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By: Steve Kapp & Joe Fabian- Cornish & Carey Commercial- Hayward office

September 10 2009

On August 27, 2009, Toyota Motor Corporation announced that the New United Motors
Manufacturing Inc. (NUMMI) automotive plant in Fremont would be closing its operations by
March 2010.

The NUMMI plant, in operation since 1984, is the largest employer in the City of Fremont, with
5,200 employees. It currently manufactures the Toyota Tacoma, the Toyota Corolla, and Pontiac
Vibe at the Fremont plant. The actions taken by Toyota Motor Corp. were accelerated by its joint
venture partner, General Motors, withdrawing from the partnership as a result of its bankruptcy
filing earlier this year.

The plant is massive- almost 5.3 million square feet situated on 380 acres of industrial land
adjacent to Interstate 880. An additional 100 acres serve as buffer areas to the surrounding
industrial uses. With such a large operation, the obvious question we are being asked is “What
impact will this plant closing have on industrial real estate values in the Bay Area?”. In this
paper, we will attempt to address this question on both the local and regional level.

Automotive manufacturing has a long history in the San Francisco Bay area. The Ford plant in
Richmond, totaling 517,000 square feet, originally constructed in the 1930s, operated until 1956.
In 2005, the City of Richmond appointed Orton Development as master developer, who then
adaptively re-developed the property, and it is now home to tenants such as Sun Power and
Mountain Hardware.

In San Leandro, Chrysler operated a manufacturing plant until the late 1960s. The ground floor
level was converted to “big box” retail, and the upper story was converted to industrial and office
uses. The project totals 400,000 square feet and is operated by SKB.

In Milpitas, Ford Motors operated an automotive manufacturing plant up until the early 1980’s
until it was closed as a result of increasing Japanese competition. It was subsequently
redeveloped by a joint venture between Ford Motor Land Development Corporation and Petrie
Dierman Kughn (McLean, VA) and as big box retail. The Great Mall of Milpitas, consisting of
1,300,000 square feet of retail space, opened in 1994 and is currently owned and operated by the
Simon Property Group.

  Cornish & Carey Commercial ONCOR International | 22351 City Center Drive, Suite 100 | Hayward CA 94541
                        Tel: 510.300.0200 | Fax: 510.300.0201 |
The NUMMI plant is currently the last operating United States automotive plant east of the
Mississippi River.

The point in reviewing this history is that these large plants can be redeveloped, but there are
many roadblocks, and huge amounts of time that need to pass before the conversion occurs. A
partial list of hurdles includes environmental cleanup, infrastructure, permitting, financing, and
necessary approvals for large and impactful developments. It may easily be 10 years before the
site is re-developed, which could be two more cycles in the real estate market.

As for other examples of “prime” industrial infill sites with long lead times to development, we
point to the Oakland Army Base, Alameda Naval Air Station, and Oak/9th Street Terminal sites.
We see no reason why the NUMMI site could be redeveloped more quickly.

The obvious impacts to the NUMMI plant closing are the loss of 5,000 jobs to the local
economy, which will have a ripple effect due to these employees buying power at local
restaurants, retailers, etc. Until these employees find new jobs, and it is reasonable to believe that
it will take quite a while, there will be belt-tightening in these households.

Further, the City of Fremont will be affected significantly as the NUMMI Plant was the largest
taxpayer by far in the city. Property taxes, sales taxes, business licenses, permits, and payroll
taxes are just a few areas that will be significantly affected. The city may find it difficult to meet
budgets, and cuts in services and infrastructure investment are to be expected.

But the biggest impact will be the effect the plant closing has on NUMMI’s vendors, service
providers, parts suppliers, and subcontractors. Estimates are that the fallout from this plant
closing could affect an additional 15,000-20,000 jobs. While it is difficult to categorize all the
vendors that could be affected, they range from food service providers, to industrial laundry, to
operational and maintenance personnel that have been subcontracted out to 3rd party providers.

It is safe to say that the ripple effect from the plant closing will affect local home prices, local
retail store sales, local government hiring, and local car sales, among other items. The union jobs
being eliminated by a plant closure are relatively high paying for the skill set and it will be
difficult for those affected to find equivalent pay replacement jobs.

In order to assist our clients in understanding this situation, Cornish & Carey Commercial has
identified the local and regional part suppliers for the NUMMI plant. These companies, their
product, and their location can be found in the attached chart. We have also provided a schematic
map showing each supplier’s location relative to the NUMMI plant.

  Cornish & Carey Commercial ONCOR International | 22351 City Center Drive, Suite 100 | Hayward CA 94541
                        Tel: 510.300.0200 | Fax: 510.300.0201 |
The chart shows a total of 28 Northern California suppliers, with a total occupied square footage
of just almost 3,000,000 square feet.. Some of the buildings are owner-occupied, while others
are leased. We have created some graphs to visually show you the composition of this data.

