Nordstrom says it has delayed plans to open a jobs-heavy West Coast e-commerce center coveted by both Fresno and Visalia, citing changing retail economics.
The company sent a letter to Visalia city officials Wednesday saying it had re-evaluated the project’s timing and did not anticipate it opening until sometime after 2020.
“It wasn’t the decision we were looking for,” Visalia Mayor Steve Nelsen said. “It took some of the air out of the balloon.”
Fresno officials received a similar notice from Nordstrom on Wednesday.
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“We’re obviously disappointed in the delay, but we know that Nordstrom appreciates the value of our location and our workforce in Fresno,” Mayor Ashley Swearengin said. “We look forward to restarting discussions whenever they’re ready.”
She added: “We’re glad Central California is still an option, even if the time frame has been pushed back, instead of seeing those jobs go to Nevada or another western state.”
It wasn’t the decision we were looking for. It took some of the air out of the balloon.
Visalia Mayor Steve Nelsen
The company approached both cities last year asking for millions of dollars in financial incentives and assistance in locating the e-commerce fulfillment center in one of the cities. Nordstrom said the 1 million square-foot center, at full build-out, could employ about 1,000 full time workers and another 200 to 450 seasonal workers. A second phase could add another 875 workers.
Both Fresno and Visalia city councils approved $12 million in tax incentives for Nordstrom, and the counties of Fresno and Tulare offered additional inducements. In April of this year, the state granted Nordstrom $11 million in state tax credits to support job creation.
The company was also considering locations outside of California.
The two Valley cities were salivating at the potential bonanza of jobs and sales tax revenues. Although the precise opening date was murky, Fresno’s incentive package projected that operations would begin in 2018.
Nordstrom initially said it expected to decide on a location by last January, then pushed its decision back to this spring.
But in its letter to Visalia, the company said the e-commerce center was out of the picture until after 2020.
The letter, signed by Erik Nordstrom, company co-president, noted that “Since our teams first met a year ago, the pace of change in retail has continued to increase.”
If they’re losing money and laying people off, it doesn’t make sense that they would turn around and build a warehouse here in the Valley and hire a thousand people.
Fresno City Councilman Lee Brand
He added: “While we feel confident that a West Coast fulfillment center will continue to be a part of our longer-term plan, as we look at the broader needs of our business in the current environment we have re-evaluated the timing of this potential project. We now anticipate that an opening would likely not occur before 2020.”
Fresno City Councilman Lee Brand said Nordstrom’s decision isn’t necessarily a big surprise, given the company’s recent sales reports and announcements of layoffs in a softening retail climate for department stores.
“If they’re losing money and laying people off, it doesn’t make sense that they would turn around and build a warehouse here in the Valley and hire a thousand people,” Brand said Wednesday evening. “Other retailers are seeing similar issues.”
Brand said his understanding from late last year was that Nordstrom, once it selected a site, planned to acquire property and break ground in late 2016 or 2017 with an expectation of opening the fulfillment center in 2018.
Brand said he believes the company “still likes the concept and still likes the geography” in the Valley.
But if and when the company is prepared to move ahead with its plans, the properties being considered may not be available, Brand added.
“They’re talking about 2020, but I don’t think the Parnagians will sit around and wait for four years before doing anything with that property,” Brand said of the 230-acre North Pointe Business Park property owned by Leland Parnagian and his family’s G3 Development Co. The site is at the corner of East and Central avenues on the southern fringe of Fresno.
Brand added that Visalia’s property owners are likely in the same spot. “Whether it’s Fresno or Visalia, how can Nordstrom just expect them to sit there and wait … unless they have an option on the land or an extended escrow?” he said.
Despite the setback, Visalia Mayor Nelsen remained optimistic that his city might still have a shot at the Nordstrom center.
“It doesn’t mean they’re not going to go forward,” he said. “Down the road, they’re going to make a decision. We’re still in the running.”