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/873170
60 • September 2017 • Western Real Estate Business www.REBusinessOnline.com INDUSTRIAL DEVELOPMENT AMPS UP NORTH OF LA Downtown Los Angeles and the port areas may be sparse on industrial space, but the industry has found a haven just north of the city. By Nellie Day I ndustrial users and investors are well aware of the constraints fac- ing Los Angeles' industrial mar- ket. The area's premier location near two of the busiest ports, one of the busiest U.S. airports, numerous rail- ways and more freeways than you can count has made it nearly impos- sible for new entrants to penetrate this market. This is true for users of all sizes, though the need for spaces larger than 100,000 square feet is par- ticularly hard to come by. These is- sues are heightened due to rezoning efforts that have resulted in the con- version of old industrial buildings into creative office, breweries and multifamily complexes in the city's Downtown section. In essence, Los Angeles' industrial supply is shrinking, with little room for future growth, as demand contin- ues to heighten. "The Los Angeles industrial mar- ket boasts one of the lowest vacancy rates in the country and continues to be the most highly sought-after in- dustrial market in the U.S. in terms of investment capital," according to Voit's Greater Los Angeles industrial report for the second quarter of 2017. "Driven by imports and the continued emergence of e-commerce, industrial tenants continue to scramble for qual- ity space in this tight market. These robust and competitive market condi- tions should continue as Los Angeles becomes more urbanized and con- sumer consumption continues its ag- gressive growth." The Inland Empire has provided some respite to those who want to re- main close to the ports, though even this market has reached an uber- competitive level among REITs, life insurance companies, private equity groups and foreign investors. Some investors and owner-users have sought respite outside the state, mov- ing to nearby Nevada, Arizona and Utah. While the benefits can be many, the distance from this centralized transportation hub can be palpable in the days of ever-increasing delivery promises. Rather than leave the state or even the county, some developers have found opportunity just north of the city, along the Interstate 5 corridor. This area enjoys a close proximity to Downtown, the San Fernando Valley and Pasadena within Los Angeles proper, and hugs communities like Santa Clarita and the Antelope Valley (Palmdale and Lancaster) as it leads out of town toward Bakersfield be- fore making its way north to the Bay Area. Santa Clarita It is this corridor that has attracted development teams like Trammell Crow Co. (TCC) and Clarion Part- ners, which recently purchased an additional 54 acres of land in Santa Clarita. The land is fully entitled and approved for up to 4.2 million square feet of Class A industrial space. Phase I of the Center at Needham Ranch will include an 869,760-square-foot park with 30- to 36-foot clear heights, ESFR fire sprinklers, abundant dock- high loading, and large truck courts and yard areas. The first phase of construction should begin this Au- gust (as of press time), with comple- tion scheduled for the third quarter of 2018. Phase I of the Center at Needham Ranch in Santa Clarita will include an 869,760-square-foot park with 30- to 36-foot clear heights, ESFR fire sprinklers, abundant dock-high loading, and large truck courts and yard areas. Tejon Ranch Commerce Center in Tejon Ranch is a 1,450-acre, master-planned, fully entitled industrial/commercial complex situated at the juncture of Interstate 5 and Highway 99.