              Comparison of East Bay to Central Valley SF

                                                     East Bay
                                                     Central Valley

               Comparison of Owned Vs. Leased Property

                      SF                                    Own


 Cornish & Carey Commercial ONCOR International | 22351 City Center Drive, Suite 100 | Hayward CA 94541
                       Tel: 510.300.0200 | Fax: 510.300.0201 |
Two things are clear when looking at these graphs. The bulk of the square footage is in the
Central Valley, so we expect a bigger impact there compared to the I-880 corridor. The second
thing is that there is a lot more owner occupied versus leased square footage. This makes sense
given the high costs to fit out an auto parts manufacturing plant and the difficulty in moving once

The fact is that NUMMI parts suppliers started moving out of the Bay Area some time ago. It is
difficult to justify the cost of a supplier operation which services just one plant, particularly one
in the high cost Bay Area. Most have primary operations in the core automotive markets of
Michigan, Ohio or Indiana.

Why are their parts suppliers out in California at all? NUMMI uses a “just in time” inventory
process, effectively pushing the storage of the parts back to the suppliers. Because of this, while
in production, NUMMI’s parts suppliers are expected to make multiple deliveries per day of the
requested part. This forced the suppliers to set up operations relatively close to the NUMMI plant
to shorten delivery times. Almost all of the suppliers are located either along the I-880 corridor,
or in the Central Valley.

Many of these suppliers are not solely reliant on NUMMI, and the smart ones have worked hard
to diversify into electronics, medical device, and biotech markets. Some, such as California
Automotive Sealing (CAS), are expected to be significantly affected by the plant closing, others
such as Plastikon Industries, derive less than half of their business from NUMMI.

Assuming NUMMI follows through and actually does close the plant, we would expect the
following effects on industrial real estate:

 If the part supplier owns their building, and is highly dependant on NUMMI business, we would
expect they will move quickly to sell the asset, most likely taking a loss. The assessed values of
manufacturing buildings are often quite high when all the specialized improvements and
machinery are factored in.

In the current market, the only “quick sale” buyer will be an all cash speculative buyer. The
returns these buyers will seek will be in the 15%-25% range, depending on location, asset
condition, and local market expectations.

We expect that once these buildings begin to trade hands at “quick sale” prices, the rest of the
building sale market will have drop to meet this new level of sale comparable. We are not
expecting many buildings to be affected by this event, perhaps half a dozen buildings or so.

Using simple math, an industrial building that could be expected to ultimately lease for $.40NNN
psf /month in today’s market, might fetch only $40.00 per square foot, using a 10% cap rate after

  Cornish & Carey Commercial ONCOR International | 22351 City Center Drive, Suite 100 | Hayward CA 94541
                        Tel: 510.300.0200 | Fax: 510.300.0201 |
fully leased, and netting out lease up carry, tenant improvements, and commissions (a more
detailed analysis can be provided upon request).

 If the parts supplier leases their building, then we would expect many of them to put their
property on the market for sublease. When sublease space dramatically increases in the market, it
has a negative impact on rents, as the decision criteria for a sublessor is dramatically different
from a return based investor type of landlord.

For the I-880 corridor, the impact could total perhaps 522,000 square feet of additional space
coming onto the market if all the suppliers left. As noted above, this is unlikely as not all the
suppliers are 100% reliant on NUMMI.

According to Cornish & Carey’s 2nd quarter 2009 Market research report, the total industrial base
in the cities of San Leandro through Fremont is 156,071,825 square feet. The total space
occupied by NUMMI suppliers is less than 1% of this base. Even if all this space came to the
market, the impact on vacancy rates is likely to be slight. Of course, this does not take into
account the “ripple” effect of the significant job losses impacting other non-related industries.

The impact on the Central Valley is much larger (over 2,000,000 square feet) on a lower
industrial base. Because more of these properties are owner-occupied, with heavy infrastructure
and not typically of institutional quality, the impact could be deeper. We would expect these
properties to stay on the market longer before a suitable owner/user comes along to purchase or
lease the facility.

We hope this summary is helpful.

For a more detailed discussion, please contact the authors, Steve Kapp or Joe Fabian, at the
Cornish & Carey Hayward office (510)300-0200.

