A local commercial RE investment duo best known for buying and rehabbing properties is getting into spec development. SR Commercial has picked up a nearly 12-acre site in the Carlsbad Oaks North master-planned corporate park for $6.2M from Techbilt Construction Corp. In turn, the firm is developing a 151,500 SF multi-tenant distribution facility, capitalizing on Carlsbad's sheer lack of industrial space for that demand, says SR's Adam Robinson (here on right with partner CJ Stos).
It's not that SR has given up on acquisitions—quite the contrary. It plans to buy some $150M in commercial RE this year, up from $110M last year, Adam says. But pricing has been aggressive in recent months. Adam says if you can build new at a 7.5% cap, and existing industrial properties are going for sub-5% caps at times, going spec makes sense. Especially since the Carlsbad site was bought off-market at $12/SF, a price that helped pencil the development.
On the heels of this deal, SR just acquired Enterprise Heights Industrial Centre—a four-building, 76,500 SF industrial flex property for more than $8M from a local family. The properties, 298-304 Enterprise St in the Escondido Business Park, are fully leased to a mix of small tenants, Adam says. Colliers International's Tucker Hohenstein, Mike Erwin and Conor Boyle brokered both sales. Adam says the firm plans to spend $600k to update the project, including the roofs and HVAC, and will hold the property for at least 11 years. “We were lucky to get it off-market as well,” he says. And finding off-market transactions seems to be a skill Adam and CJ have: The firm is pursuing some $50M in off-market transactions, including an unnamed $9M buy that will close later this month. Stay tuned.
