sufficient flexibility to address unforeseen opportunities that may arise.
Develop an information campaign to counter any lingering ―image‖ problems for the area.
Develop a specific and explicit redevelopment strategy that identifies: o Who will have what redevelopment responsibilities, o What long term and short term actions and projects will be undertaken, o Why that set of actions will result in redevelopment, i.e., be clear about the strategy being followed that makes realistic economic and real estate sense, o How will each component of the strategy be implemented, what are the action steps, what are the sources and uses of funds, o Set priorities for the sub-parts within the Wye master planning area for action, and o Establish a reasonable phasing and monitoring process. o Opportunities to determine if the water, sewer, storm or street capacity can handle build out of redevelopment, and who will pay?
A range of redevelopment strategies for the Wye master planning area is discussed below.
5.7. Potential Land Uses/Real Estate Segments Appropriate for the Wye Master Plan Area
31 Thomas/Lane & Associates economic & public policy consultants Heavy industrial uses, extensive processing, and storage uses and single family detached real estate and market segments were not considered for the Wye area. Heavy industrial uses usually require rail or marine transportation facilities, large amounts of outside storage, ‗lay- down‘ areas, and often produce a whole range of ‗spillover‘ effects (dust, noise, smells, etc) that are incompatible with existing or proposed and uses at the site.
Single-family residential development could be an appropriate land use at the site, but the elimination of many current uses, rationalizing land ownership, and elimination of blighted conditions would be necessary. In addition, there are many better locations in the region for such uses. Multi-family and condominium residential uses could be developed in portions of the Wye area if they were appropriately separated from non-residential uses. Reflecting the high average age of workers employed at Hanford-related facilities, there may be a strong ―empty nester‖ market for mid-rise waterfront condos, similar to the type of development that exists in the Columbia Point area.
Overall market assessment: There is potentially a large amount of real estate development that could be accommodated in the Wye area immediately, located in vacant and under-utilized areas and eventually through redevelopment.
The Wye area will increasingly have to compete with other areas of the regional real estate market to attract tenants.
The Wye area‘s advantages are: (1) proximity to and views of the river, (2) proximity to other regional economic engines (Kennewick‘s mall, retail, office, and recreational assets), (3) access to regionally important transportation networks, (4) significant existing vacant and assembled land, (5) viable businesses already there, and (6) public agency interest in its development and redevelopment.
Retail market assessment:
Neighborhood shopping centers – There already is a large concentration of retail establishments south of the site. There are not large concentrations of residents nearby and the Wye area is not centrally or conveniently located within an established or emerging neighborhood. Eventually, should large amounts of condominiums and multi- family residential units be developed in the Wye area, there could be some demand for convenience and neighborhood retail.
32 Thomas/Lane & Associates economic & public policy consultants Community shopping centers – There are better-located existing competitive locations that are approximate to emerging and established concentrations of population within the region. Regional shopping centers - There is an established regional mall very close by. Some portions of the Wye area, primarily the relatively flat southern portion adjacent to and visible from SR-240 and the mall areas, could attract large format region serving retail establishments, but the trend is for such large format retailers to disperse closer to new and growing portions of the region. Retailers with a need for large outside storage and display areas, e.g., auto sales, RV, truck dealers new and used – There are appropriate sites on the relatively flat southern portion adjacent to and visible from SR-240 and the mall areas that could attract such region serving retail establishments. Separating such uses from the other types of uses would be important.
Restaurants, entertainment facilities, lodging (short and long stay), recreational facilities and specialty retail uses that complement and support them could be attracted to sites near to, or visible from, the river, especially when the levee‘s height is reduced and park, open space and recreation improvements are provided. ―Festival‖ retail – There is very little of this type of pedestrian oriented retail in the Tri- Cities. There are almost no existing environments that could evolve into this type of use. However if a modest size ―urban village‖ project were to develop in the Wye area‘ then such ―festival‖ retail could be a part of it. This seems like a fairly long-term prospect and would require dramatic change in the underlying development climate and parameters in the Tri-Cities area.
Commercial market assessment:
Offices, small office parks, medium density office buildings; free standing, owner-user, or multi-tenant development -- The river views, open space, recreational amenities, integration with residential uses and proximity to existing similar developments up the hill in the areas around the mall are reasons to believe that the Wye area could attract this type of real estate market segment. The Brashears office building proposed at the Columbia Park Trail Boulevard entrance to the Spaulding Business Park is a signal project, and could demonstrate this market segment as a viable use here.
Heavy Commercial – This use is already a viable use in this area. The Lincare Medical Products Company, electrical contractors, and professional services engineering and
33 Thomas/Lane & Associates economic & public policy consultants surveying firms are examples. The Wye area‘s central location in the region is a strong locational attraction for this type of use. Medical/dental offices and labs would be a type of office use that could be attracted to this area once appropriate amenities are present.
34 Thomas/Lane & Associates economic & public policy consultants Business Park market assessment
Typically, business parks are oriented to different types of activities: office types, light industrial types and hybrid types – a few of which are found within the Tri-Cities market. Unless a major effort is made to assemble a large percentage of land in the Wye area, the potential for business parks will produce relatively smaller versions, which, may be appropriate to the size of the Tri-Cities market area.
Multi-family and condominium market assessment Once the open space, recreational, park and waterfront amenities are in place, the Wye area will be a very attractive location.
35 Thomas/Lane & Associates economic & public policy consultants 6. Projections of Future Growth in Richland
6.1. Projected Employment Growth Washington State non-agricultural wage and salary employment grew strongly (1.9 percent annually) between 1990 and 1995 and at a phenomenal rate of 3.1 percent annually between 1995 and 2000. After 2000, the state‘s economy – led by the dot-com bust and simultaneous decline at Boeing – showed either negative or very slow employment growth, and is expected to average an anemic 0.3 percent annual rate over the entire 2000 through 2005 period. The State Office of Financial Management (OFM) long term forecast is for employment to grow at an annual rate of 1.7 percent between 2005 and 2010, after which it grows at slower, but still healthy, rates for the next 20 years. These projections are shown in Figure 6. Figure 9
Washington State Non-Agricultural Wage & Salary Employment 4,000,000 Actual Forecast 3,800,000
3,600,000 3,400,000
3,200,000 3,000,000 2,800,000
2,600,000 2,400,000
2,200,000 2,000,000 1990 1995 2000 2005 2010 2015 2020 2025 2029
Source: Washington Employment Security Department & Office of Financial Management
The Richland-Pasco-Kennewick MSA and the Benton County did not participate in either the dot-com or Boeing employment boom of the 1990s, and therefore did not suffer through the employment ―bust‖ that occurred after 2000. The average annual growth rate of non- agricultural wage and salary employment in the MSA was 1.1 percent between 1995 and 2000 and is projected by OFM to average 1.6 between 2000 and 2005. Benton County‘s average annual growth rate of non-agricultural wage and salary employment was 0.6 percent between 1995 and 2000 and is projected by OFM to average 1.8 between 2000 and 2005.
