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SR Commercial Is Changing Course. Here's How.

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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). 

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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. 

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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.