The popularity of investing in industrial buildings is due to several factors. It provides both steady income and high returns through redevelopment. Market fundamentals are supportive with a lack of space and rising rents. Industrial has a lower cost of operating than office and multi-family, a stable investment duration, provides diversification, and is supported by corporate credits. Industrial is the primary beneficiary as retailers shift attention to ecommerce and away from stores. Redeveloping older industrial stock, moving capital to where it’s needed, and better information will open a vast opportunity of great industrial investments.
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Whether you make one deal in a lifetime or several a year, Occupiers look at the Space Markets one dimensionally, fixed-in time, because they need to have doors open ASAP. Only available space will do. Most times, Occupiers do not have the luxury to leverage their space commitment on the investment side. A select few, mostly those who own their own business, use space commitments as an opportunity to increase personal net worth by turning rent expense into profit.
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The Space Market is on a different trajectory than the general economy. Industrial building prices have doubled since the Great Recession and are up over 20% from previous peaks. Rents are keeping pace and $1.00 per foot Gross for industrial in Gardena and greater South Bay is becoming the norm in many segments especially for smaller units and new, Class A Buildings. All other buildings, while renting for less, are still at all-time highs. Space shortages persist across the board. A disconnect exists between a real estate pricing surge and muddling economic conditions.
Continue reading “What’s New For Gardena Industrial – Fall 2016”

Analytic tools are essential ways to address space shortages for Occupiers or Investors. The reasons are complicated but the traditional market no longer supplies enough quality space. Online listing services do not yield satisfying choices. More aggressive tools, that emulates your precise business strategy or market expertise are needed to find deals in the era of Space Scarcity. The surest way to make deals is to create them and data is an integral part. Understanding the market comes first before developing the tools to exploit it. For instance, this is the case that better data will help you purchase Big Industrial deals…
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For Los Angeles area companies, Inland Empire (IE) is a serious contender for relocation if you do not move out of state all together. Western IE, now considered infill Los Angeles, is 45 miles from Downtown. The space ratio is generally 50% more space for the same rent and the additional cube height comes free. While new buildings are being absorbed as quickly as they are being built, there are currently several million square feet of space going through the planning process. If you are taking a big chunk of space, the time to get the best deals are just after entitlement and before construction begins. This is when developers are looking for financial partners and will consider pre-sales.
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Another trend, popular in West L.A. and DTLA, as well as other creative centers across the country is Space Sharing. Networks, mobile computing and particularly start-up finance, has made sharing office and desk ubiquitous. Many innovative industries share common production resources like equipment, processes, and costly tenant improvements in Maker Spaces. (see New Industries post). While normally more expensive on a square foot basis, the total cost of rent, on a demand and hedged basis, is much less. Compatibility, or in the Space Sharing vernacular, curation, is an essential factor easily overlooked. Having a common bond or a similar industry cluster increases the likelihood of success. The drawing below is of the LaKretz Innovation Campus in Downtown Los Angeles, a 65,000 square foot space that can be easily adapted for the changing needs of multiple occupants.

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The Space Market is on a different trajectory than the general economy. Industrial building prices have doubled since the Great Recession and are up over 20% from previous peaks. Rents are keeping pace and $1.00 per foot Gross for industrial in Gardena and greater South Bay is becoming the norm in many segments especially for smaller units and new, Class A Buildings. All other buildings, while renting for less, are still at all-time highs. Space shortages persist across the board. A disconnect exists between a real estate pricing surge and muddling economic conditions.
Continue reading “What’s New For Gardena Industrial”

More and more, typical industrial development in the Inland Empire will look like this. Instead of one large warehouse with lots of truck doors, cities will require smaller buildings so not to conflict with nearby residential communities. This planning protocol significantly increases the costs for the developer but it creates opportunities for Occupiers who wouldn’t ordinarily find a building in smaller sizes to purchase.
Continue reading “Inland Empire Development Deal – 180,000 SF Total”

SIOR had their first European Conference in London at the end of June. Coincidentally, it was at the same time as the Brexit Referendum. The day before, gleeful developers, confident at being the center of the developed world were completely dazed by the results the next morning, with news of their world being threatened. However, it did not take long to speculate about the opportunities, not only in London but under a new financial order.
Continue reading “SIOR 2016 International European Conference”