36 Thomas/Lane & Associates economic & public policy consultants Figure 10
MSA Non-Agricultural Wage & Salary Employment
130,000 Actual Forecast 120,000
110,000
100,000
90,000
80,000
70,000
60,000 1995 2000 2005 2010 2015 2020 2025 2029
Source: Thomas/Lane Associates
Figure 11
Benton County Non-Agricultural Wage &Salary Employment
100,000
95,000 actual forecast 90,000
85,000 80,000
75,000 70,000 65,000
60,000 55,000
50,000 1995 2000 2005 2010 2015 2020 2025 2029
Source: Thomas/Lane Associates
37 Thomas/Lane & Associates economic & public policy consultants
Richland‘s growth of non-agricultural wage and salary employment is projected to closely track Benton County patterns. Employment increased by 800 net new jobs between 1995 and 2000 – an average annual growth rate of 0.6 percent – and is projected to increase by just over 2,600 net new jobs between 2000 and 2005 – an average annual growth rate of 1.8 percent. By 2029, non-agricultural wage and salary employment in the City of Richland is expected to grow from its 2000 level of 28,900 to 43,600. Figure 12
Richland Non-Agricultural Wage & Salary Employment 45,000 actual forecast 40,000
35,000
30,000
25,000
20,000 1995 2000 2005 2010 2015 2020 2025 2029
Source: Thomas/Lane Associates
6.2. Distribution of Employment by Industry The distribution of Richland‘s non-agricultural wage and salary workforce is based on its adjusted percentage distribution by North American Industrial Classification System (NAICS) industry codes for 2000. The ―adjustment‖ to the actual 2000 distributions reflects both a time trending of industry patterns and weighting for different occupational distributions in Richland and all of Benton County. The resulting distribution of employment, by industry and by 5-year increment, is shown in Table 6-1.
38 Thomas/Lane & Associates economic & public policy consultants Table 6-1 Projected Distribution of Employment in Richland
Adjusted Richland Richland Richland Richland Richland Richland Richland Richland 2000 2005 2010 2015 2020 2025 2029 2000 Average Average Average Average Average Average Average Employment Employment Employment Employment Employment Employment Employment Employment Distribution
Construction 3.3% 943 1,029 1,116 1,199 1,283 1,356 1,423 Manufacturing 3.7% 1,081 1,179 1,279 1,374 1,470 1,554 1,631 Wholesale Trade 1.5% 443 483 524 563 603 637 669 Retail Trade 11.3% 3,273 3,569 3,872 4,159 4,450 4,704 4,937 Transportation 0.5% 141 153 166 179 191 202 212 Information 1.7% 505 551 598 642 687 726 762 Finance 1.5% 421 459 498 535 572 605 635 Insurance 0.6% 182 199 216 232 248 262 275 Real Estate 1.1% 307 335 364 391 418 442 464 Accommodations 1.0% 278 303 329 353 378 400 419 Amusement & Recreation 2.1% 609 664 721 774 828 876 919 Educational Services 0.4% 118 128 139 149 160 169 177 Health Services 5.0% 1,455 1,586 1,721 1,849 1,978 2,091 2,194 Legal Services 1.2% 359 392 425 457 489 517 542 Engineering, Mg't, & Business Services 15.3% 4,430 4,831 5,240 5,630 6,023 6,367 6,682 Eating & Drinking Services 7.4% 2,150 2,345 2,544 2,732 2,923 3,090 3,243 Social & Family Services 3.5% 1,008 1,099 1,193 1,281 1,371 1,449 1,521 Repair Services 2.2% 629 686 744 799 855 904 949 Other Services 36.5% 10,553 11,508 12,484 13,411 14,347 15,167 15,919
TOTAL 100.0% 28,886 31,501 34,172 36,711 39,274 41,517 43,576 Source: TLA using WSES & Census data
39 Thomas/Lane & Associates economic & public policy consultants Engineering, Management & Business Services employment is projected to continue to grow even though there will be a workforce reduction after the Hanford waste treatment (vitrification) plant is completed. As reported in The Impact of the Waste Treatment Plant on the Hanford Communities report, the annual peak of about 4,500 jobs over the eleven-year life of the project will be in addition to the expected growth of almost 15,000 net new jobs in the Richland- Pasco-Kennewick MSA projected to occur under a baseline – no vitrification plant – scenario. Given the occupational and industrial composition of Richland‘s economy, a significant number of those jobs will be in the Engineering, Management and Business Services sector – particularly in the engineering and scientific R&D industries.5
Other Services, is a catchall category. However much of its expected growth is expected to occur in services associated with the aging of the Richland-Pasco- Kennewick MSA‘s population.
6.3. New Business Establishments by Industry The number of new business establishments in Richland was projected by dividing each industry‘s employment by the average number of workers per establishment reported by WSES. These projections are shown in Table 6-6, on the following page.
Between 2000 and 2020, Richland is projected to have between 180 and 190 net new business establishments every five years, with this number falling to a level of 150 land 160 net new business establishments for each five-year period thereafter.
The industries with the most number of net new firms are projected to be engineering, management and business services; retail trade; and eating and drinking places.
5 Perteet Engineering, Thomas/Lane & Associates, and SCM Consultants, The Impact of the Waste Treatment Plant Project on the Hanford Communities (The Hanford Communities, October, 201), pg3-3.
