Garden Grove, CA., (September 14, 2017) – Mike Bouma, Senior Vice President, and Eric Smith, Senior Associate, of Voit Real Estate Services’ Anaheim office successfully directed the $7,125,000 million sale of a 40,840 square-foot industrial facility in Garden Grove, on behalf of the seller, The Realty Associates Fund X, L.P., based out of Boston, MA. The buyer, Exelon Realty LLC, a privately owned real estate company based out of Encino, CA, was also represented by Mike Bouma and Eric Smith of Voit Real Estate Services.
“Strong market fundamentals in the Orange County Industrial market, a credit tenant, an excellent Garden Grove location and a long tenancy of similar uses made this property very attractive,” according to Bouma.
The property is located at 7142 Chapman Avenue and 12031/51 Industry Street in Garden Grove.
About Voit Real Estate Services
Voit Real Estate Services is a privately held, broker owned Southern California commercial real estate firm that provides strategic property solutions tailored to clients’ needs. Throughout its 45+ year history, the firm has developed, managed and acquired more than 64 million square feet, managed $1.4 billion in construction projects and completed in excess of $46.5 billion in brokerage transactions encompassing more than 44,500 brokerage deals. Voit’s unmatched expertise in Southern California brokerage, investment advisory, financial analysis, and market research enable the firm to provide clients with forward looking strategies that create value for a wide range of assets and portfolios. Further information is available at www.voitco.com.
RANCHO CUCAMONGA, CA, (September 9, 2016) – Voit Real Estate Services has successfully completed the sale of Arrow Business Park, a seven-building, 136,806 square-foot multi-tenant industrial/flex business park in Rancho Cucamonga.
Frank Geraci and Juan Gutierrez of Voit’s Inland Empire office and Mike Bouma of Voit’s Orange County office worked together to represent both the buyer, Focus Real Estate, and the seller, Essex Arrow LLC, in the transaction.
“The Inland Empire is one of the strongest industrial markets in the nation,” comments Geraci. “Vacancy rates in the prime Inland Empire West submarket finished the second quarter at 3.75 percent, and average lease rates jumped to $0.56 per square-foot, surpassing pre-recession peak rental rates for the first time ever. Based on these strong market fundamentals, the Arrow Business Park is extremely well-positioned to capitalize on rising rental rates and the growing demand for quality industrial space throughout the region.”
The business park, which was sold for $15.4 million, consists of 69 units ranging from 240 to 12,650 square feet in size.
Geraci explains that no new multi-tenant industrial business parks have been built in the last 15 years in the local market, adding that high land and construction costs have significantly limited the available supply of new multi-tenant industrial product in this region.
“Demand for space in existing multi-tenant parks is at an all-time high, placing upward pressure on lease rates for this product type,” Geraci adds. “In particular, demand for smaller flex units with office build-outs is on the rise as tenants continue to seek spaces that can accommodate a vast array of corporate functions. We are now at a point in the recovery cycle where multi-tenant industrial is poised for tremendous growth, and investors are taking note.”
Located in the Rancho Cucamonga submarket, which boasts a 1.76 percent industrial vacancy, the Arrow Business Park was 76 percent occupied at acquisition, presenting an initial challenge that the Voit team was able to overcome.
“Despite the property’s prime location in a highly desirable submarket, the vacancy rate raised initial concerns among some of the prospective buyers,” says Geraci. “We knew that the property presented tremendous opportunity for value creation in the hands of an experienced owner-operator. By emphasizing the strength of the market, the well-below replacement cost value, and the asset’s tremendous value-add potential, we were able to successfully secure a buyer that recognized the opportunity for value creation.”
Voit’s Inland Empire and Orange County offices worked together to achieve this success – an integration that is reflective of Voit’s new broker-owned platform in action, according to Geraci.
“Voit’s new structure gives every broker a personal stake in the company,” he explains. “The knowledge that the company’s success equates directly to each broker’s success has created a renewed energy and drive that is fueling collective work among and between our brokers. As a result, we’re able to create even better outcomes for our clients, and for ourselves.”
Geraci notes that in this case, the result was identifying a buyer that understood the property’s potential, and demonstrated surety of close.
