11:16 PM PDT on Saturday, September 4, 2010
By JACK KATZANEK
Bob Wolf, the developer who over the last four decades was responsible for a lot of the projects that turned Interstate 215 into a busy commercial corridor, recalls an anecdote about Texas billionaire H. Ross Perot.
Perot, who has initiated dozens of philanthropic ventures, once donated land for a medical center in Texas. People were thrilled about the opportunity to upgrade that area’s medical care.
But Wolf, who stepped down as president of Riverside-based Germania Corp. two years ago and now is a consultant for developers, said the biggest financial beneficiary on this hospital project was Perot, who owned land surrounding that facility.
“Perot gave that land to the hospital because he knew very well the surrounding properties would become much more valuable,” Wolf recalled. “It was a huge success for him.”
Whether that scenario will repeat itself on properties surrounding March Air Reserve Base remains to be seen.
March Healthcare West, a private company, has a deal with the March Joint Powers Authority, the public agency charged with redeveloping the former U.S. Air Force base property, to build a medical facility on the air base site. Officials have said they hope to be treating the first patients at a new medical center by the end of next year.
The facility is called March LifeCare. Ultimately the ambitious plans call for several medical facilities and possibly hotels and retail locations. If it all comes together, the complex could employ as many as 7,200 people.
All of this, Wolf and others who keep tabs on this area say, could help property owners and developers whose land is not on the base but close by. Scores of properties, mostly within the city limits of Moreno Valley and Perris, are for sale for commercial users. Most are zoned for warehouses or other large industrial buildings.
If there is a more immediate upside to March LifeCare it isn’t likely to come from 700,000-square foot distribution centers. It could come from office buildings that sell or lease 12,000 square feet to doctors and other medical operations.
Chris Ernst, senior vice president of Aardex LLC, a Denver-based developer that specializes in medical offices and condominiums, said interest from doctors and others in medical professions has been growing. People want to be close to the medical center but not on the base itself.
Ernst said buyers are now offering twice or three times as much for properties than they did 18 months ago, although the asking prices are still well off their peak before the recession.
“Since the announcement of the medical center we’ve gotten three times the inquiries on vacant properties,” Ernst said. “Doctors believe it will happen, and they want to position themselves.”
The question most have is whether Inland Southern California’s weak economy will hurt that area’s commercial real estate market more than a major medical facility will help.
The medical center project started in earnest last month when demolition work began on old base buildings, but the economy is not picking up any measurable traction.
Peter Coates, the agent for Hemet-based Brubaker-Culton Real Estate, which is handling a vacant property on the intersection of Perris and Harley Knox boulevards in Moreno Valley, said there’s been “no tangible interest” because of the base redevelopment.
“The economy has slowed everything down,” Coates said. “Vacant land is very, very difficult to sell.”
The owners of vacant lots have it hard right now because they’re competing with distribution centers that are already tenant-ready. Coates said the only sellers who might have an edge are those with I-215 frontage property.
Existing properties are moving slowly as well. Tom Taylor, executive vice president with Colliers International, is trying to sell or lease several properties on and around Cactus Avenue in Moreno Valley. One is a 779,000-square-foot building that has been vacant for several years and never had a tenant, although Taylor said Colliers could be close to a deal on that property.
“I don’t think (base plans) have really moved the bar much,” Taylor said.
Space to build
The areas east of the cities of Riverside and San Bernardino are called “Inland Empire East” in commercial real estate circles. It gained a lot of economic prominence in the first part of the last decade because the western part of the two-county area centered around Ontario was close to running out of space to build.
That sent development north to the Victorville area, east to San Bernardino and Redlands and southeast down the I-15 corridor. Major companies such as Walgreens, Lowe’s and Ross opened huge distribution centers in Moreno Valley and Perris during this period.
Barry Foster, economic development director for Moreno Valley, said the medical center should eventually speed up industrial development north of the base and probably spur some new retail development, although some land along Alessandro Boulevard is restricted by water issues.
“If you produce another 8,000 jobs it would support the retail business that’s already there and probably create more,” Foster said.
Prices remain depressed
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