40 Thomas/Lane & Associates economic & public policy consultants Table 6-2 Projection of New Business Establishments in Richland
Estimated Richland Richland Richland Richland Richland Richland Richland Workers Estimated Estimated Estimated Estimated Estimated Estimated Estimated per Business Business Business Business Business Business Business Business Units Units Units Units Units Units Units Unit 2000 2005 2010 2015 2020 2025 2029
Construction 7.5 127 138 150 161 172 182 191 Manufacturing 29.2 37 40 44 47 50 53 56 Wholesale Trade 20.5 22 24 26 27 29 31 33 Retail Trade 24.0 136 149 161 173 185 196 206 Transportation 9.3 15 16 18 19 21 22 23 Information 31.0 16 18 19 21 22 23 25 Finance 17.1 25 27 29 31 33 35 37 Insurance 6.2 30 32 35 38 40 43 45 Real Estate 6.3 49 53 57 62 66 70 73 Accommodations 27.2 10 11 12 13 14 15 15 Amusement & Recreation 13.7 45 49 53 57 61 64 67 Educational Services 7.1 17 18 20 21 23 24 25 Health Services 12.0 121 132 143 154 164 174 182 Legal Services 3.8 96 104 113 122 130 138 144 Engineering, Mg't, & Business Services 25.6 173 188 204 220 235 248 261 Eating & Drinking Services 17.3 124 136 147 158 169 179 188 Social & Family Services 11.3 89 98 106 114 122 129 135 Repair Services 5.7 110 120 130 140 149 158 166 Other Services 12.5 844 921 999 1,073 1,148 1,213 1,274 TOTAL 2,085 2,273 2,466 2,649 2,834 2,996 3,145 CHANGE IN TOTAL 189 193 183 185 162 149 Source: TLA using WSES data
41 Thomas/Lane & Associates economic & public policy consultants 7. Future Land Use Demand in the Richland Wye Area
7.1 Current Absorption Patterns
In recent years, the Wye area has seen the establishment of the Spaulding Business Park by the Port of Kennewick and a limited number of other new developments. Several of the businesses displaced by WSDOT‘s reconfiguration of the SR-240 interchange have chosen to stay in the area and developed new buildings. There are newer mixed use or small office buildings. There have been several businesses that have purchased sites in the Fowler Avenue portion of the Wye area near the Columbia Center Way North and SR-240 interchange. Some churning of tenants has occurred at the Colombia Center North shopping center. A mixed general tenant office building is proposed for site at the entrance to the Spaulding Business Park. Most of these uses are light industrial/heavy commercial uses, regionally focused specialty retail, or small professional office uses.
7.2. Future Development Potential
A multi-stepped process was followed to obtain projections of future growth that are realistic for the Wye area. First, data on 22 occupational categories and 164 industrial (the new NAICS industrial) categories of employment were examined and separated in eight real estate market segments that were appropriate for the Wye area of Richland. Secondly, the employment projections for Richland developed in Section 6 (see Table 6-1) were divided among those real estate market segments. It was assumed that Wye area development would be generated by new economic activity or expansion of such activity rather than movements within the market, though that may also occur. Thirdly, capture rates were derived for each real estate segment based on the analysis of the market trends, conditions and patterns that are in existence and could reasonably be projected for the Wye area (see Sections 4 and 5). Typical employment densities for suburban areas were used to estimate land needed for the real estate market segments that would be attracted to the Wye area. Both low and high range absorption projections were made. This range was appropriate both because the projection period is long term and there is a range of potential strategic development approaches available to the City (see Section 8 below).
42 Thomas/Lane & Associates economic & public policy consultants Several assumptions about the Wye area were made, including:
New development in the near term would be mostly located on currently vacant properties,
That there would be no additional major ‗move-outs‘ from the Wye area,
That the WSDOT ramp improvements do occur and that the City of Richland and Corps of Engineers improvements to the river dike system are undertaken,
That zoning within the Wye area will not be an obstacle for location of businesses, The capacity of road and utility systems will not be an obstacle for location of businesses into the area, and
The absorption projections were made for two time periods, consistent with the employment projections 2005-2015 and 2015-2029.
Key considerations for land absorption in the Wye area rest on the strengths and challenges discussed above.
Absorption projections were made for six non-residential real estate market segments:
General office space,
Office space specialized for health services, such as doctors offices and laboratories, Lodgings,
Retail space: o shopping centers, o non-shopping center, and o arterial and auto-oriented
Gaming, entertainment, recreation & amusement, and
Light industrial/heavy commercial.
There are a substantial number of retail businesses Richland that are not attracted to shopping centers or are indifferent to locating within them. This type of retail
43 Thomas/Lane & Associates economic & public policy consultants activity is categorized in the ―non-shopping‖ center retail category. The other category of retail includes businesses that are oriented to locations on arterials (e.g. fast food limited service restaurants), and such businesses that sell autos, parts and services vehicles.
Development absorption projections were also made for multi-family residential development.
44 Thomas/Lane & Associates economic & public policy consultants Table 7-1 Land Absorption Projections for the Wye Area Real Estate 2005-2015 2015-2029 Market Segment Non-Residential: 29 ac. 70 ac. Office 6.5 16.0 Retail and Other* 12.0 34.0 Light Industrial & Heavy Commercial 11.0 21.0
Multi-Family Residential 3-12 acres 5–12 acres * includes: retail (shopping center, non-shopping center, & arterial/auto oriented), lodging, gaming, entertainments, recreation, amusement, and restaurant
Table 7.1 projects total land absorption in the Wye area for the two time periods covered during the next twenty-five years for both residential and non-residential land uses. These projections are for the total Wye area. The actual development may involve combinations that are influenced by future City land use policies, infrastructure investments, timing of such improvements and the intensity of public-private development strategy pursued.
These real estate market segments are those that were evaluated as appropriate and supportable in the Wye area. The absorption projections did not include:
employment that would locate in heavy industrial areas,
hospital or specialized medical and resident care facilities,
employment directly related to Hanford operations and clean-up activities, and other professional and technical services, transportation facilities,
major manufacturing activities,
activities including construction, resource processing or large outside storage, processing or ‗lay-down‘ areas, and public and government activities.
Each of the 164 North American Industrial Classification System (NAICS) industries and 22 occupations were examined in order to allocate the types of employment that would locate into the real estate market segments. This process allowed such industries that have a portion of their employment located in office space or light industrial/heavy commercial space to be included rather than left-out of consideration.
45 Thomas/Lane & Associates economic & public policy consultants Table 7-2 gives the assumptions used for translating employment projections into land projections, including dwelling unit density assumptions. The employment densities are typical of suburban development locations. Actual employment densities may vary among firms in each industry depending on their own business/real estate strategies. The residential multi-family unit absorption projections were made assuming that the annual average building of such units that has occurred over the past decade in Richland will continue as associated with employment growth. During that period the annual absorption was 40 units. Table 7-2 Land Absorption Assumptions: Non-residential Typical Floor Area Square Feet Typical Real Estate Market Segment Employees Ratio per Acre Employment per Square (F.A.R.) per Acre Foot Office Space: General 350 .33 14,375 40 Office Space: Health Services 450 .33 14,375 32 Retail: Shopping Center 500 .25 10,890 22 Retail: Non-shopping Ctr. 500 .20 8,712 17 Retail: Arterial/Auto 500 .15 6,534 13 Restaurant 750 .20 8,712 12 Gaming, Entertainment, Recreation, Amusement 600 .25 10,890 18 Lodging One/room* .33 14,375 30 Light Industrial/Heavy Commercial 800 .45 19,602 25 Source: Economic Consulting Services, * room gross square foot per room 500 sq. ft.
