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City officials originally wanted mixed-use office and commercial on the Meredith site with little or no industrial development, but market conditions have forced them to go to Plan B, at least for now.
It can no longer be said that there aren’t any large developable parcels of industrial real estate on the west end of the Inland Empire.
There are approximately 250 acres of commercial property at Interstate 10 and Vineyard Avenue in Ontario, better known as the Meredith property, named for the family trust in Tustin that owns the site.
Earlier this month, QVC, the television retailer, announced that it will build a warehouse-distribution facility on the property at Fourth Street and Vineyard Avenue that will cover approximately one million square feet.
That project’s first phase is expected to be up and running next summer. It’s expected to employ as many as 1,000 people when it reaches full capacity, probably in five years.
When it opens it will be QVC’s first west coast distribution center, and it will handle up to 20 percent of the company’s U.S. business.
The project’s development plan has been approved by the planning commission. Unless someone files an appeal, the city council’s approval is not required.
QVC’s announcement wasn’t entirely a surprise. Last October, the property’s owner, Sares-Regis in Irvine, announced that it was buying 150 acres of the Meredith site for an industrial tenant, which it had not yet signed. Given Sares-Regis’ history and the current red-hot Inland Empire industrial market, finding a tenant was a formality.
When QVC signed on the dotted line, it did more than a bring another logistics operation to the Inland Empire. It officially ended Ontario’s long-time vision for the Meredith property, which was to be a mixed-use project – residential, restaurants, high-end retail – and, most of all, Class-A office development.
Former City Manager Greg Devereaux, now San Bernardino County’s chief executive officer, wanted the site to be a miniature version of Century City, one that would serve as the unofficial gateway on Interstate 10 to the Inland Empire.
Devereaux’s message was clear: the Inland region, and Ontario in particular, already had plenty of warehouse-distribution centers. Given their importance to the local economy, both entities were sure to get more of them.
However, the Meredith property was unique within the Inland Empire, and maybe the western United States. Something more substantial, and ambitious, than warehouse-distribution centers should be built there, Devereaux believed.
Devereaux could not be reached for comment this week, but three years ago he expressed his thoughts on what he believed should be done with the Meredith property.
“I really believe that it has that much potential,” Devereaux said of the site, which by 2012 was still empty, its development having been put on hold by the Great Recession. “It should be more than just commercial development. It should be a destination, a downtown for the whole Inland Empire.”
That could still happen someday, but for now the city felt like it needed to get something built on the property so it could start generating revenue, said Scott Murphy, Ontario’s planning director.
“It’s a great opportunity, not only for Sares-Regis and QVC but also for the city,” said Murphy, who said the project could generate between $4 million and $5 million in sales tax revenue for the city during a typical year. “I wouldn’t say there was pressure to get anything built, but we did want to get something done.”
Ultimately, the demise of the Inland Empire office market probably forced Ontario to change its plans regarding the Meredith property. Although absorption is up and lease rates are moving back to respectability, there is still too much vacant office space on the market to justify building anything new.
Most local office brokers say they don’t expect any speculative office development in the region for at least two or three years. Besides, Ontario already has several other commercial projects – Piemonte at Ontario Center near Citizens Business Bank Arena and Guasti Village next to Interstate 10 – that are struggling to find office tenants.
‘If you add a lot of office to the Meredith site it will only make things tougher,” Murphy said. “So you need to find other uses for that property.”
But the clincher might have been a city study that found it could take 50 years to attract as much Class A office to the Meredith property as the city originally envisioned.
“I still think we will get some office there, but the problem is there’s still too much empty office space that needs to be filled,” Murphy said. “That’s really the biggest problem. But industrial is completely different. Even during the recession we were getting some industrial deals.”
About 100 acres of the Meredith site that is adjacent to the freeway – also owned by Sares-Regis – remains designated for mixed use, but those parcels are likely to stay vacant for awhile, depending on the state of the market.
“I don’t see any office happening for at least three years,” Murphy said.
In the meantime, Sares-Regis will begin construction on the QVC project while marketing its other parcels on the Meredith site.
“I guess [Sares-Regis] just got tired of waiting,” Inland economist John Husing said. “They wanted to put office there, which would have been nice, but that was going to t
