Retail Drives Industrial Through Much Of The Western U.S.
The industrial market is enjoying a moment in the sun throughout the West. Much of this is due to the retail sector’s continued technological advances, which have placed increasing demand on speedy delivery as manufacturing, distribution and warehousing needs are more important now than ever. “The market fundamentals for industrial properties are the best they have ever been,” says Bob O’Neill, senior vice president of acquisitions at CapRock Partners in Newport Beach, Calif. “Industrial absorption, lease rates and sales prices are at all time highs, while market vacancies are at historic lows and construction in the Western United States remains in check.”
CapRock Partners is taking on similar projects in equally supply constrained San Diego. The company purchased nearly 250,000 square feet of industrial space in the area through multiple transactions earlier this year. One of the assets was a vacant 91,183-square-foot industrial building in the Scripps Ranch submarket that had become surplus real estate for the corporate seller.
“While the property had ‘good bones,’ it was constructed in 1982 and the building exterior and landscaping reflected that time period,” O’Neill notes. “Additionally, the interior office improvements were last renovated in the late 1990s and were in need of modernization. Upon close of escrow, we obtained city approvals for significant renovations and work is currently underway.”
Though the asset may be older, CapRock engaged a 3D graphics technology company to provide prospective tenants with a virtual reality (VR) tour of the finished product.
“We believe there will continue to be opportunities to reposition and renovate existing industrial buildings with functional utility in infill markets,” O’Neill says. “In general, we have seen increased appetite by quality tenants for more immersive insight into prospective property offerings. With VR tours and other technology, we are pleased to continue to partner with cutting-edge providers to stay ahead of the market. The next decade will be an interesting period of change and resilient investors will adapt to meet the demands of tomorrow’s industrial occupiers.”
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