Table 7-3 Residential Development Densities Assumptions 2005-2015 2015-2029 Multi-family @ 12 units @ 12 units Capture Annual absorbed absorbed Rates for Absorption* 2005-2015 2015-29 per acre* per acre** Wye Area 10% 4 40 56 3.3 4.7
25% 10 100 140 11.7 11.7 Source: Economic Consulting Services, * The annual multi-family unit production in Richland averaged 40 units from 1994 to 2004, see Table 4-1 Section $ page 16; ** unit size assumed is 1200 sq. ft. with a floor area ratio of .33
46 Thomas/Lane & Associates economic & public policy consultants 8. Implications for Strategic Development in the Wye Area
8.1. Alternative Development Scenarios During interviews with local officials, businesspersons and other Richland Wye area stakeholders, it became evident that a range of alternate development scenarios existed, and that not all of them were necessarily compatible (i.e., some might involve trade-offs). The following are the issues associated with the major development alternatives identified:
Should development of the Richland Wye area (a) maximize creation of jobs that will be needed to off-set the expected loss of Hanford DOE jobs, (b) expand Richland‘s tax base, or (c) some combination of both?
The Richland Wye area is a significant location of low-income housing. If it is redeveloped, should there be provision for relocating the low-income households that now live there?
Should Columbia Point‘s development concept of upscale condos and recreational land uses combined with retail and hospitality uses be replicated? What is the right mix of zoning and land use regulations that will optimize development of the Richland Wye area? Should development emphasize residential, commercial or retail uses?
How can the Columbia River shoreline that marks the northeast boundary of the Richland Wye area be enhanced and used to promote regional and city convention and/or visitor activity?
Should the Richland Wye area be developed to compete with the high technology industrial and business areas that rim the City‘s north end (e.g., the Horn Rapids business center, the Horn Rapids industrial park, the Richland industrial center, the Battelle campus, the technology and business campus, etc.)?
Should the City of Richland create a development authority as a vehicle for guiding the Richland Wye area‘s future development?
Before addressing these issues, the range of uncertainties that will surround any development effort need to be made explicit.
47 Thomas/Lane & Associates economic & public policy consultants 8.2. Uncertainties Any development scenario involves certain assumptions. In this report, the major assumptions are:
The relationship between Richland‘s historical and projected economies will be relatively constant, including the growth of the City within the context of the Richland-Pasco-Kennewick MSA, and the growth of the MSA within the context of the state‘s total economy, and The relationship between the demand for developable land and local economic growth will not change appreciably in the foreseeable future.
The development strategies (page 46-52) depend heavily on the lowering of the levee and the improvements to the shoreline that currently remain unfunded.
Further, it is the underlying assumption of this report that private market forces are the best promoters of economic development, and that the appropriate role of City government is to provide the infrastructure and regulatory regime under which private market forces work best.
8.3. Alternative Development Strategies
The transformation of the Wye area will require a well thought out sustained development strategy over a long period of time. There are a series of activities that if undertaken at the beginning will increase the chances and also the pace of such redevelopment (see section V-6 above). There are many combinations and permutations of alternative intensity strategies that could be followed depending on the selection of potential uses and identification of sub-parts of the Wye area for focus/phasing. The ultimate strategy should be developed as full public private-multi-jurisdictional process. The following are preliminary ideas to begin discussions.
Alternative Strategic Development Concepts
The short-term market for development in the Wye area is known. The State Department of Transportation has plans to reconfigure the SR-240 exit; the City of Richland and Corps of Engineers have dramatic plans for redevelopment of the flood control levee along the Columbia river in the Wye area; there have been recent locations and sales of retail/heavy commercial
48 Thomas/Lane & Associates economic & public policy consultants properties in the Wye area, mainly along the Fowler Street portion near SR- 240; there are plans for the locations of a auto dealer also along the SR-240 frontage and a proposed office building at the Columbia Park Trail entrance of the Port of Kennewick‘s business park, which has other vacant sites available; Roger‘s Surveying has built a 10,000 square foot office building, Gamache Landscaping plans to relocate to the Wye area, and there still are underutilized commercial and residential sites that could be developed. Land prices are reported at $2.75 to 3.25 per square foot and higher quality office buildings can rent good space for $18-20 per square foot. The market analysis in this section has concentrated more on the long term than short-term market trends.
The following are general development strategies that the City could pursue over the longer term in order to redevelop the Wye area.
Passive Laissez-faire Strategy
After the City of Richland has completed the sub-area planning for the Wye area, the private property owners and private regional market forces are relied upon to accomplish the redevelopment of the area. The area will get wide notice once the transportation (freeway exit) and waterfront improvements are made and that may stimulate more interest in the area. The city provides marketing assistance as it does with the other focus areas of its economic development strategy.
Market Facilitation Strategy
The City enforces its zoning and building codes, and follows its economic development strategy as private land owners and developers reveal their plans. The City assists with facilitating the development process for the area and proceeds with infrastructure plans for the riverfront, roadway improvements and utility systems. The city also markets and emphasizes the area with a strategic planning process, but leaves the primary tasks of land assembly, and development to the private property owners there and developers who may recognize the opportunities that are inherent in the Wye area. As City funds are available other amenities and improvements maybe made to assist and stimulate interest and facilitate improvement of the location of firms into the area.
49 Thomas/Lane & Associates economic & public policy consultants
Table 8-1 Framework for Alternative Strategic Concepts For Redevelopment in Wye Master Planning Area Passive Aggressive Market Active Laissez- Public- Actions Facilitation In-fill faire Private
Public Actions;
Planning X X X X Regulation X X X X Urban Design Regulations X X Public Infrastructure X X
Formation of a Development Vehicle
Community Renewal District X X Local Improvement District X X Public Development Authority X
Infrastructure
Planning X X X X Design X X X X Cost estimation X X X X Financial strategy X X X X Permitting X X X Construction X X
Development Assistance
Strategic Planning-Monitoring X X General marketing X X X Focused intense marketing X X
Land Assembly
Land-owner X X X X organization/participation
Identification of strategic parcels X X X Public Process Legal Requirements X X (i.e., eminent domain requirements) Acquisition X Relocation X
50 Thomas/Lane & Associates economic & public policy consultants
Active In-fill Strategy
The City accomplishes the planning of public infrastructure improvements envisioned and also targets certain strategic parcels, most probably those that will benefit and complement the waterfront areas. The city would also take steps to acquire or be the catalyst for development on a piecemeal basis as property owners make there plans obvious. A phased plan of acquisition, public-private investment and infrastructure improvements are made, as is a coordinated marketing of the area.
