Yakima - A Landscape of Promise

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Yakima County’s vast and diverse landscape is often a surprise to visitors.

In less than an hour’s drive, one can travel from sagebrush-covered prairie or lush, irrigated farmland to forested hills that lead directly into the jagged Cascade Mountains.

Brilliant views of Mt. Rainier and Mt. Adams are omnipresent from most points in the county. The Naches and Yakima rivers leisurely wind their way through the area, a place that many people mistakenly perceive as primarily a semi-arid desert.

Natural beauty aside, what may not be as immediately apparent to those passing through is the diversity and health of the region’s economic landscape.

Yakima County has been rightfully called the fruit bowl of the nation, thanks to its abundant crops, such as tree fruits and wine grapes. While agriculture remains a mainstay here, Yakima also has one of the most diverse economies in Eastern Washington.

A deceptively strong manufacturing sector and a thriving health-care industry compliment the region’s well-known agricultural base. The area’s burgeoning tourism industry, spawned by the growth of wineries and vineyards, as well as a prosperous convention trade industry, are also adding more jobs and revenues to public treasuries. New businesses dot the landscape.

“The last five years have seen the best job growth in decades,” says Don Meseck, labor analyst for Washington State Employment Security. “[Yakima County] grew at the same rate as Washington state last year.”

The economy has been so strong in recent years that the county’s unemployment rate is at historically low levels. In almost every category, the number of jobs being created is on the rise, with health services and construction leading the way. Meseck describes the Yakima area as “virtually at full employment.”

Manufacturing strength
One reason for that strong employment picture is the county’s manufacturing sector, which some local observers call Yakima’s best-kept secret.

About 14 percent of the county’s nonagricultural workforce is employed in manufacturing; 260 companies make a wide array of products, ranging from designing and producing light sports aircraft and parts for the world’s aerospace industry to manufacturing critical components for the technology and medical fields. Many of the companies in these industries have expanded in recent years.

The bottom line is healthy, says Mark Mochel, a business development manager for New Vision, a private economic development association for Yakima County. While the sector has not yet rebounded to the employment levels seen before the 2001 terrorist attacks, officials say manufacturing is still registering job gains.

“New Vision’s recent survey shows that more than 350,000 square feet of additional [manufacturing] space has been added in Yakima County, and almost 60 percent of the respondents reported an increase in sales and had positive outlooks for the coming year,” Mochel notes. “Only three companies reported a decrease in sales.”

Yakima’s agriculture-based manufacturing also continues to grow. Some examples include Blueline Manufacturing Co. and Orchard-Rite. Located about four miles east of Yakima in the city of Moxee, Blue Line makes and sells specialized farming equipment and is the only company in the nation building mechanized apple harvesting machines. Orchard-Rite has produced approximately 70 percent of the world’s wind machines used for crop frost control. It also designs and builds mechanical tree shakers for use in harvesting almonds, walnuts, pecans and pine nuts. Both companies expect to increase their manufacturing capacity.

From distribution centers for companies like Wal-Mart and Ace Hardware, to call centers for high-tech companies, this region is developing niche industries that play to its strengths as a centrally located hub with lower business costs.
The call center sector is volatile, as evidenced by the recent departure of HouseValues.com, an internet-based real estate business that closed its Yakima call center earlier this year. But labor analyst Meseck says that call centers are a viable industry in Yakima and should continue to grow.

Facts bear out Meseck’s contention. There remain three major call centers here: a customer-support center for appliance giants Maytag and Whirlpool; a billing claim service center for the Adaptis healthcare support company; and a customer-service operation run by Praeclarent, which supplies technical support for blue-chip financial heavyweights such as General Electric and JPMorgan Chase & Co. These centers employ about 300 people, says Dave McFadden, CEO for New Vision, and he believes that the future of these industries in Yakima remains bright.

“There is more room for growth [among the call centers],” McFadden says. “Our goal is for the centers to pay more than the county’s average hourly pay rate.”

The region’s backbone
Despite the growth in various industries, agriculture remains the area’s economic backbone.

