Kings of Industrial
If you think Beverly Hills High creates just 90210 teen angst, it also turns out to be a place where future real estate partnerships are forged.
Rexford Industrial Co-CEOs Howard Schwimmer and Michael Frankel were a year apart at BHH in the late 70s, but reunited in '03, two years after Howard and industry legend Dick Ziman (another Beverly alum) formed the company. Today with a team of 40 colleagues, they operate 7.5M SF of industrial space, in the form of 66 projects and 300 buildings. With $271M raised from both a public offering and private placement in July, they're targeting more 80k-500k SF single and multi-tenant properties in SoCal infill markets, both core and value-add. Oh, and although Dick is still active as Rexford’s Chairman, Elgin Baylor is the icon Howard chooses to put on his wall.
The CEO duo points out that while big box industrial gets the media attention, 1.6 billion SF of SoCal's 2B SF industrial market, just like the US GDP it reflects, is driven by small and medium-sized tenants, so that's what they focus on. They say their secret sauce is the ability to find investment opportunities and generate deal flow in a hyper-competitive market via in-house research and 30 years of relationships. They love ops that are not being actively marketed, and generic space with low finishes so they can create value through light renovations, construction, or simply waiting for leases to expire. Why the company name? Rexford was Ziman's street just like the name of his famous previous company Arden had been.
A typical warehouse in their portfolio. Michael spent the mid-80s in Beijing "putting together factories," and today can still carry a conversation in Mandarin. He says only 3% of Southern California industrial is owned by public REITS, and the rest is often in family hands, built before 1980 by "post-World War II cowboys." With a new generation having different interests and often seeking liquidity, Rexford finds the time ripe to roll-up many fragmented holdings. In addition, the surge of e-commerce (and now same-day delivery) increases the need for warehousing. SoCal, with its big ports and info tech ecosystem, is the country's largest regional consumer of industrial space.
Rexford's proud of its corporate culture, wanting employees to love being in the office. They recently switched floors in a building they've been in the past six years on Wilshire in Brentwood, gutted the new space, and made it super modern and sleek.
Here's the contestants in December's Bad Holiday Sweater competition. (No kidding.)
Howard's got extracurricular energy, too. He's a mountain biker, golfer, spinner, and weightlifter, plus he and his wife are remodelling their house. His 16 year old daughter plays competitive tennis and his 10 and 14 year old sons are even bigger golf junkies than he is. Howard's uncle fostered his real estate interest during college. After USC, he spent 18 years as an industrial broker at Daum, buying his first building just two-and-a-half years out of college and syndicating close to 2M SF prior to forming Rexford. He says industrial buildings are his "artistic palate," and he loves nothing more than to figure out how to reposition, modernize and redevelop assets.
Rexford's growing business has a need for more human talent—they're actively looking for five to seven new hires, in acquisitions, corporate finance and property management. They'd like another senior rainmaker with local brokerage and institutional relationships. A key duty for team members? Bringing out the Deal Monkey to celebrate closings. Acquisition associate Natalie Greenberg created the tradition, and the company's non-stop dealmaking provides frequent occasion for it to be observed.