  Cornish & Carey Commercial ONCOR International | 22351 City Center Drive, Suite 100 | Hayward CA 94541
                        Tel: 510.300.0200 | Fax: 510.300.0201 |
                                                                      NUMMI's Northern California Suppliers

  COMPANY NAME (Vendor Number)              REGION        PLANT CITY LOCATION               PRODUCT                        LABOR UNION STATUS         SQ. FT.             ADDRESS             OWN/LEASE

Toyota Tsusho(Wingard Quality Systems)     Bay Area           Fremont, CA                Wheel Assembly                            None               94,800                                    Lease

  Mission Tool and Manufacturing Co.       Bay Area          Hayward, CA                 Metal Stampings                           None               28,000          3440 Arden Road           Lease
        AGC- (AP Technoglass)              Bay Area          Hayward, CA                    Back Glass                             None                                    Closed

   NHK Spring (New Mather Metals)          Bay Area          Hayward, CA                   Stabilizer Bar                          None                               Closed (Kentucky)

         Injex Industries, Inc.            Bay Area          Hayward, CA               Interior Plastic Trim                   UAW Local 76           84,447       30559 San Antonio Street     Own
                                                                                                                           Teamsters #853 (plant)
                                                                                                                           Teamsters #78 (drivers)
               Tuscarora                   Bay Area          Hayward, CA               Foam and Packaging                                             43,000         3440 Enterprise Ave        Lease
                                                                                                                           Machinists Automotive
                                                                                                                               #1546 (maint)
                                                                                  Toneau Cover/               Interior
     Vuteq California Corporation          Bay Area          Hayward, CA                                                           None              130,200           2118 Cabot Blvd.         Lease
       Plastikon Industries, Inc.          Bay Area          Hayward, CA              Interior/Exterior Trim                       None               80,567          688 Sandoval Way          Own

       Plastikon Industries, Inc.          Bay Area          Hayward, CA              Interior/Exterior Trim                       None               33,924         30260 Santucci Court       Lease

       Plastikon Industries, Inc.          Bay Area          Hayward, CA              Interior/Exterior Trim                       None               50,000         30248 Santucci Court       Lease

       Plastikon Industries, Inc.          Bay Area          Hayward, CA              Interior/Exterior Trim                       None               48,960                Zephyr              Lease

                TG CAS                     Bay Area          Hayward, CA            Weather Strip, Door Seals                Teamsters Local 78      101,700        30551 Huntwood Ave          Lease

        Johnson Controls, Inc.             Bay Area          Livermore, CA               Seats, Headliner                     UAW Local - TBD        106,700        6383 Las Positas Road       Own

          Delphi Compressor                Bay Area         San Leandro, CA                Compressor                              None                               CLOSED (Michigan)

 SMC Inc (Stoesser Gordon Industries)      Bay Area          Santa Rosa, CA          Plastic Injection Molding                                       62,000             3250 Brickway           Lease

                Kaneka                     Bay Area         San Leandro, CA            Bumper Resin Foam                           None               24,500        2465 Polvorosa Avenue       Lease

                                                                                        East Bay Subtotal                                            793,998

          Fuel Total Systems             Central Valley       Lathrop, CA                       Fuel Tank                          None              115,000       18231 Murphy Parkway         Own

       Pilkington Industries Inc.        Central Valley       Lathrop, CA                         Glass                            None              1,000,000       500 E. Louise Avenue       Own

              Amtex, Inc.                Central Valley      Manteca, CA                        Carpets                            None               57,000         550 Carnegie Street        Lease

           Arvin Sango, Inc.             Central Valley       Merced, CA                 Exhaust Systems                           None               63,000         2525 Cooper Avenue         Own

        Trim Masters, Inc. (JCI)         Central Valley      Modesto, CA                Truck Door Panels                          None              131,000         201 S. McClure Road        Own

           Aisin Electronics             Central Valley      Stockton, CA         Electronic Controls & Sensors                    None               22,000        199 Frank West Circle       Lease

           Aisin Electronics             Central Valley      Stockton, CA                  Door Frames                             None               59,850          3837 Imperial Way         Lease

                                                                                Coil Springs/               Leaf Springs
       Central Springs, Inc (CSI)        Central Valley      Stockton, CA                                                          None              104,000             1616 Boeing            Own
                                                                                             (ship pt)
           Dana Corporation              Central Valley      Stockton, CA                  Truck Frames                            None              330,000         1550 Industrial Drive      Own
           Premier Finishing             Central Valley      Stockton, CA                Powder Coating                            None               10,000           7910 S. Longe St.        Own

 Kyoho Manufacturing (Div. of Toyota)    Central Valley      Stockton, CA               Stamping, Welding                          None              175,000        4720 Farmington Road        Own

        Pacific Coast Industries         Central Valley        Tracy, CA                  Undercarraiges                           None               45,000          4101 N. Holly Drive       Own
                                                                                      Central Valley Subtotal                                          2,111,850

                                                                                                                              Total Combined         2,905,848