What's BH Properties' Steve Jaffe's favorite Shasta flavor? Grape. But he especially loves empty Shastas—warehouses, that is. He's fresh from his firm's purchase of 301 S 29th St in Phoenix, a 63k SF warehouse that was formerly used by Shasta for $1.9M, all cash. What's notable about the purchase: While other investors and developers are focused on big boxes with 30'-plus ceilings, BH went the opposite way, snapping up a product that could be viewed as obsolete for tenants. But “we don't use the word obsolete in our portfolio,” Steve says. Historically, it hasn't had a problem leasing property with reduced ceiling heights. "It's not something everybody needs. And we offer it at a cheaper rate.”

BH doesn't just invest in industrial; it invests in value-add and distressed properties it believes it can turn around. Most recently, as we reported here, BH purchased Ross Plaza, a 65k SF neighborhood center for $3M. But Steve says finding value-add is difficult today, especially in multifamily, where capital is pushing prices up and caps down. “The properties are still value-add, but the pricing is not,” he says. “We're not only seeing this in Phoenix, but we're seeing this in a lot of places where we're back to buying pro forma.” And that means BH is considering selling some of its multifamily holdings in Phoenix. It's too early to say what, Steve says, but the firm does own a dozen properties in Arizona.