High Fees Can Reduce Industrial Development
Published:
GlobeSt.com 4/14/15
By: Carrie Rossenfeld | San Diego
By: Carrie Rossenfeld | San Diego
Provenzano: “The problem with development is still the cost of land and the
cost to build.”
GlobeSt.com: How would you characterize the Poway market
for industrial sales?
Provenzano: Poway is not a market that’s appealing to every user, but to
those users who live in the area and have current businesses there, it’s very
appealing. There are a couple of different levels of industrial in that
submarket: storage-style warehouse, which is highly sought after since there’s
very little availability at this time, and light industrial that also has
office space, which is also popular.
GlobeSt.com: What types of properties are investors seeking
in this market?
Provenzano: Mostly light industrial, warehouse and R&D. General Atomics is a big player in
Poway and has changed that market over the last three to four years. They
continue to buy and lease, which
makes for less availability and helps to increase rental rates and sales
prices. They’re the type of user that needs both nice functional office and
warehouse space. The 12220 Kirkham Rd. property that we just sold will lease
out at a lower lease rate and sold at a higher cap rate because it is mainly
warehouse with little office space.
GlobeSt.com: Is there any industrial development occurring
in the Poway submarket?
Provenzano: There
are some vacant lots available and a couple of projects near completion. The
problem with development is still the cost of land and the cost to build,
including the city and state fees, permitting, water and local bond fees. There
are still some development opportunities in that market, but the hard costs, in
addition to the soft costs, are still challenging to most owner/users and
investors. Unless purchasing large parcels with the luxury of the economies of
scale, it’s not any less expensive to build than it is to buy existing
industrial space in most San Diego markets.
GlobeSt.com: What else should our readers know
about this market?
Provenzano: It’s a fantastic market for people who live in Scripps
Ranch, Rancho Bernardo and Poway. Highway 67 leads to East County, where you
can pull in some of your labor, and the 15 freeway goes north/south, so the
access is pretty good. Those small to medium-sized business owners in the area
love that market. It’s off the beaten path, and there are some nice properties
with fenced yards and good security, and the larger companies such as General
Atomics were able to get multiple properties and create a campus-style
atmosphere for a lot less than the more high-trafficked areas.
DISCLAIMER: This blog/article has
been curated from an alternate source and is designed for informational
purposes to highlight the commercial real estate market. It solely represents
the opinion of the specific blogger/author and does not necessarily represent
the opinion of Pacific Coast Commercial. www.PacificCoastCommercial.com
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