Exclusive Q&A With Carlsbad’s Industrial Mover And Shaker Adam Robinson

RAF Pacifica Group principal Adam Robinson has taken the industry’s most lackluster product type and made it sexy. His creative industrial projects provide a mix of collaborative office, state-of the-art industrial, and indoor and outdoor amenities attractive to digital, high-tech, life sciences and manufacturing companies that want to consolidate their corporate headquarters and other operations under one roof.

Above is Adam with his three children Kellan, 7, Reed, 5, and Asher, 9.

Bisnow: What are the advantages to leasing creative industrial as opposed to a traditional industrial building?

Adam Robinson: Creative industrial delivers a higher-quality user experience than is typically found in traditional industrial buildings. For a small premium, industrial users can lease a brand-new facility that supports all aspects of their business, from industrial uses to brand and company culture.

For tenants, creative industrial space increases efficiencies by providing new, state-of-the-art amenities in a space designed to serve as both a headquarters and manufacturing, R&D or distribution facility and offers an innovative workplace culture, which can aid in attracting the best talent to their businesses.

From an owner’s perspective, leasing creative industrial addresses the needs of a wide variety of users in the market. Companies from tech to biotech to manufacturing to consumer products, among others, are seeking out fresh, innovative industrial space, and we’re able to provide that.

Based on the extremely fast leasing we’re experiencing...we anticipate that leasing activity will accelerate for other creative industrial projects as we take them to market. (The 156,977 SF el•e•vate spec project is about 50% pre-leased months before completion and is in negotiations with another company for 25%.)

Bisnow: Why are businesses migrating and relocating to Carlsbad? There’s been a lot of talk about tech companies in the Bay Area moving to San Diego. What makes this an attractive hotspot for startups to launch and grow their businesses?

Adam: There are several factors that are driving this migration of businesses to Carlsbad. First, the cost of living is significantly lower compared to Bay Area markets. Many businesses in the tech industry, for example, are heading south and are finding a similar synergy of tech startups in San Diego. It is also a lifestyle decision. Industrial users across all industries are attracted to Carlsbad’s coastal lifestyle and the live/work/play culture this city embodies.

In the case of el•e•vate (below), the new tenants we have signed to date are relocating from other parts of San Diego and were drawn to the high-caliber quality of the building itself, especially the extensive office space that is not typically found in traditional industrial facilities.

Bisnow: What are the challenges that arise with developing and leasing this product type?

Adam: One of the development challenges we face is that creative industrial product is typically more expensive to build. That said, while these projects require a larger upfront capital investment, they are also better positioned to sustain tenant demand and command higher rents, resulting in strong cash flow and returns over a long-term hold period.

When leasing creative industrial, one of the initial obstacles we faced was demonstrating the value of our product without having anything to compare it with. As the first ground-up developer of creative industrial product, we had no precedent for reference or comparison. Now that our first project is nearing completion, we are able to walk prospective tenants through the space to showcase the features that differentiate this project from any other industrial buildings in the area.

Bisnow: As we look ahead to 2017, what trends should we expect to see in the industrial market?

Adam: A recent report by Urban Land Institute ranked industrial as one of the top product types for investments in 2017. We see industrial as the sector to watch in the year ahead.

The e-commerce revolution has had a tremendous impact on demand for industrial product, and we anticipate high leasing activity based on this factor.

We also expect to see a continued shift in the amenities that industrial tenants demand in the year ahead. Creative industrial is the next evolution of industrial product, and we believe more widespread demand for this product type will emerge nationwide in the next two to four years.

At 2870 and 2864 Whiptail Loop in the Carlsbad Oaks North business park (under construction above), el•e•vate provides access to the I-5, I-15 and 78 freeways.

Bisnow: Is there anything else we should know about creative industrial?

Adam: We continue to evolve our creative industrial developments based on feedback as we lease our first project (el•e•vate). One of the most prominent key learnings to date is that the creative office component is pivotal in leasing decisions.

For example, el•e•vate was initially designed as a distribution facility; however, we have not yet signed a single distribution tenant. Tenants pre-leasing space in el•e•vate are:

• UNITE Eurotherapy, a global supplier of premium hair-care products, taking 54,018 SF for a corporate headquarters—about one-third of the facility;
• B&D Nutritional Ingredients, a leading distributor of dietary supplements, leasing 10,994 SF; and
• Hydrogenics, a Canadian developer and manufacturer of clean hydrogen energy generation technology and fuel cell products, taking 5,509 SF. 

These leases suggest that the building’s industrial features, such as the high clear heights, were not the deciding factors that drove pre-leasing. Instead, the interior office configuration and design aesthetic were the determining factors that attracted these three tenants to our building.

As a result, we continue to focus more on the design of office spaces within our creative industrial properties in order to optimize those spaces for our future tenants.