YK America Regional Center's initial investment offerings will be for shopping center developments in the city of Delano in Kern County, California. Delano is a good fit for the YK America model, being in an area with rapid population growth but lagging behind in growth of retail and employment opportunities. YK America is partnering with the Redevelopment Agency of the City of Delano for two major developments, including a 20 acre downtown mixed use shopping center and a regional shopping center of almost 200 acres along Highway 99.
City of Delano: Overview
Geographic Location
Delano offers a central location within the state of California, near the border between Kern and Tulare counties and intersected by Highway 99. It is located 30 miles north of Bakersfield, the dominant fi nancial, retail, and administrative center of the region. Delano is the focus of eight communities within a fifteen mile radius, including McFarland, Wasco, Pixley, and Rich Grove. Over 100,000 people live in this 15-mile radius. Delano has an area of 12.16 square miles, with coordinates: 35.76484 N, 119.25042 W.
Transportation
Regional access to the city of Delano is provided by State Highway 99, which extends in a north/south direction through the center of the city. This freeway is the major arterial connecting the Central Valley from Los Angeles to Sacramento. East/west regional access is provided by State Highway 155. Freight train service is provided by the Union Pacific Railway companies which run parallel to Highway 99.
Commercial Profile
While Delano has grown to become Kern County's second largest city, its roots remain embedded in agriculture. Delano's almonds and table grapes are particularly renowned for their high quality, and the county leads the state in the production of almonds, pistachios, carrots, watermelons, sheep, and wool. The region ships hundreds of millions worth of commodities throughout the US and to 85 foreign countries. Kern county is the third most productive agricultural county in the nation, as well as producing over two thirds of the oil produced in California.
Delano is influenced by its location 20 minutes from Bakersfield, which is the economic center of Kern County. Bakersfield has received heavy investment from major oil companies and is also the center for county government, which is the largest overall employer in Kern County. Bakersfi eld and Delano have become part of the "ring of expansion" around the ports of Los Angeles and Long Beach, and benefit from business, land and labor costs that are relatively low when compared to the rest of the southern California market. The county has recently attracted back office type uses (credit card processing, telemarketing, insurance companies, etc.) to relocate from the greater Los Angeles area, and warehouse and distribution facilities have also been relocating to Kern county. Delano's economy is enhanced by a number of large industries including Railex Logistics, Sears Logistics, Paramount Citrus, Anthony Welded Corporation, and Delano Energy.
The City of Delano includes an Enterprise Zone which offers significant tax savings and other benefits to businesses. Delano, including the YKARC project sites, is a Targeted Employment Area, since the entire county of Kern has been designated as a Targeted Employment Area.
City of Delano Demographics
Delano |
5 Miles |
10 Miles |
15 Miles |
|
| Population | 47,589 |
49,923 |
77,329 |
102,366 |
| Population % Change (2008-13) | 2.05% |
2.01% |
2.10% |
2.39% |
| Median Age | 28.2 |
28.2 |
27.1 |
26.7 |
| Households | 9,848 |
10,463 |
16,278 |
22,660 |
| Household Avg. Income | $44,582 |
$44,831 |
$42,626 |
$43,545 |
| Household Median Income | $32,863 |
$33,024 |
$31,075 |
$31,806 |
Population Growth Rate
Population growth in Delano and Kern county as a whole is related to its relatively affordable housing. The area has very low housing costs compared to the state of California in general and the Los Angeles metropolitan area county in particular.
Ethnicity
Delano is ethnically diverse, with a people of Hispanic origin making up a particularly large proportion of the population.
Source: STDB Demographics 2008
Income
In general, Delano's income levels have grown steadily, though there tends to be a considerable concentration of households in the lower income ranges.
Employment
Historically, Kern County's largest industries have been farming, government and retail trade. However, since 2000, the job market has shifted to reflect the impact of regional growth. During the 2000's, the fastest growing sectors are the construction and medical services industries. The largest industry employers in Delano include the agriculture, forestry, fishing, hunting, and mining group; the educational, health, and social services group; and retail trade.
DELANO TOP 10 EMPLOYERS |
||
| Company | # of Employees | Product/Service |
| North kern State Prison | 1,239 |
Correctional Facility |
| Pandol & Sons | 900 |
Farming |
| Delano Union Elementary School | 775 |
Education |
| SLS (Sears) Logistics Services | 653 |
Distribution Center |
| Paramount Citrus Association | 550 |
Processing Center |
| Delano Regional Medical Center | 550 |
Medical |
| Anton Caratan & Son | 421 |
Farming |
| Delano Joint Union High School District | 336 |
Education |
| City of Delano | 318 |
Government |
| R.B. Sandrini Farms | 250 |
Farming |
Much of the recent job growth has been due to growth of non-basic industries - that is local-serving industries that sell their products within the region and do not bring in money from outside. This has been in response to general growth in the population. While farming still plays a major role in the local economy, farming and management of companies and enterprises are the two fastest declining industries in the region. These trends suggest that many households will continue to commute to jobs outside the county.
Unemployment
Statistics show that unemployment in Delano is relatively high.
