Western Real Estate Business

SEP 2018

Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.

Issue link: https://westernrealestatebusiness.epubxp.com/i/1027244

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Page 1 of 82

N o one ever said it was cheap to maintain a presence in Southern Cali- fornia. While that might be true across the board, this sentiment is certainly resonating with today's industrial players. Sticker shock is a common phenomenon nowadays among the Inland Empire and Los Ange- les investment, development and owner-user communities — and that's if you can even find a deal to balk at. Here's the thing, though. Despite these rising costs, many within the in- dustrial market are not balking. Instead, they're asking how many other of- fers are being considered. "Given the expected strength of rents — buoyed by demand and limited supply of modern logistics facilities — rising construction costs have not curtailed new warehouse development even as the land cost component has climbed to more than half of a project's total outlay in places such as Los Angeles and the Inland Empire," states CBRE's 2018 Global Industrial & Logistics Prime Rents study. A s demand for data center space continues to climb in the West, Metro Phoenix — already known for its thriving data center sector — remains one of the nation's most popular new site selection op- tions. But as more and more data center space is built, the inventory of close-in land opportunities dwindles, causing developers to turn their focus to parcels outside the core. This shift has initiated a surge of ac- tivity in Phoenix's East and West Val- leys, where land, power and skilled workers are abundant, and where Phoenix continues to write its own story in an era of modern data center demand. Welcome to the Silicon Desert Within Metro Phoenix's 1.63 million square feet (228.9 MW) of data center space, there is now more than 800,000 square feet (210 MW) of space planned or under construction by major colo- cation players like Aligned Energy, Cyrus One, Digital Realty, EdgeCore, Iron Mountain and QTS. LAND COSTS, CONSTRAINTS DON'T RESTRAIN LA, IE INDUSTRIAL MARKETS Southern California regions continue to enjoy high demand even as land, construction and acquisition costs continue to rise. By Nellie Day see INDUSTRIAL, page 74 see DATA CENTERS, page 78 There is more than 800,000 square feet (210 MW) of space planned or under construction in Metro Phoenix by major colocation players like Aligned Energy, Cyrus One, Digital Realty, EdgeCore, Iron Mountain and QTS (pictured). PHOENIX'S EAST, WEST VALLEYS PRESENT NEW OPPORTUNITIES FOR DATA CENTERS The metro may be filling up, but plenty of data center options still exist — and at a good price — in Phoenix's valley submarkets. By Mark Bauer For California Retail, Smaller Is Bigger page 50 San Diego Market Highlight page 42 page 60 Student Housing Strategies Controlling Costs in Bay Area Buildings From the Inside Out page 72 INSIDE THIS ISSUE www.REBusinessOnline.com September 2018 • Volume 16, Issue 1 CapRock Partners is currently developing Serrano Business Park, a 327,000-square-foot, three-building center in Jurupa Valley that is slated for completion early next year.

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