Creative solutions to problem real estate are the domain of value added deals. These are buildings that after they are redeveloped will increase cash flow and operability. The simplest examples are adding more square footage to an underutilized land area or subdividing the building for smaller tenants at a higher per foot rent. Because building new is so costly, there is more attention being paid to reconfiguring older property.
Continue reading “Added Value Property”
While many investors complain about a lack of deals and high pricing, others see nothing but opportunity. One difference in perception is risk tolerance. Another is a reluctance to embrace new development models. But I think the biggest factor in the vision discrepancy is the nature of their organizations.
Continue reading “Enterprise Buyers”
The value proposition is overwhelming when comparing old, obsolete structures to developing say, a 3-story residential condominium. We often see redevelopment returns of 2 and 3 times compared to what is currently being generated at an older property. All industrial property with a decent location is open to reuse. A growing population, increased densification and worsening traffic mean there is continual opportunity in underutilized property.
Continue reading “Underutilized Sites”
Like its harbors, airports and freeways, the Los Angeles industrial market is becoming clogged. Buildings are scarce and sale pricing is unimaginably high. Land values and constructions costs make it expensive to build new. Meanwhile Seller’s options are limited by capital gains (although relatively low for the moment), lack of suitable replacement properties, and unwieldy ownership structures.
Continue reading “Overcoming Space Scarcity”