At the Tejon Ranch Commerce Center at the southern end of Kern County, construction has started on a new 580,000-square-foot spec industrial building. Grading of the property started early this month and already there is interest from a potential tenant, said Joe Rentfro, executive vice president of real estate with Tejon Ranch Co. “I cannot announce the company, but I can tell you today we have a lease pending to pre-lease a significant portion of that building,” he told the Business Journal. The speculative construction project is a partnership between Tejon Ranch and Majestic Realty Co. It will be located Tejon Ranch Commerce Center in Lebec next to a 480,480-square-foot building that Tejon and Majestic built in 2017 and leased to Dollar General Corp. and L’Oréal USA. With ample land, accessibility to major highways and a ready workforce, this area north of the Grapevine is becoming a major logistics hub. “We hope that this is a foreshadowing of a trend that will hit a tipping point and will continue,” Rentfro said of L’Oréal relocating its SalonCentrics subsidiary from Valencia to Kern County. Straddling the 5 freeway, the 1,450-acre Tejon Ranch Commerce Center has attracted a handful of big e-commerce and distribution companies since opening in 1999. Inter Ikea Holding B.V., parent of Ikea stores, has 2 million square feet across two buildings; and Dollar General, Famous Footwear owner Caleres Inc. and Caterpillar Inc. have together more than 1.7 million square feet. Tejon Ranch has 20 million square feet of entitlements, of which 5 million square feet have been developed so far. Freeway access Richard Chapman, chief executive of the Kern County Economic Development Corp., said a pro-business attitude in the county allow buildings to go up in months instead of years. But when it comes to site selection criteria, highway accessibility is critical, Chapman said. Kern County benefits from having north-south routes in the 5 freeway and highway 99 and the east-west route of highway 58 that leads to the Antelope Valley. “Our passes, as well, rarely are closed by the snow, versus when you go north,” Chapman said. “We are a four-hour drive overnight from most of the state’s population.” The county is about two hours away from the ports of Los Angeles and Long Beach, while the port in Oakland is about four hours away, Chapman continued. Along with the ability to receive goods from the ports, the location in Kern County also allows distributors the ability to get them out to the population centers in Southern California, Rentfro said. “It’s a strong proven mix of efforts that have made those who relocate here able to be productive and profitable,” he added. To Jeff Abraham, a member of the industrial real estate team headed up by John DeGrinis at Newmark Knight Frank’s Woodland Hills office, the main driving force for development in Kern County has been the workforce. As the number one agricultural county in the U.S., there are a lot of farm workers who are paid hourly with no benefits and do so at six-month intervals. These workers tend to switch from picking fruit to vegetables and back again, Abraham said. “So, when you give these folks an opportunity (to work for major companies) that’s the number one opportunity,” he added. Abraham, DeGrinis and Patrick DuRoss represented Tejon Ranch Commerce Center in the L’Oréal deal and will handling leasing of the new spec building. Chapman said that there is a recognized need for the distribution center jobs, which can pay up to $50,000 a year. Also, the skill sets of agricultural workers are transferable to working in a warehouse. “We have job applicants to jobs at a ratio of, I think, 12:1,” Chapman added. The ability of the workforce is a great story and contributing to it is the strong work ethic that comes from the county’s agricultural history, Rentfro said. “They are thankful for the jobs that they have here and put in a great effort,” Rentfro explained. Relocation tax credits There are other reasons why companies look to Kern County for a distribution hub. Back in 2015, Boyd Co. Inc., in Princeton, N.J., named metropolitan Bakersfield as having the state’s lowest operating costs based on labor, electricity, amortization, tax and shipping expenses. A 500,000-square-foot distribution center with 200 employees would cost $15.6 million to operate, the company’s study found. “When site selection consultants and corporate real estate execs do their initial analysis before we are contacted, these things definitely jump out,” Chapman said. There is also a new county incentive program that was passed in November 2017 by the Kern County Board of Supervisors. The program is meant to create new jobs and expansion of new and existing businesses, Chapman said. L’Oréal was the first company to receive an incentive, getting about $3 million in tax credits.