Why Rexford Industrial Can't Get Enough Of Orange County
The SoCal region is one of the few markets nationally where demand for industrial space dramatically exceeds supply. We caught up with Rexford Industrial co-CEO Howard Schwimmer to get the latest on the hot market. Howard will be among the all-star speakers at Bisnow's Orange County Industrial and E-Commerce Real Estate event tomorrow at the Hyatt Regency Orange County.
Howard (right, with Rexford Industrial co-CEO/director Michael Rankel and attorney Ken Fields) tells us other than the eastern portion of the Inland Empire, there are limited opportunities to build more product.
He says there’s growing concern for potential oversupply in 2016 or 2017 nationally due to recent slowing of industrial industry production, a decline in inventories and potential overbuilding. We’re really lucky here in SoCal, as the majority of our markets are infill—there’s almost no land available to build new product. The fundamentals are really starting to differentiate us from the national market, he adds.
Howard says we're also one of the few markets losing more product every year than is built. This is the result of developers repositioning older industrial buildings to other uses, he explains, noting that over 60M SF of industrial space has been removed from service in the LA and OC markets since 2001, of which 13M SF lost was in OC.
Pictured is a Rexford Industrial building on Birch Street in Santa Ana before renovations.
“The conversion of old industrial buildings in Downtown LA to creative office, residential and retail is a prime example, but it’s happening in Orange County too,” Howard points out. “We’re seeing this in all areas of Orange County, but predominately in the Airport (John Wayne) submarket. This trend is growing in popularity because these structures are in urban areas.”
With vacancy so low, there’s not enough space to meet demand, and industrial users are finding it more economical to renew existing leases than compete for vacant space at quickly increasing rental rates with few concessions, Howard tells us, noting that it’s a great landlord market.
Pictured is the same Rexford Industrial building on Birch Street in Santa Ana as above, after renovations.
Unlike the Inland Empire, which is a regional distribution hub with industrial buildings 750k SF and up, larger buildings in OC are in the 200k SF range, he says, explaining that OC industrial users are typically businesses serving the local population or are occupied by companies whose executives live in OC and are willing to pay more to keep their commutes down.
Despite investors competing for industrial properties bidding up prices, which escalated 11% in OC over the last year, Howard says the firm is bullish on this market, and its performance in 2016 and beyond. Rexford purchased a 115k SF industrial building in Huntington Beach the end of last year, and is actively seeking more product.
Hear more from Howard and the rest of SoCal's industrial heavyweights at Bisnow's Orange County Industrial and E-Commerce Real Estate event tomorrow at the Hyatt Regency Orange County. Sign up here!