Historical Labor Statistics for Delano and Kern County |
||||||
Year |
City of Delano |
Kern County |
||||
Labor Force |
Unemployed |
Unemployent Rate |
Labor Force |
Unemployed |
Unemployment Rate |
|
2003 |
15,500 |
4,200 |
27.0% |
313,700 |
32,400 |
10.3% |
2004 |
15,600 |
4,100 |
26.1% |
317,200 |
31,500 |
9.9% |
2005 |
15,800 |
3,600 |
22.8% |
330,400 |
27,900 |
8.4% |
2006 |
16,000 |
3,300 |
20.8% |
341,600 |
25,900 |
7.6% |
2007 |
16,800 |
3,800 |
22.4% |
351,900 |
29,100 |
8.3% |
2008 Sept. |
17,900 |
4,400 |
24.7% |
369,000 |
34,200 |
9.3% |
Source: California Employment Development Department
With a median age of 28.2, Delano's population is considerably younger than that of most California counties, resulting in a relatively large number of potential employees in Delano. The city is aggressively involved in promoting employment. A state supported Career Services Center, and Proteus Inc, provides training and workforce development, and the Career Services Center will assist in screening and hiring applicants at no cost to the employer.
Market Overview
Delano is the second largest city in Kern County and within 20 minutes of Bakersfield, the governmental, economic and retail center of Kern County. Kern County is in the forefront of California's growth, as companies and people continue to gravitate to the area due to the county's lower business costs and affordable living costs. Retail potential is strong in Delano and the region as a whole since retail activity tends to directly track population growth. Delano has shown strong retail sales growth, especially over the last five years, but currently still offers limited types of retail stores and is behind the region as a whole in growth of retail outlets.
Retail Trade Area
Retail Sales
Delano has historically had a similar rate of retail growth relative to county wide trends, but experienced comparatively strong growth in the last five years. The recent growth spurt reflected on the chart below coincided with the opening of Home Depot in Delano - one of the anchors of the Delano Marketplace retail area.
The California Retail Survey gives Delano a 5-star rating for overall market growth, equal to Bakersfield and above other communities in the San Joaquin Valley. This suggests that Delano has potential to follow Bakersfield's lead as a retail center in this rapidly growing area.
California Retail Survey City Comparison |
||||
City |
Performance Ranking |
Relative Strength Ratio |
Growth Persistence |
Star Ratings |
Bakersfield |
1 |
1.73 |
86.1 |
***** |
Delano |
1 |
2.38 |
83.3 |
***** |
Fresno |
2 |
1.46 |
63.9 |
**** |
Hanford |
2 |
1.37 |
63.9 |
**** |
Porterville |
2 |
1.01 |
38.9 |
*** |
Visalia |
2 |
1.40 |
66.7 |
** |
- Performance Ranking: measurement of a market's growth rate in the current year compared to all other markets in California. The rankings range from 1 to 5, with 1 being the top 20th percentile for recent growth rate.
- Relative Strength Ratio measures the long-term retail sales growth trend compared to growth fluctuations in statewide retail sales. The ratio is derived by dividing the percentage increase in retail sales in a specific county or city over the past five years by comparable percentage increases for total statewide retail sales.
- The Growth Persistence Index measures the ability of a local market to consistently out-perform the overall market each year. This measurement is used to differentiate markets with steady, above average growth from those that experience wide fluctuations in their relative growth performance.
- The Star Ratings provide Survey users with a clear assessment of a market's growth compared to all other markets in California. Markets that have grown the fastest over the last five years are given the five-star rating.
Retail Outlets
For many years the Valley Plaza Shopping Center in Bakersfield was the only regional mall in the county, and it has experienced consistent success and substantial expansion. Recently there has been construction of newer retail centers in response to the ongoing housing growth, though the growth rate for retail outlets has been lower in Delano than in the county as a whole.
Delano has added retail outlets at a lower rate relative to county wide trends, and high occupancy rates at retail outlets in the surrounding area suggest opportunity for further development. Currently the overall vacancy rate in Delano for retail properties is between 3% and 7%. Bakersfield's retail vacancy rates are also low, at about 4%.
Delano Retail Area
The existing Delano retail market is primarily confined to older storefront developments within the downtown business district along 11th Avenue, High and Lexington Streets. This area has very low vacancy, with nearly every space filled, and offers little room for expansion. It is dominated by very small businesses with few employees and by "99 cent"-type discount stores. Some of the long-time business establishments have left and have been replaced by businesses seeking bargain shoppers, which has made it difficult for established businesses that attract a mix of incomes to remain Delano. The current primary retail area is also not directly linked to Highway 99, reducing its potential to attract traffic from the region. The city has recently completed a renovation of the downtown area in an attempt to increase curb appeal, and supports plans for new development to expand Delano's retail area.
Retail Leakage and Increasing Demand
Delano residents spend a signifi cant potion of their total retail dollar at shopping centers in Bakersfield, Porterville, Tulare, and other communities with a greater variety of retail stores that are not available locally. Due to limited retail options in the city, Delano experiences retail leakage - the difference between local demand and local sales.
Five-year projections for retail sales volumes in the Delano area show growth across the board, with a particularly marked increase in spending on health and personal care items. These projections do not take into account the effect that Delano Marketplace and Paseo Delano will have on local spending.
Conclusion
The Delano area retail market and the local sub market are exhibiting strong occupancy levels and upward trending rental rates, while maintaining favorable absorption in recent years. The Delano area is projected to experience moderate, positive growth relative to households, population, income levels and retail expenditures into the near future, creating a positive environment for new development.