Aggressive Public-Private Strategy
After a well thought out strategic planning process that actively includes the private property owners and others in the community who are active in segments of the regional real estate industry, the city accomplishes the legal actions that will enable it to acquire property in the area and implements an aggressive redevelopment process. This is a very expensive and long-term program, but is the best assurance for the complete redevelopment of the Wye master planning area.
These suggestive strategic concepts are a starting point for a discussion of the alternatives for redevelopment of the area.
8.4. Recommended Development Scenarios The Richland Wye area is large and diverse – too large and diverse for any single development concept to work everywhere. The following discussion, therefore, addresses recommended development scenarios for different parts of the total area.
The part of the Richland Wye area that borders the Columbia River (roughly the area north of Columbia Park Trail and east of Montana Street) should be reserved for water oriented public and private recreational developments.
Current plans are for the Corps of Engineers to reduce the levee along the river by four to five feet and use the spoilings from the top of the levee to put in a long linear shore side park and walking trail. Expectations are
51 Thomas/Lane & Associates economic & public policy consultants that this $2.3 to $2.5 million project will be completed sometime between 2006 and 2010.
The City should continue to continue to maintain such areas as the Lewis & Clark Trail Overlook, and proceed with development of the Columbia Park West on the east end of the Richland Wye area. Encouragement should be given to the owners/operators of Sundown Marine and the City might consider encouraging Columbia River Journeys to relocate to a new facility located along the river. Priority development in the future should go to private developers of non-industrial marine oriented businesses – particularly businesses associated with recreation and tourist activities.
The City should consider supporting the development of a mixed income housing project in the part the Richland Wye area south of Columbia Park Trail and east of the new SR-240 interchange (the area in and around Nevada Avenue).
Creation of a low-moderate income housing project will allow for the relocation of households that will be displaced when the Richland Wye area is redeveloped. The City should consider opening discussions with the Washington State Housing Finance Commission about methods and techniques of raising funding to support the construction of such a project.
It is our understanding that the Port of Kennewick‘s Spaulding Center has reached agreement with the Washington State Department of Transportation (WSDOT) to obtain the land immediately to its south. This area, together with southern half of the Spaulding Center property, has the potential to be developed as an auto-plex park. This could include getting some MSA auto dealers to relocate from their present locations to a Spaulding Center Location.
For automobile dealers, the south side of the Spaulding Center property is an excellent location. It has visibility from SR-240, it has good access to the entire Tri-Cities MSA‘s population, and it can draw from people attracted to the Columbia Center/Tapteal area retail concentrations.
For the City of Richland, creation of a concentration of automobile dealers would create a source of big ticket sales that would enhance to the City‘s tax base.
52 Thomas/Lane & Associates economic & public policy consultants Even though one developer who was interested in the autoplex concept has decided not to pursue it in the Spaulding Center, we feel the market advantages of the Center for this type of use are still strong. Given the large potential of this type of development to contribute to Richland‘s tax base, we recommend that the City of Richland actively go after creation of an autoplex development in the south part of the Spaulding Center.
The City should consider the possibility of attracting a planned unit development for active elderly persons in the east end of the Richland Wye area.
A recent analysis of demographic patterns among workers employed at Richland‘s engineering, scientific and R&D establishments conducted by WSES‘s regional economist indicates that a large number of them will be reaching retirement age within the next ten years. These households will likely have significant asset holdings and retirement incomes, and many will be looking for retirement living arrangements in the Tri-Cities area. An attractive, up-scale retirement living community on the east side of the Richland Wye area that connects to the planned river shoreline trail area and has walking access to Bateman Island may represent a feasible market potential.
It would also bring a significant source of purchasing power to Richland‘s economy, and would help support numerous additional development potentials.
The City should beautify and enhance the street entries to businesses at the park off Fowler, Columbia Center Blvd., and the former freeway off-ramp.
Partnership with property owners and the Port should be sought.
8.5. Implementation Strategies
Development of the Richland Wye area will require a series of pro-active initiatives on the part of the City of Richland. This action has been started by the new State Highway project resulting in the demolition and clean up of some of the older buildings. Partnership with property owners and the Port should be sought.
53 Thomas/Lane & Associates economic & public policy consultants Access to the Richland Wye area from Fowler to Columbia Center Blvd. needs to be improved.
The City should consider qualifying the Richland Wye area under the rules for a Neighborhood Revitalization service Area (NRSA) five year plan that would allow use of the City‘s CDBG funds for both housing and economic development in the area.
The City should consider establishing either a District for the purpose of promoting economic development in the Richland Wye area. Such a District would benefit development efforts in the area in several ways. First, it would give the City the option of adding a small amount to the area‘s property taxes, which would be dedicated to redevelopment efforts (the Port of Kennewick created such a district and added 45 cents per thousand dollars of property value, and it has apparently been successful). Second, a district could aid in the assemblage of the many small parcels that now exist in the Richland Wye area if it were provided with eminent domain power. Finally, a district would provide a central locus for a multi-year redevelopment effort.
Surface Transportation Program or other such funds should be sought.
