Retail development continues locally despite headwinds
A simple measure of economic sentiment in large cities is how many cranes loom on the skyline. But in Bakersfield, the better gauge may be how many drivethrus are under construction.
By that standard, things still appear to be looking up locally.
Despite relatively high costs related to construction and financing, shopping centers are being built or proceeding in various stages of planning in the city’s southwest, northwest, south and northeast.
An apt example can be found in southwest Bakersfield: Construction crews are busy on both sides of Stockdale Highway just west of Heath Road as separate developers build shopping centers that have already signed up major tenants.
The trend is unsurprising in some respects — retail follows rooftops, as the saying goes, and there’s been considerable homebuilding around town lately. But in other ways, the new development seems disconnected from the national discussion about whether the economy may be headed for a recession even in the face of surprising job growth.
There are different explanations locally, and some of that comes from the fact that different locations offer unique opportunities. To some, Bakersfield still seems to be experiencing pent-up demand from the lull of the pandemic. Others note the surge of construction lately says more about the outlook a year and a half ago than it speaks to current conditions.
Executive Vice President Bruce Davis of Bolthouse Properties, managing two projects including the one at the southwest corner of Stockdale and Heath, said new homes and new residents “justify what we’re doing here.”
“Our community is starting to
mature,” he said Thursday. “We have people and we consider our retail as part of our community.”
A somewhat different view came from retail broker Scott Underhill, a partner at ASU Commercial, who noted the projects going up now had their leases signed and financing finalized 18 months ago.
Would they still be approved in the current environment with higher interest rates and inflation? Possibly so, he said.
“In my opinion, current economic conditions are not killing deals,” Underhill said. “Are they making things more difficult? Yes. Are people being more careful? Yes. But I … would say there are no deals being lost currently because of economic conditions. It doesn’t mean they won’t die.”
With retail vacancy rates generally low around town, Bakersfield is seeing several hot spots for retail development, starting in the southwest.
Bolthouse Properties is beginning to fill out its Belcourt Village neighborhood retail center at White Lane and Buena Vista Road. A Starbucks and two gyms are already open there and more room is being built for additional tenants, including a Chipotle drive-thru, several Bakersfield-based restaurants and a dry bar to be locally owned and operated.
A similarly local-first approach is taking shape at Stockdale and Heath’s center, called The Ranch, where the developer has named tenants including a Dewar’s drive-thru, a Sully’s filling station and convenience store, a Valley Strong Credit Union branch, a nail salon and several food shops and restaurants.
Opposite Stockdale from that development is a project dubbed Stockdale River Village, where an AutoZone store and a McDonald’s restaurant look nearly complete, with adjacent land under active development. The project’s developer could not be reached for comment Thursday.
In the city’s northwest, at the southwest corner of 7th Standard Road and Calloway Drive, Underhill reports a 20-acre shopping center is being marketed to restaurants, grocers, service-suppliers and other potential tenants.
In south Bakersfield, at Hosking Avenue and H streets, two retail developments are planned, one measuring 40 acres on the intersection’s south side, the other proposed to take up nine acres to the north. Underhill said much of the development there appears to be driven by so-called pads, which are standalone, medium-size buildings that tend to suit drive-thrus.
New development appears to be coming, as well, to the area around Morning Drive in the city’s northeast. So said retail broker Garret Tuckness, senior vice president and partner of Colliers Tingey, during a real estate conference last month. He could not be reached Thursday.
Tuckness also made mention at the meeting of an out-oftown investor preparing to buy a 46-acre lot for speculative development on the south side of Rosedale Highway and Coffee Road.
Underhill said recent, economic headwinds haven’t wiped out any local retail development deals locally, but they’re “messing with our hair right now.”
Even though it’s less expensive to increase same-store sales than expand with new ones, Underhill said retailers are still making deals lately. Some of that has to do with how well those same retailers are already doing with other locations in Bakersfield.
“The reason they’re still expanding is because the units here that are open are doing well,” he said, adding “We do have a very healthy market with very low retail vacancy. It is very healthy.”
“The reason they’re still expanding is because the units here that are open are doing well. We do have a very healthy market with very low retail vacancy. It is very healthy.”
— Scott Underhill, a partner at ASU Commercial