Huberman: Kearny Mesa is one of the largest and most dynamic industrial submarkets in all of San Diego County. It is dominated by strong tenant demand, incredibly low vacancy and, as with much of San Diego County, the region is also very supply constrained.

At the close of Q1 2017, vacancy rates in the area hovered around 2.44%, which dropped from the close of Q4 2016, which was 2.9%. This rapidly decreasing vacancy rate, coupled with the region's ongoing demand and growth, is demonstrative of the economic health of the region.

Businesses continue to flock to the Kearny Mesa submarket, which is placing upwards pressure on rental rates and property values. This is a trend that we anticipate will continue over the next several years, continuing Kearny Mesa's reputation as one of the most attractive industrial markets in San Diego.

GlobeSt.com: What are tenants seeking in their industrial space in this market?

Huberman: Industrial tenants are seeking properties that incorporate the latest in industrial design and functionality. This includes 36-foot clear heights, ESFR sprinklers, dock-high loading doors and ample parking, as well as items such as areas where Uber drivers can pick up packages for delivery to consumers. This is a trend that is growing in popularity in urban- infill locations throughout the country.

Industrial users are also looking for landlords who have the ability to alter buildings or industrial properties that can be altered to incorporate these key attributes or to fit their specific needs. With the constantly evolving consumer preferences, rise in e-commerce and changes in supply chain, industrial users are seeking properties that have the ability to expand or change along with them.

At BLT, the ability to customize and modernize a property is a core component of what we do. We employ a “last landlord” approach to all of our properties where we ensure that all tenants want to lease with us for the long-term. The only way to do that is by truly bringing value to tenants by providing the flexibility to accommodate their changing needs.

For example, the 71,862-square-foot, two-story flex industrial building we just acquired in Kearny Mesa was built in 1981, and is in need of key upgrades and modernization. We plan to implement several renovations to modernize the property including improvements to the exteriors, new mechanical systems and employee amenities. We also plan to remove the 20,000-square-foot mezzanine that was added to the property. This will significantly improve the parking ratio for the asset, providing more convenience and functionality for future tenants.

GlobeSt.com: What are the advantages of being located in this market as compared to other areas?

Huberman: San Diego as a whole is a very attractive market, especially from an investment perspective. That said, Kearny Mesa is particularly attractive due to its diverse range of industries. It is not dependent on one single industry and is home to a range of businesses and industries including healthcare, defense, construction, government and consumer products, among others.

This diversification provides a sense of stability to investors as the region is less likely to be impacted by shifts in one industry. This also creates an environment that will continue to be in demand over time.

In addition, Kearny Mesa has long been a popular destination for industrial tenants seeking to establish or expand their San Diego footprint, due to its location in the heart of the county and proximity to several freeways. Kearny Mesa is centrally located and provides easy access to the 163, 52, I-15 and I-805 freeways.