GlobeSt.com: With so much competition for this space, how are landlords evaluating tenant criteria before signing leases with them?

Brutten: Landlords do not always have consistent needs. There are some who focus on minimizing out-of-pocket costs (tenant improvements, commissions, etc.) and downtime, with less of a focus on rent. Westcore focuses on overall value creation, with a strong focus on starting rent. We thoroughly underwrite the financial strength of our tenants and mandate security-enhancement instruments (higher security deposits, letters of credit, personal guaranties, etc.) if warranted. Most importantly, we work hard to understand the needs of our tenants in order to craft deal terms that meet the requirements of both parties.

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GlobeSt.com: How is the tight market affecting valuations? Can the market sustain more price run-ups?

Brutten: The real estate market is seeing price increases in both lease rates and property valuations. The leasing market is very strong. In the last 12 months, we've had six of our largest tenants commit to 10-to 12-year lease terms at strong lease rates. Several years ago, these tenants would have been focused on three-to-five-year leases. This is coupled with significant equity capital trying to buy industrial. Investor return expectations continue to compress, which is driving up pricing. With the amount of capital chasing limited deals, we do not expect investor demand to slow down in the foreseeable future.

GlobeSt.com: What else should our readers know about this market?

Brutten: Central San Diego industrial should continue to be a strong market for investment. Areas like the Miramar corridor are already densely developed and provide close access to key distribution areas. Although rents will fluctuate up and down, investors will continue to do well in this market. The advancement of e-commerce distribution, particularly with the push toward same-day delivery, should only reinforce this.