The new Amazon distribution center at McClellan Park is expected to be operational in the next 2-3 months. (Photo by Judy Farah)

Coronavirus Divergence

At McClellan Park, one side is bustling, the other side is quiet

Back Web Only May 15, 2020 By Judy Farah

McClellan Park during the coronavirus is like “A Tale of Two Cities.” The west side of the sprawling 3,000-acre park is busy with activity in the large warehouses, which are doing food and construction distribution. Over on the east side, where offices are located, it’s quiet, with workers either telecommuting or furloughed.

“McClellan is predominantly industrial, and industrial businesses are generally essential, particularly distribution,” says Frank Myers, chief operating officer of McClellan Park. “The warehouse operations of our tenants, food distribution and construction products, are still quite busy.”

During normal times, McClellan is bustling with 18,000 employees working for the 220 businesses on campus, which has 9 million square feet of building space. Along with the warehouses, a few offices remain open, such as the call center for Covered California, but with reduced staff. Small businesses such as clothing and retail have been closed. Restaurants such as The Officer’s Club and Beach Hut Deli are doing curbside pickup.

Myers describes the current economic crisis as a “Black Swan event,” meaning an unpredictable event with potentially severe consequences. “It’s been difficult for sure,” Myers says. “It seems pretty critical that businesses get back to work. We have a lot of small businesses that can seriously be hurt by this if they can’t get back into operation.”

On the positive side, construction of a 417,000-square-foot warehouse for an Amazon distribution center has just been completed at the park. It’s expected to be operational in a couple of months. Hydra Logistics Group, one of the warehouse businesses that remain open, is distributing food via trucks and the railroad from McClellan. Another open warehouse is Sacramento Container Corporation, a corrugated packaging company that is providing boxes for food distribution during the coronavirus shutdown. 

The California Department of Forestry and Fire Protection, headquartered at Sacramento McClellan Airport, remains busy doing training for the upcoming fire season. But recreational flights at the airport have stopped, says Myers.

Larry Kelley, the Sacramento-area developer who oversaw the successful transition of McClellan from a former U.S. Air Force base to a business park, says he sees opportunity in the current situation. Kelley recalls the 1989 Loma Prieta earthquake that caused extensive building damage in the Bay Area and attracted some businesses to relocate to the Sacramento region. “When you have situations like this, there’s always opportunity,” Kelley says. “We’re selling the same thing we’ve been selling for a long time: proximity to the Bay Area, seismic stability, less expensive real estate, and occupancy cost and employee cost.”

Kelley says he feels sympathetic for the small businesses that have been shut down, knowing owners invested their money and passion into trying to make them successful. “Things like this affect the people who can afford it the least,” he says.

Kelley, whose LDK Ventures is developing The Railyards in Sacramento with his son, Denton Kelley (a member of Comstock’s Editorial Advisory Board), predicts there will be a new normal that comes out of the coronavirus pandemic, but he’s not exactly sure what that will mean.

“I think overall you’re going to see a lot of changes,” Kelley says. “Do you need an office for everyone you employ? There’s going to be differences in shopping habits, where employees work and how they work and how they’re managed. There’s tremendous disruption to a lot of things we’ve taken for granted as basics. It’s going to create opportunities for us.”

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