Yakima County ranks 14th in the nation in the dollar value of the agricultural crops produced there. The sector was hard-hit a few years ago, but has rebounded in full. Today, nearly every crop being grown is experiencing rising prices.
“I have been working with the financial needs of agriculture for over 35 years, and I have never seen all crops do so well at once,” observes Tom Robbert, vice president for Key Bank’s Yakima office. “Even hops and grains are getting record prices.”

The economic heartbeat of the agricultural sector has long been the apple industry. Many observers thought the local apple orchards were down for the count at the turn of this century. Surplus supply, international competition and rising production costs resulted in prices below the cost of growing and harvesting the fruit. Many orchards were forced to shut. But it is a new world for the survivors.

“There have been transitions,” says Dan Kelly, assistant manger of the Washington Growers Clearinghouse, the Wenatchee-based growers association that tracks prices received for fruit. The standing growers have new varieties that fetch higher prices than the traditional Red and Golden Delicious apples, he explains, as well as resources to implement new technologies, resulting in a profitable industry.

Today, farmers enjoy record prices for most fruit crops, including apples.

”Farmers are more efficient and productive in the orchards,” Kelly adds, “and the packing houses have better marketing strategies.”

Healthy sectors
As in agriculture, this is a time of change for Yakima’s economy. Some niche sectors, such as the health services industry, are gaining strength. Yakima has long been a regional health-care center, but in the past five years, the sector has been the fastest growing industry in the county.

“Last year, there were more than 12,100 jobs in the sector, up from 11,500 in 2005, a 5.2 percent jump,” says Meseck. Retirees and aging baby boomers moving into Yakima are driving the growth, according to Meseck.
Yakima hasn’t always been a health-care center. Some 15 years ago, people had to leave town for treatment of serious illnesses such as cancer. No more, says Rick Linneweh, CEO of Yakima Valley Memorial Hospital.

Linneweh points to a list of innovative programs that Memorial has initiated, ranging from North Star Lodge, a one-stop treatment service for cancer patients, to the award-winning Children’s Village, which is able to treat the region’s children who have been stricken with cancer and other diseases.

One health-care institution that is expected to be a major shot in the arm to the local economy is the Pacific Northwest University of Health Sciences (PNWU). The medical school, which is scheduled to open for classes in August 2008, specializes in osteopathic medicine, a discipline that uses a holistic approach for preventive health care and treatment. The university will focus on training physicians for rural areas in the Northwest.

PNWU, which was still in its formative stages two years ago, is now an accredited institution that is currently recruiting students. Construction on the main campus will be completed in the summer of 2008. Already on board are a dean and department heads; they are in the process of hiring instructors to greet the 120 students scheduled to begin classes next August. Within a few years, PNWU officials estimate that 480 students will attend the 42-acre campus and its programs.

Real-estate boom
Yakima county’s economic vitality, along with relatively inexpensive land, modest living costs, natural beauty and a relaxed lifestyle, have spurred the success of yet another industry: real-estate.

Demand for second homes and an influx of retirees moving to the area has dramatically increased housing prices. Companies seeking inexpensive land are looking for deals on industrial and commercial sites. The wine industry is also helping to propel a boost in the tourism industry.

“[The Yakima area] is becoming an investment hotspot,” maintains Bill Almon Sr., owner of Almon Commercial Real Estate, the region’s largest commercial real estate firm. “We are dealing with clients from all over—from Texas, California and Western Washington—who are looking for large tracts of land for residential projects. What is new is the amount of outside investors.”

An average home goes for about $156,000 in Yakima County, and commercial properties cost from $7.50 to $14.50 per square foot. Industrial properties range from $1.50 to $2.50 a square foot. Almon says all these prices are well below those in most places west of the Cascades.

Potential profit is also helping to turn the area into a hot market for speculators looking to buy land as an investment. “It is booming,” says Russ Roberts, a Heritage Moultray realtor who recently moved to Yakima from San Diego. “[Investors] are buying everything.”

Times have been very good for real-estate agents, and, so far, the county has not been affected by the national housing slump.