54 Thomas/Lane & Associates economic & public policy consultants
Appendix A
Statistical Tables
55 Thomas/Lane & Associates economic & public policy consultants APPENDIX A STATISTICAL TABLES
A-1 Total Employment Wash State MSA Benton Franklin
1994 2,285,003 78,744 59,788 18,956 1995 2,326,492 79,160 59,963 19,197 1996 2,388,241 77,267 57,721 19,546 1997 2,495,185 79,243 58,923 20,320 1998 2,583,666 79,672 58,703 20,969 1999 2,632,612 81,604 60,225 21,379 2000 2,696,146 83,347 61,667 21,680 2001 2,691,210 86,021 64,440 21,581 2002 2,643,715 88,042 66,169 21,873 2003 2,642,313 90,526 68,130 22,396 Source: Washington State Employment Security Department
A-2 Employment & Establishments in Benton County Year Establishments Employment Emp/Est
1994 3,370 59,788 17.7 1995 3,627 59,963 16.5 1996 3,623 57,721 15.9 1997 3,757 58,923 15.7 1998 4,076 58,703 14.4 1999 4,200 60,225 14.3 2000 4,398 61,667 14.0 2001 4,572 64,440 14.1 2002 4,547 66,169 14.6 2003 4,754 68,130 14.3 Source: Washington State Employment Security Department
56 Thomas/Lane & Associates economic & public policy consultants A-3 Employment & Establishments in Franklin County Year Establishments Employment Emp/Est 1994 1,737 18,956 10.9 1995 1,827 19,197 10.5 1996 1,753 19,546 11.2 1997 1,866 20,320 10.9 1998 2,056 20,969 10.2 1999 2,124 21,379 10.1 2000 2,224 21,680 9.7 2001 2,264 21,581 9.5 2002 2,292 21,873 9.5 2003 2,437 22,396 9.2 Source: Washington State Employment Security Department
A-4 Benton County Employment in 2000 Industry Employment Agriculture, Forestry, Fishing & Hunting 4,657 Utilities 120 Construction 2,678 Manufacturing 4,208 Wholesale Trade 1,026 Retail Trade 7,441 Motor Vehicle and Parts Dealers 743 Furniture and Home Furnishings Stores 161 Electronics and Appliance Stores 314 Building Material & Garden Supply Stores 582 Food and Beverage Stores 1,077 Health and Personal Care Stores 280 Gasoline Stations 510 Clothing and Clothing Accessories Stores 637 Transportation and Warehousing 449 Information 1,340 Finance and Insurance 1,290 Real Estate and Rental and Leasing 652 Professional and Technical Services 6,886 Administrative and Waste Services 8,881 Educational Services 238 Health Care and Social Assistance 4,421 Arts, Entertainment, and Recreation 1,093 Accommodation and Food Services 4,534 Other Services, Ex. Public Admin 1,860 Total Government 9,791 Source: Washington State Employment Security Department
57 Thomas/Lane & Associates economic & public policy consultants A-5 Franklin County Employment in 2000 Industry Employment Agriculture, Forestry, Fishing & Hunting 5,135 Mining 26 Construction 1,104 Manufacturing 1,587 Wholesale Trade 1,035 Retail Trade 2,002 Motor Vehicle and Parts Dealers 666 Furniture and Home Furnishings Stores 49 Building Material & Garden Supply Stores 190 Food and Beverage Stores 359 Health and Personal Care Stores 90 Gasoline Stations 114 Clothing and Clothing Accessories Stores 44 Transportation and Warehousing 723 Information 151 Finance and Insurance 194 Real Estate and Rental and Leasing 486 Professional and Technical Services 250 Administrative and Waste Services 632 Educational Services 111 Health Care and Social Assistance 1,710 Arts, Entertainment, and Recreation 90 Accommodation and Food Services 1,426 Other Services, Ex. Public Admin 957 Total Government 4,053 Source: Washington State Employment Security Department
58 Thomas/Lane & Associates economic & public policy consultants
A-6 City of Richland Third Quarter Employment in 2002 3rd Qtr. Employer Average Units Monthly Employment INDUSTRY TOTAL … 1,519 30,995 Total Farm 16 65 Construction, Natural Resources & Mining 121 1,085 Manufacturing 34 1,441 Wholesale Trade 20 172 Retail Trade 134 2,194 Transportation, Warehousing, and Utilities 15 138 Information 15 69 Finance, Insurance, and Real Estate 89 739 SERVICES 760 21,348 Medical 138 2,742 Research Services 164 8,341 GOVERNMENT 13 3,743 Source: Washington State Employment Security Department
59 Thomas/Lane & Associates economic & public policy consultants
A-7 Detailed Assumptions for Absorption Projections General Health Lodging G.E.R.A.3 Retail: Retail: Retail; Restaurant Light Total Office Services Shopping Non- Arterial Industrial Allocated Office Center Shopping Auto Heavy Center4 Commercial Employment1 2005 5615 397 2722 781 892 2594 785 2110 2980 19856 Employment2 1012 66 449 91 148 432 295 348 533 3374 Increment 2005-2015 Employment2 1332 86 594 120 195 572 389 460 703 4501 Increment 2015-2029 Percent of Uses 28.3% 2.0% 13.7% 3.9% 4.5% 13.1% 9.0% 10.6% 15.0% 100.0% Low Capture Rate Wye 25% 5% 20% 10% 5% 10% 10% 10% 50% Area High Capture Rate 50% 20% 33% 25% 10% 25% 25% 25% 75% Wye Area Employees/acre 40 32 30 18 17 22 13 12 25 Low Acres 6.3 .1 3.0 .5 .4 2.0 2.3 2.9 10.7 28.6 ac. High Acres 15.3 .5 6.5 2.6 1.1 6.5 7.5 9.6 21.1 70.1 ac. Source; Economic Consulting Services: Notes: 1 including only the employment allocated to the eight real estate market segments/land uses appropriate for the Wye area 2 see Table 6-1, increases in employment for the years indicated 3 Gaming, Entertainment, Recreation and Amusement 4 fifty percent of the retail employment that would be attracted to either shopping centers or that is in different to location within shopping centers.
60 Thomas/Lane & Associates economic & public policy consultants A-8 Employment Allocated for Wye Area Real Estate Market Segment Percent of Projected Employment Employment Employment Increment Projected Increment Projected Allocated to Eight & Allocated & Allocated Real Estate Market Segments 2005- 2015 2015-2029 Construction 20% 170 224 Manufacturing 30% 195 257 Wholesale Trade 45% 80 106 Retail 100% 590 778 Transportation 20% 26 33 Information 90% 91 120 Finance 100% 76 100 Insurance 100% 33 43 Real Estate 75% 56 73 Accommodations 100% 50 66 G. E.R.A. 100% 71 145 Health Services 50% 263 345 Legal Services 100% 65 85 Engr. Mgmt. Bus. Serv. 75% 799 1052 Restaurants 100% 387 511 Social, Family & Orgs. 60% 182 240 Repair Services 85% 113 150 Other Services 75% 1903 2508 Projected Employment in Wye Area Real 3374 4501 Estate Market Segments Source: Economic Consulting Services
61 Thomas/Lane & Associates economic & public policy consultants
A-9 Allocation of Projected Richland Employment to Wye Area Real Estate Market Segments and Industries Retail: Retail: Retail; Restaurant Light Total Industry General Health Lodging G.E.R.A. Shopping Non- Arterial Industrial Office Services Center Shopping Auto Heavy Allocated Office Center*** Commercial 10% 10% Construction Manufacturing 5% 25% Wholesale Trade 5% 10% 30 Retail: Shopping Center 25% Non-shopping Center 25% Arterial/auto orients 50% 10% 10% Transportation Information 75% 5% Finance 20% 80% 75% 25% Insurance Real Estate 35% 30% 10% Accommodations 100% Gaming, Entertainment, 100% Recreation, Amusement Health Services 25% 25% Legal services 100% Engr. Mgmt. Bus. Serv. 65% 5% 5% Restaurants 5% 5% 90%
62 Thomas/Lane & Associates economic & public policy consultants
A-9 Allocation of Projected Richland Employment to Wye Area Real Estate Market Segments and Industries [con’t]
