How an Old Campbell's Soup Building Reveals a Lot About the Market
Spiffing up old industrial buildings (including a Campbell's building in Sacramento) is a hot activity. It's one reason we think it's a great time to host SoCal Industrial Real Estate Summit—now in its fourth year—at the JW Marriott LA LIVE on Sept. 11. We caught up with a few of our panelists:
Hackman Capital Partners senior managing director Theresa Jones tells us the firm's recent acquisitions include 1.6M SF of former Campbell's facilities in Sacramento and 750k SF purchased from the Hoover vacuum company in El Paso and Juarez, Mexico (the company's first Mexican acquisition). The deals reflect Hackman's MO of buying closed factories to reposition the real estate and sell off the equipment. Lately, the company has branched out a bit, having bought the Culver Studios, where Gone With the Wind and Citizen Kane were filmed; plans are to continue to operate it as a studio. Theresa has three kids: a 10-year-old and 7-year-old twins. She also watches pretty much every sport—except boxing and race car driving, which she doesn't consider "sports." Of course, this time of year she's cheering for her fantasy football team.
Dedeaux Properties principal Brett Dedeaux says construction is nearly done on a 90k SF facility in Vernon, and walls were just tilted on an adjacent 140k SF facility. The company is accumulating truck terminals, including one that just closed escrow in South Gate. It also aims to be a leader in refrigerated facilities in the LA area, like its recent buy of the LA Food Center with partner Cornerstone Advisers. The company has food distribution expertise stemming from its affiliation with Dart Warehouse Corp, founded in 1938 by Brett's grandfather, legendary USC baseball coach Rod Dedeaux. Brett is also executive director of the Dedeaux Foundation, which hosts the USA Baseball Golden Spikes Award, the Heisman Trophy of college baseball.
CapRock Partners principal Jon Pharris (snapped at a previous Bisnow industrial event) tells us the firm is doing ground-up development in SoCal, including two spec industrial buildings totaling over 1M SF in Rialto. The company owns or is in escrow on 250 acres and has a Class-A development pipeline of 5M SF. On the value-add side, the company acquired a 110k SF building in Orange County; a public company tenant is in tow to take 40%, and CapRock is converting the balance into creative space. Jon has four kids, all under age 5. Fun fact: When he was 18, Jon was captain of a US team that played in the Pan-Am Junior water polo championships in Cuba.
Oltmans Construction VP Gerald Singh sees a tremendous amount of construction opportunity and activity in the industrial sector, and "it's greatly welcomed." The company begins tilting walls this month on the 1.1M SF Perris Valley Logistics Center (rendered above). Managed and developed by Howard Industrial Partners and Prudential Real Estate Investors, it features expansion parcels for auto and trailer storage catering to e-commerce and distribution users. In addition, Oltmans is pouring the floor slab for the two-building, 1.5M SF Goodman Logistics Center in Rancho Cucamonga, and is far along on Trammell Crow's CleanTech Manufacturing Center on a former brownfield site in Downtown LA. Two trends Gerald sees: 36-foot clear height requirements on larger facilities, and institutional capital looking for big-box industrial product.
The good news, says Lee & Associates LA North/Ventura prez Mike Tingus (with wife Jaime last summer on their Greek honeymoon) is lease rates have been rising—buoyed by 4% vacancies. He notes Overton Moore is preparing to build a project in Chatsworth, and Mike's client Teitelbaum Construction is getting ready to build 75k SF of buildings in Thousand Oaks. Buildings under 10k SF used to lag behind, but in the past 12 to 24 months they've seen a great spike in leasing activity. Smaller companies are coming out of the garage. "That's always a good barometer." Mike's happy that his five kids are back in school, and he's also looking forward to Oct. 10, when Lee LA North/Ventura hold its 17th annual golf tournament to benefit local charities.
Cassidy Turley VP Brad Koehler says the San Fernando Valley suffers from a shortage of high-quality high-clearance buildings. Want a minimum 24-foot clearance? Try Valencia. Brad recently completed 417k SF of renegotiations and new transactions in Clarion Partners' Valencia Commerce Center and Valencia Industrial Center. He estimates his deal volume (primarily repping landlords) has doubled from a year ago. It's a landlord's market now, he says. The tenants run the gamut from a moving and storage company, a toy importer, and paper goods and hair products to aerospace and entertainment. "That's the beauty of our market—the tenant base is very diverse." Brad spends time in the Eastern Sierra around June Lake with wife Katie, son Jack (9), daughter Megan (13), and dog Riley (7 months).
Saunders Commercial Seismic Retrofit president Steven Saunders (here with Bisnow's Frank Sanchez) tells us the company has 20 projects under way in SoCal, NorCal, and Washington state. Most of them are seismic retrofits of existing industrial buildings, though a few months ago, the company completed an 18-story non-ductile building in Costa Mesa. Saunders is finding that many of the buildings have condensation issues. Steven expects to get some calls following the Napa quake after the engineers finish drawing up retrofit plans. Quakes make building owners—and especially, their lenders and insurers—realize that the Big One is looming. He rides his bike most mornings, but that's not the only way he gets around—Steven's a pilot. (Ask him to take you out for a spin when you stop by our industrial event this coming Thursday.)