“Focus Real Estate’s proven track record and solid financial backing enabled them to emerge as the right buyer for this asset,” he states.
Focus Real Estate acquired the property in partnership with HG Capital. Chris Bramel and Randy Bramel of Bridgeport Investments arranged the debt and assisted with the equity for the acquisition. An acquisition loan was provided by Silvergate Bank of La Jolla.
Built in 1988, the Arrow Business Park features ample parking, 16’ to 24’ warehouse clearance ceilings, ground level loading, and a 35 percent office build-out. Located at 9047-9087 Arrow Route in Rancho Cucamonga, California, the property offers immediate access to the I-210, I-15, and I-10 for distribution and transportation.
The property’s close proximity to residential communities and extensive retail amenities such as Victoria Gardens and many local service providers make this a strong, centrally-located industrial asset that will deliver long-term value to tenants and investors, according to Geraci.
Focus Real Estate plans to upgrade the property, reposition the vacant space through a series of capital improvements, lease the vacant space, and bring rents to market upon tenant rollover in order to deliver strong risk-adjusted returns to its investors.
About Voit Real Estate Services
Voit Real Estate Services is a privately held, broker-owned Southern California commercial real estate firm that provides strategic property solutions tailored to clients’ needs. Throughout its 40+ year history, the firm has developed, managed and acquired more than 64 million square feet and completed more than $42.5 billion in brokerage transactions encompassing more than 41,000 brokerage deals. Voit’s unmatched expertise in Southern California brokerage, investment advisory, financial analysis, and market research enable the firm to provide clients with forward looking strategies that create value for a wide range of assets and portfolios. Further information is available at www.voitco.com.
By Mark Mueller | June 6, 2016
Garden Grove HQ
King Shocks, a Garden Grove-based maker of shock absorbers and other automotive products, has bought an industrial property in its hometown for a new, larger headquarters.
The company recently closed on the purchase of 12472 Edison Way, a 55,576-square-foot industrial facility about half a mile north of the Garden Grove (22) Freeway near Lampson Avenue.
An affiliate of Irvine-based LBA Realty sold the building for a little more than $9.4 million, or $170 per square foot. LBA acquired the property in 2012 as part of a reported $144 million portfolio deal of local industrial properties previously owned by Kilroy Realty.
The latest sale was brokered by Voit Real Estate’s Mike Bouma, Paul Caputo and Eric Smith.
The property previously served as an Isuzu Motor Co. research and development facility, housing offices, a fuel storage room, and a car wash for the automotive company.
The facilities should fit well for King Shocks, a manufacturer and servicer of custom-made automotive shock absorbers, as well as performance racing products for utility vehicles and professional racing.
“There is around a 2% vacancy rate in the area and it took almost a year to find the right building for this group,” Voit’s Caputo said in a statement.
ORANGE COUNTY, CA—Experts in the commercial real estate industry have been warning of an imminent end to the upward cycle we’ve been experiencing since the recession and the beginning of the recovery. Opinions on just how soon it will end vary according to the market and different sectors within that market. GlobeSt.com spoke exclusively with two of Voit Real Estate Services’ Orange County-based brokers, Doug Killlian, SVP in the Irvine office, who specializes in the office market; and Mike Bouma, SVP in the Anaheim office, who specializes in industrial, to find out where this market stands in their respective sector specialties.
GlobeSt.com: How much runway do you think is left in the current commercial real estate up-cycle in your geographical market?
Killian: There are cycles in real estate that can be identified as recovery, expansion, spec development, then recession. We are definitely well into the expansion phase, in which businesses are optimistic about the future and are adding employees. The market supply begins to thin, and speculative development commences again. We are now experiencing that dynamic, and we will continue to post positive absorption well through 2016.
Bouma: I feel confident we should see continued appreciation in the Orange County industrial market for another two to three years. It is hard to predict further out, but barring any unforeseen events that could affect the national and/or global economy, I’m hopeful to see steady, yet slower, growth for the years following.
GlobeSt.com: When the cycle eventually slows again in your market, do you anticipate it to be a gradual slowdown or something more dramatic?
