Inland Empire Forming Up North

In case you haven’t noticed, a second Inland Empire is starting to take root to the north of us. It’s the Grapevine area on the north side of the Tejon Pass. And while it is tiny compared to the vast tracts of warehouses that spread across the inland areas, well, big things usually start small. The Tejon Ranch Co. owns the mammoth Tejon Ranch that includes much of the area near the settlement of Grapevine, and a couple of months ago it announced that for the second time in six months, a company is relocating its distribution center from Los Angeles to the Grapevine area. The unidentified company will take 390,000 square feet of an even bigger building now under construction. If you’re wondering, that’s more square footage than the Sherman Oaks Galleria retail mall. That building is next to a 480,000 square foot building built two years ago and leased to Dollar General Corp. and L’Oreal USA. Also having immense distribution centers in the area: Caterpillar, Ikea and Famous Footwear. “We hope this is a foreshadowing of a trend that will hit a tipping point and will continue,” said Jim Rentfro of Tejon Ranch Co., referring to L’Oreal’s relocation from Valencia, according to an article by reporter Mark Madler in the Business Journal a couple of months ago. So, why is the Grapevine area attractive for warehouse and distribution facilities? For one thing, the area is just beyond Los Angeles County. Kern County is much more business friendly. Builders there can go from concept to a ribbon cutting ceremony before their counterparts in Los Angeles could get permits approved. And much of the area is in a Foreign Trade Zone, which provides benefits for companies involved in international trade. What’s more, costs there tend to be lower than in the built-out and congested Inland Empire east of Los Angeles. Wouldn’t distance be a detriment? Perhaps a bit, but the Grapevine area is not that much further from the port complex. A car trip from the Port of Los Angeles to Moreno Valley in the Inland Empire would take about an hour and 45 minutes, according to my traffic app one afternoon last week. A trip to the Grapevine area would be only about 20 minutes longer. And Grapevine’s less than an hour from the heart of the San Fernando Valley. Anyway, the Tejon Ranch Co. has developed 5 million square feet in warehouse and industrial space and has plans for 14 million more. That’s a pittance compared to the Inland Empire, the nation’s warehouse and distribution capital. Still, close to 20 million square feet would make it a respectable little brother to the Inland Empire. And there’s plenty more raw ground for the future. A nascent warehouse community to the north will mean more trucks on the 405 Freeway through the San Fernando Valley, but the business opportunities for the whole Valley area will be big. Like I said: Just in case you hadn’t noticed. • • • The state’s strange impulse to basically kill the thriving gig economy has taken a turn against smaller businesses. It now appears bigger businesses are selling them out. It all started last year with the California Supreme Court’s decision in the so-called Dynamex case. That basically outlawed the use of independent contractors, ending the longstanding rules of hiring such workers and putting real fear into such big businesses as Uber and DoorDash, smaller businesses that routinely hire someone or some company to perform a task, and the gig workers themselves, who rightly fear their freelance way of making a living is in jeopardy. (Read the op-ed directly below to get one independent workers’ view.) The legislature – you’d hope it’d shackle or even kill the Dynamex decision – instead proposed a bill that embraces it. Called AB 5, it codifies the principles of the court decision, saying businesses for the most part can’t use independent contractors but must hire such workers as employees. It carved out a few exceptions, such as for doctors, insurance agents and securities brokers and advisers. Alas, a coalition of business groups, led by the California Chamber of Commerce, rather than fighting the bill on principle, has signed on to it with the provision that there be additional exemptions. Among those proposed exemptions: professionals such as architects and lawyers; “direct sellers” such as “drivers in the gig economy”; and some business-to-business arrangements, such as restaurants that contract with a delivery service. (I suppose it’s just coincidence that many of the proposed exemptions go to the most influential professionals and big businesses.) The author of the bill has indicated she’s open to negotiation but won’t accept all of the proposed exemptions. So that’s what it’s come down to. The business groups have given up the fight on principle and are negotiating the terms of surrender. The likely result: big businesses that can afford lobbyists will get their carve outs and smaller businesses won’t; legislators will enjoy the fruits of all that lobbying; and a monumentally confusing system will be created in which some businesses and industries can hire some independent contractors and others can’t. Charles Crumpley is editor and publisher of the Business Journal. He can be reached at [email protected].