Industry General Health Lodging G.E.R.A. Retail: Retail: Retail; Restaurant Light Total Office Services Shopping Non- Arterial Industrial Allocated Office Center Shopping Auto Heavy Center*** Commercial Social, Family and other 60% Organizations Repair Services 5% 10% 70% Other Services, N.E.C. 10% 20% 30% 15% Increment of 1012 66 449 91 148 432 285 348 533 3374 Employment Projected 2005-2015 Increment of 1228 86 594 170 195 572 389 461 703 4501 Employment Projected 2015-2029 Source: Economic Consulting Services:
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Appendix B
Technical Note on the Calculation of Absorption Rates
64 Thomas/Lane & Associates economic & public policy consultants APPENDIX B TECHNICAL NOTE ON THE CALCULATION OF ABSORPTION RATES
Appendix Table A-7 is a summary of the detailed calculations that produce the absorption amount projected for the Wye area. Projected Richland Employment in 2005 was allocated to eight real estate market segments that would be expected to be attracted to the Wye area. The employment increment for the two periods: 2005-2015 and 2015-2029 were adjusted to reflect the amount that would be appropriate for each of the eight real estate categories. The assumptions for development densities, i.e., floor area ratios are typical for suburban locations where land prices are typically cheaper and there are generous parking and landscaping requirement. The employment densities are also typical for suburban areas and non-residential development. For an example office space per employee in suburban locations is often 300-400 square feet per employee, whereas in high-rise central business districts it is 200-250 sq. ft. per employee. The steps used to arrive at the eight real estate market segments‘ employment allocation were the following: create a matrix of 164 NAICS industries by 22 OES occupational groups the 22 occupational groups (OES numbers) were reduced to eight likely real estate market segments: Office: OES occupation group numbers – 11, 13, 15, 17, 23, 43 Office health services: 29, 31 Lodgings: 39 Gaming, entertainment, recreation & amusement: 27 Retail: 41 Restaurants: 25 Light industrial/heavy commercial: 19, 49, 51 [Not allocated were: OES occupation groups public sector 25, 33 and heavy industrial 37, 45,47, 53 Percentages of employment in each segment were calculated and the 164 industries were grouped in 22 NAICS industries for which there were projections available for the Richland portion of the Tri-cities labor market; adjustments were made, see below Employment increments projected for two time periods 2005-2015 and 2015-2029 The allocated projected employment were calculated for the 22 industries and eight market segments see Appendix Table B below The totals employment allocations were summed for each real estate market segment, see Appendix Table C below The projected and allocated employment totals were used as the major inputs and used in the Appendix Table and the employment and development density assumptions were applied to arrive at projections of land that is potentially available to the Wye area.
The percentage of each industry‘s employment that is allocated for to each of the real estate segments is displayed in Appendix Table A-8. That table displays the percentage of each industry reported for and projected for Richland industry that would occur in the eight real estate categories. It displays the percentages of the total Richland employment projected and allocated to these 22 NAICS industrial categories and real estate segments. The remainder of each
65 Thomas/Lane & Associates economic & public policy consultants industry‘s employment was determined as inappropriate for the Wye area or not likely to locate there. That table also includes the amount of employment in those eight categories for the two time periods. The amount employment projected into the eight real estate segments is also displayed by 22 industrial categories.
Appendix Table A-9 displays the percentages of each industry‘s employment that is allocated into each of the eight real estate market segments appropriate for the Wye area. In addition the employment that would be associated with that allocation is summed. These summed amounts for each of the 22 industries and eight real estate market segments are the major input into the Table A-7 that uses employment and development densities to determine projected absorption of land.
Two assumptions were made to adjust the data for a realistic allocation of projected employment in to the real estate market segments. The portion of the Richland ―Engineering, Management and Business Services‖ industry employment that would be associated with remediation services, i.e. that category most closely associated with the activities of the Hanford clean-up was not include. Real estate professionals in the Tri-cities area regard this employment as a separate market niche. Taking the percent of this category in the Benton County employment of 2002 and removing it, approximately 36%, adjusted for the portion of remedial service employment in this category of Richland‘s employment projections for 2005-2029. This is probably an understatement, which still leaves some of this employment category in the absorption projections, which is also probably realistic. The remainder, 64% is allocated among the real estate segments. 1. An allocation for retail industries that tend to not locate in shopping centers was made. Those businesses that would either locate or not into shopping centers was allocated to this real estate segment. This amount which would locate into shopping centers or not was then reduce by half based on the assumption that some this category would or could locate into shopping centers but would not locate in the Wye area. There is a shopping center in the Wye area. It could expand, increase its density or expand and that or the appearance of a small shopping center is taken care of in the shopping center retail category. This adjustment is aimed at that portion that would not go to shopping centers and could be attracted to the Wye area.
66 Thomas/Lane & Associates economic & public policy consultants
Appendix C
Sources
67 Thomas/Lane & Associates economic & public policy consultants APPENDIX C SOURCES
Bucher, Willis & Ratliff, Wye Master Plan, (City of Richland, December, 1998).
Buxton Company, Retail Location Analysis (prepared for the Cities of Richland and Kennewick, May, 2004).
City of Richland, 2004 Annual Budget, The Challenge of Change.
City of Richland, 2004 Community Survey (Public Information Office, June, 2004).
Fitzpatrick, Clara, “Y, oh Y”, Tri-City Herald (October, 2004), pg A6.
Hopkin, Mary, “Tavern Closure Marks End of Era,” Tri-City Herald, (October 17, 2004), pg. A6.
Speakers Compendium, Tri-Cities Regional Economic Outlook Forum (TRIDEC, January, 2003).
Schau, Dean, “Show Me the Money: Growth, Strengths and the Future of the Tri-Cities Economy” (Washington State Employment Security department, January 7, 2004).
Timerica Management Company, Economic Development in the New Economy: A Strategic Plan for Richland, Washington (November, 2003).
TRIDEC, Tri-Cities Fact Sheet (Tri-City Industrial Development Council, 2004).
Washington State Employment Security Department, Employment & Payrolls in Washington State (multiple years).
Washington State Employment Security Department, Occupational Employment Statistics (multiple years).
Washington State Office of Financial Management, Long Term State Forecasts.