Kristy Wilbert of KMW Enterprises, which tracks real estate activity in the county, says that the number of home sales have set records in 2005, only to be surpassed in 2006. “And this year looks better than last year,” Wilbert says.
She warns that the sub-prime rate problem could affect the Yakima market, but it is too early to speculate on what may occur.

Data gleaned from realtors suggest that part of this real-estate boom has been the construction of upscale residential developments aimed at buyers from places like California and Seattle, who are beginning to discover Yakima County.
“In 2006, 27 percent of my clients were from outside the area,” says Nancy Nulph, top selling realtor for Coldwell Banker. “In 2007, it is 35 percent, year to date.” Nulph’s clients are a mix of retirees and people obtaining new jobs in Yakima.

The movement of people with disposable incomes into the area is logical, given historical trends and economics, say some realtors.

“We have seen places like the Bay Area, where people had appreciation in their homes and could sell,” says Ted Marquis Jr., manager of Creekside Reality. “Then they would buy much better homes in surrounding areas of California, while putting money in the bank. That trend is now occurring in Yakima.”

Realtor Russ Roberts is a prime example. The former San Diego resident was ready to cash out of Southern California’s skyrocketing real-estate market and get away from all the congestion. He settled on Yakima, where he could buy a nice home and still have plenty of money to put in the bank. He expects a lot more people to follow suit.

“The average home in San Diego was $535,000; here, it was about $150,000 or so,” Roberts says. “Developers are constructing homes for over $300,000, and people here are saying, ‘Who in Yakima can buy these houses?’ What they don’t realize is that it is people from California and Seattle.”

Allure of the good life
The real-estate buzz that has impacted this region in recent years is resulting in the development of a number of housing and recreational projects.

The most ambitious development is The Vineyards resort, located about eight miles from Zillah and near approximately 40 wineries. The beautiful landscape, coupled with recreational activities such as golf, were the driving forces for developing this ambitious project, explains Gary Scott, the project’s co-developer. Construction will begin this fall on a hill now covered by dry grass and sagebrush. This location provides panoramic views of the Yakima Valley and the white-capped mountains of the Cascades.

When completed, the development will include 580 homes and an 18-hole golf course, as well as a village center featuring a boutique hotel, spa, shops, sports facilities and cafés. Scott says he’s already sold 40 home sites.
Al DeAtley, a prominent Yakima businessman and civic leader, says the project has the potential to turn Yakima into “the next Bend, Oregon.”

Not far from The Vineyards is Zillah Lakes, a 224-acre resort community project that has been more-or-less flying under the radar. Eventually, the site is expected to include 630 homes, a nine-hole golf course, lakefront properties, a town center and other recreational amenities. The impetus for the project was based on a hunch, according to Steve Stroshal, co-owner of United Builders, which is developing the site.

“We became involved with a large development project in Tacoma just before the area went on an upswing,” Stroshal says. “We sensed that the same thing was occurring here, especially with the continued growth of the wine industry in this region.”

So far, Stroshal’s intuition has been on the mark. The project has already sold a number of home sites to Western Washington residents.

Running on all cylinders
Times are good in Yakima County. Thanks to the area’s economic health, there is a feeling of excitement and change in the air.

New businesses and industries are giving fresh, brighter colors and hues to the economic landscape, and the county is now seen as a modern-day investment frontier—or even perhaps another Sonoma or Napa Valley.

Times are good, but there is still room for improvement. Light-industrial growth hasn’t followed at the same clip as new residential and commercial developments. Some business and civic leaders also are concerned that wages, while keeping pace with inflation, remain below state averages. But others believe it is just a matter of time before the market corrects these discrepancies.

“More job growth will occur,” says Ted Marquis Sr., CEO of Marquis Enterprises, who also owns a prosperous business park in the area and will soon develop an industrial park. “We are getting inquiries all the time. We still have inexpensive industrial land, a manufacturing base to work with that is very high-tech, a skilled labor pool and a sound technical training education system. We are on the verge of really booming.”

From Seattle Business Monthly