Killian: Recessions are not ideal, but inevitable. However, our market will be somewhat shielded from the full force, and it will be gradual. One large factor to that statement is we will not be overbuilt with large amounts of product never being occupied, and we will have a much more diversified tenant base than ever before.
Bouma: I don’t see any apparent bubbles forming in the industrial market in Orange County where we would be in for a significant downturn in the market, nor a shift in the supply curve that would result in a glut of product coming on the market, which would lead to a dramatic decline in prices or lease rates. We have a more diversified economy in Orange County this time around that is not likely to suffer from the impact of a downturn in a specific industry type, such as the mortgage-industry implosion and debt crisis that preceded the last recession and had a large impact on Orange County—or like the significant drop in oil prices is having on markets across the nation that are heavily reliant on one industry. Interest rates are also on everyone’s mind, but with the uncertainty in the national and global economies, and with inflation fears not materializing, I’m hopeful the Fed will do what they can to prevent a rapid spike in interest rates, which could have a negative effect on values if increased too quickly.
GlobeSt.com: What are the fundamentals in your market that give it strength when a down cycle hits?
Killian: Quality of life, demographics, diversified work force and lack of available land to overdevelop. Secondly, we have a large amount of local and offshore money just waiting on the sidelines to buy up Orange County real estate.
Bouma: During the prior six years leading up to the recession, there was over 7 million square feet of new industrial product delivered in Orange County. As a comparison, there has been only 2.7 million square feet of new product delivered in the six years from 2009 to present. The Orange County industrial market ended 2015 at a 2.33% vacancy factor—the lowest ever recorded despite 2.2 million square feet of new deliveries since 2014. We have a scarcity of land to build new product, and cities such as Anaheim, Irvine, Costa Mesa, and Huntington Beach are allowing the rezoning of portions of their aging industrial markets to allow for high-density residential projects, further reducing the industrial base. These factors, combined with higher construction costs, create huge barriers-to-entry in our market.
What this means is that even if there is a downturn in demand, it is very unlikely we are going to see a related shift in supply. We have a nice buffer from where we are at now before we will see high vacancy factors leading to downward rents and property values. During the last recession, even with the debt crisis and worry that the industrial market was going to follow suit of the residential market with a flood of REOs, we saw a comparative dribble in the industrial market as lenders negotiated workouts and extensions with many commercial borrowers. We are now selling those properties at or greater-than-pre-recession pricing. All the while, businesses weathered the storm by cutting costs in other ways, strengthening their balance sheets, gaining efficiencies, relying less on bank financing for growth and lowering their lines of credit and maintaining lower loan-to-value ratios on their properties. I think the industrial market in Orange County is generally very healthy, and the businesses within it are as well. All these factors contribute to the strength and resilience of our market.
GlobeSt.com: What else should our readers know about your market weathering cycles?
Killian: Occupancy is everything. Treating your tenants as customers will pay off in the long term; they are the key to weathering the down cycle.
Bouma: We all know that as much as Orange County is an expensive area to do business, it continues to be a great place to live and work. Local-owned businesses don’t want to make a move to lower-priced cities or states, even if it makes economic sense to do so. Proximity to where business owners live is always going to have a factor in keeping industrial businesses solidly anchored in Orange County. Great schools and universities for their families, availability of skilled labor and proximity to the ports are among the reasons that keep industrial-related businesses in Orange County. Although we have seen many of the large manufacturing businesses leave the state or country over the years in order to compete to survive, many companies still retain their headquarters in Orange County, while outsourcing to a manufacturing facility overseas or larger distribution center in areas such as the Inland Empire.
They call New York City the Big Apple and New Orleans the Big Easy. When it comes to the industrial property market, Orange County is becoming known as the Big Squeeze. Conditions are such that good value is getting harder to find, competition for space is becoming intense and prices are being forced up by the simple law of supply and demand. Vacancy is now so low, (2.6% at the end of September) that some businesses are forced to stay where they are because a better option is just not available. The result: lower transaction volume and even fewer properties to choose from. Measured in square feet, sale transaction volume in Q3 of 2015 was 47% lower than it was the same time last year. Even leasing activity is feeling the pressure, having dropped by 67% in the same period. Read more