68 Thomas/Lane & Associates economic & public policy consultants
Appendix D
Persons Interviewed
69 Thomas/Lane & Associates economic & public policy consultants APPENDIX D PERSONS INTERVIEWED
Tim Arntzen Port of Kennewick
Darin K. Arrasmith City of Richland Planning & Development Services
Wyn Birkenthal City of Richland Parks & Recreation Department
Tim Bush Suzuki Dealership Owner
David W. Fraley Fluor Hanford Information Resources Management
Maureen Frix Richland Chamber of Commerce
Diahann Howard City of Richland Business & Economic Development
R. Bryan Kidder CH2M Hill Hanford Group, Inc.
William B. King City of Richland Deputy City Manager
Marvin J. Kinney Port of Benton Assistant Executive Director/Airport Director
Rita Mazur City of Richland City Councilmember
Joseph J. Schiessl City of Richland Housing & Redevelopment
Dean Schau Washinton State Employment Security Department Regional Economist
Jerry Schneider Fluor Hanford Economic Diversification
Rick Simon City of Richland Community & Development Services
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Appendix E
North American Industrial Classification System Industries
71 Thomas/Lane & Associates economic & public policy consultants APPENDIX E NORTH AMERICAN INDUSTRIAL CLASSIFICATION SYSTEM INDUSTRIES
Industry Industry Titles Codes 1100 Agriculture 1151 Support activities for crop production 2123 Nonmetallic mineral mining and quarrying 2213 Water, sewage and other systems 2361 Residential building construction 2362 Nonresidential building construction 2371 Utility system construction 2372 Land subdivision 2373 Highway, street, and bridge construction 2379 Other heavy construction 2381 Building foundation and exterior contractors 2382 Building equipment contractors 2383 Building finishing contractors 2389 Other specialty trade contractors 3111 Animal food manufacturing 3114 Fruit and vegetable preserving and specialty 3116 Animal slaughtering and processing 3118 Bakeries and tortilla manufacturing 3121 Beverage manufacturing 3212 Plywood and engineered wood product mfg. 3219 Other wood product manufacturing 3231 Printing and related support activities 3253 Agricultural chemical manufacturing 3261 Plastics product manufacturing 3323 Architectural and structural metals mfg. 3327 Machine shops and threaded product mfg. 3328 Coating, engraving, and heat treating metals 3332 Industrial machinery manufacturing 3334 HVAC and commercial refrigeration equipment 3339 Other general purpose machinery manufacturing 3345 Electronic instrument manufacturing 3363 Motor vehicle parts manufacturing 3371 Household and institutional furniture mfg. 3391 Medical equipment and supplies manufacturing 3399 Other miscellaneous manufacturing 4231 Motor vehicle and parts merchant wholesalers 4232 Furniture and furnishing merchant wholesalers 4233 Lumber and const. supply merchant wholesalers
72 Thomas/Lane & Associates economic & public policy consultants 4234 Commercial equip. merchant wholesalers 4235 Metal and mineral merchant wholesalers 4236 Electric goods merchant wholesalers 4237 Hardware and plumbing merchant wholesalers 4238 Machinery and supply merchant wholesalers 4239 Misc. durable goods merchant wholesalers 4241 Paper and paper product merchant wholesalers 4244 Grocery and Related Product Wholesalers 4245 Farm product raw material merch. whls. 4247 Petroleum merchant wholesalers 4249 Misc. nondurable goods merchant wholesalers 4251 Electronic markets and agents and brokers 4411 Automobile dealers 4412 Other motor vehicle dealers 4413 Auto parts, accessories, and tire stores 4421 Furniture stores 4422 Home furnishings stores 4431 Electronics and appliance stores 4441 Building material and supplies dealers 4442 Lawn and garden equipment and supplies stores 4451 Grocery stores 4452 Specialty food stores 4453 Beer, wine, and liquor stores 4461 Health and personal care stores 4471 Gasoline stations 4481 Clothing stores 4482 Shoe stores 4483 Jewelry, luggage, and leather goods stores 4511 Sporting goods and musical instrument stores 4512 Book, periodical, and music stores 4521 Department stores 4529 Other general merchandise stores 4531 Florists 4532 Office supplies, stationery, and gift stores 4539 Other miscellaneous store retailers 4543 Direct selling establishments 4811 Scheduled air transportation 4821 Rail transportation 4841 General freight trucking 4842 Specialized freight trucking 4881 Support activities for air transportation 4884 Support activities for road transportation 4885 Freight transportation arrangement 4921 Couriers 4931 Warehousing and storage
73 Thomas/Lane & Associates economic & public policy consultants 5111 Newspaper, book, and directory publishers 5112 Software publishers 5121 Motion picture and video industries 5151 Radio and television broadcasting 5172 Wireless telecommunications carriers 5173 Telecommunications resellers 5181 ISPs and web search portals 5221 Depository credit intermediation 5222 Nondepository credit intermediation 5223 Activities related to credit intermediation 5231 Securities and commodity contracts brokerage 5239 Other financial investment activities 5241 Insurance carriers 5242 Insurance agencies, brokerages, and related 5311 Lessors of real estate 5312 Offices of real estate agents and brokers 5313 Activities related to real estate 5321 Automotive equipment rental and leasing 5322 Consumer goods rental 5323 General rental centers 5324 Machinery and equipment rental and leasing 5411 Legal services 5412 Accounting and bookkeeping services 5413 Architectural and engineering services 5414 Specialized design services 5415 Computer systems design and related services 5416 Management and technical consulting services 5418 Advertising and related services 5419 Other professional and technical services 5511 Management of companies and enterprises 5611 Office administrative services 5613 Employment services 5614 Business support services 5615 Travel arrangement and reservation services 5616 Investigation and security services 5617 Services to buildings and dwellings 5619 Other support services 5629 Remediation and other waste services 6110 Educational Services 6211 Offices of physicians 6212 Offices of dentists 6213 Offices of other health practitioners 6214 Outpatient care centers 6215 Medical and diagnostic laboratories 6216 Home health care services
74 Thomas/Lane & Associates economic & public policy consultants 6219 Other ambulatory health care services 6221 General medical and surgical hospitals 6231 Nursing care facilities 6232 Residential mental health facilities 6233 Community care facilities for the elderly 6241 Individual and family services 6242 Emergency and other relief services 6243 Vocational rehabilitation services 6244 Child day care services 7112 Spectator sports 7115 Independent artists, writers, and performers 7121 Museums, historical sites, zoos, and parks 7132 Gambling industries 7139 Other amusement and recreation industries 7211 Traveler accommodation 7212 RV parks and recreational camps 7221 Full-service restaurants 7222 Limited-service eating places 7223 Special food services 7224 Drinking places, alcoholic beverages 8111 Automotive repair and maintenance 8112 Electronic equipment repair and maintenance 8113 Commercial machinery repair and maintenance 8114 Household goods repair and maintenance 8121 Personal care services 8122 Death care services 8123 Drycleaning and laundry services 8129 Other personal services 8132 Grantmaking and giving services 8133 Social advocacy organizations 8134 Civic and social organizations 8139 Professional and similar organizations 8141 Private households
75 Thomas/Lane & Associates economic & public policy consultants