evelopment in California has taken a decided eastward migration over the last year. Rising office space costs coupled with limited available land in coastal areas have many companies taking a harder look at interior regions of the state when making site decisions.
        Proximity to affordable housing has become a critical concern across the state as well, as housing prices continue to rise.
        "It's a question of how do we deliver more housing closer to the work force," says Richard M. Gollis, a founder of The Concord Group, a real estate advisory firm with offices in Newport Beach and San Francisco, which specializes in land use issues. Gollis says California's inland valleys are becoming an attractive relocation region, particularly for firms looking to move back offices or distribution centers.
        It is no secret that manufacturers like to have their plants and distribution centers near primary trucking corridors. Thus, logistics is a key driver of inland California development, says Mike Locke, president and CEO of the San Joaquin Partnership. He cites the intermodal facilities such as the one Burlington Northern Santa Fe (BNSF) opened last year as being significant growth propellants in the Stockton area. Catellus Development Corp. plans to develop a 106-acre (262-ha.) tract near the BNSF facility.
        "The Duck Creek development is in a premier location and offers the shipping community a number of rail transportation options that can save shippers up to 25 percent on their total supply chain costs," says Patrick Thompson, BNSF's director of economic development. "With more than a hundred acres [405 hectares] of rail-served property and less than a mile from our Stockton Intermodal Facility, the Duck Creek development provides customers with direct access to rail, intermodal rail options, and transload services. We expect to see a lot of large-scale warehouses built at this facility as well as light manufacturing."

Clean, Well-Lighted Places Await the Recovery

With its energy crisis abating, the world's fifth largest economy is now tackling declining state revenues and accelerating housing costs. One leading California economist sees the recession fading in the north and continued expansion in the south. Dr. Tom Lieser, senior economist and an author of the UCLA Anderson Forecast, a quarterly examination of the state's economy, says hope for a sustainable recovery during the second half of 2002 depends on improvement in Northern California.
        "California has had somewhat of a boom-bust economy the last several years compared with the rest of the nation," Lieser says. "In 2000, California ranked third in the nation in the growth rate of personal income. Currently, we are well below average in terms of growth. The changes reflect the technological bust we've been through."
        Conversely, Lieser says Southern California, with a larger, more diverse economy and population, has not seen a recession. He says the shift to the east is more pronounced in Southern California due to good links to port facilities (see "2002 Global Infrastructure Report," p. 574). This will continue as businesses seek lower production costs, he says.
        Lieser believes the worst is over regarding California's energy situation, with supply catching up to demand.
        "Californians in general are paying more for energy, but one no longer hears of threats of brownouts and blackouts," Lieser says. "Now, it's more of a longer-term nagging issue of where we go from here."
        The world economic slowdown hit California's export sales of high-tech equipment especially hard. But the rate of decline slowed during the first quarter of 2002, and improved sales could be seen during the second half, Lieser predicts. The UCLA economist also expects California's nonresidential construction to decline during the third quarter.
        "With an increase in vacancy rates in virtually all California nonresidential markets, particularly in the San Francisco region, new projects are increasingly risky," Lieser says.