Business Trends
I find one of the most surprising facts I share with companies and commercial brokers is that Morgan Hill is home to two of the 13 largest business parks in Silicon Valley.
According to the San Jose/Silicon Valley Business Journal, Morgan Hill Business Ranch (about 400 acres on the southside of Cochrane Road) is the largest business park in Silicon Valley with about 3 million square feet of completed buildings. Anritsu, Sakata Seeds, and Hospira (formerly Abbott Labs) are located in Morgan Hill Business Ranch. Madrone Business Park (about 100 acres), which is bisected by Madrone Parkway, is the 13th largest business park in Silicon Valley with about 750,000 square feet of completed buildings. The Thomas Kinkade Company’s corporate headquarters (formerly known as Media Arts) is located in Madrone Business Park.
TRENDS
There is more than 5 million square feet of commercial/industrial space in Morgan Hill. The current vacancy rate ranges between 15 and 20 percent, which is about the average in Silicon Valley. Most of the vacant space in Morgan Hill is in older buildings.
From 2001 through 2006, we saw about 2.3 million square feet in commercial/industrial space being developed in town. This includes both new construction and tenant improvements (i.e., companies remodeling or improving previous unimproved space). More than 50 percent or about 1.2 million square feet of the total development occurred in 2001. So since the dot-com bust, we have experienced less development over five years than in one year. The latest trend in Morgan Hill appears to be smaller developments such as business condos or smaller “shell” buildings. Shell buildings are constructed by developers without a specific tenant in mind and when the space is leased, the tenant is generally required to install tenant improvements.
SALES TAX- CONSTRUCTION SECTOR
In last month’s column, I discussed retail sales tax. I thought I would continue that trend by analyzing the construction sector of sales tax revenue. We actually saw a lot of growth in the construction sector, which includes building materials wholesale and retail. From 2003 to 2006, the sales tax revenue the city received from the construction sector almost doubled from $324,000 to $662,000. This reflects the opening of Home Depot, the expansion of Johnson Lumber/ACE Hardware and increases in the costs of raw building materials (e.g., lumber). While this growth has helped city revenues, the growth in the sector has stabilized and, unfortunately, we can’t anticipate such double-digit growth over the next few years.
NEW BUSINESSES
So who’s new coming to town. Well, it sounds like a Kinkos/FedEx will be coming to town in Madrone Village (smaller retail center under construction just west of Chevron along Cochrane Road). Already, some are asking whether it will be open 24 hours, but I think just having one in town will make a lot of parents happy (i.e., kids’ last minute school projects). Another company that recently came to town is 247 Workspace. The Business Journal ranks 247 Workspace No. 5 in terms of gross sales of office furniture in Silicon Valley. The company pioneered a more cost effective method of selling commercial office furniture via the Internet. 247 Workspace is also ranked as a “Best Places to Work” in the Business Journal. As more than 60 percent of Morgan Hill residents commute more than 30 minutes and the average commute time for everyone is about 37 minutes, I would
suggest that those interested in working closer to home,
check out 247 Workspace’s Web site for job opportunities at
www.247workspace.com.
QUOTE OF THE WEEK
“Whatever you fear most has no power – It is your fear that has the power”
– Oprah Winfrey, talk show host and media mogul
Garrett Toy is the director of business assistance and housing services (BAHS) for the City of Morgan Hill. BAHS is responsible for the city’s economic development, redevelopment and affordable housing activities. He has been working in this field for 18 years: 8.5 years for the city of Morgan Hill. E-mail him at ga*********@***********ca.gov.
