LOS ANGELES—Geringer Capital is nearing completion of a 126,768-square-foot build-to-suit industrial project for tenant Walker Zanger. The project began construction in February 2014 after the tenant signed a leased of the future property. Despite the high demand for industrial product in the market, Geringer Capital, a private investor, decided to mitigate its risk factor by pre-leasing the property before entering into development. The property will be completed in August of this year.

“The owner of the property is a private investor, so they wanted to be a little bit more conservative,” David Harding, SVP at CBRE, tells GlobeSt.com. “They would rather have a deal in hand before they construct. If they were a large institutional owner, most certainly, they would have gone ahead and built it.” Harding, along with SVP Greg Geraci, first VP Matt Dierckman and VP Billy Walk represented the landlord in the transaction. Transwestern's J.D. DeRosa represented the tenant.

The industrial facility is being built to Walker Zanger's standards with a custom showroom, 24,180-square-feet of corporate offices, a two-story atrium, 30-foot warehouse ceiling clearance and ten dock high loading doors. It is located North Hills Industrial Park, a 19-acre industrial campus that is also home to a FedEx facility.

“There is a limited availability of product in the market,” says Harding. “In our market we have about a 1.5% vacancy, and for buildings north of 100,000 square feet, there are only a couple available at best.” However, that doesn't mean that the leasing process wasn't without its challenges. “For larger property types, tenants don't have a lot of choices; however, the market tends to prefer existing buildings rather than build-to-suits. Overall, we still received pretty good interest because of the lack of available product.”

North Hills is located in the San Fernando Valley, which in general is known for its high industrial demand and low vacancy rates. As a result, institutional investors have been penetrating the market more frequently. The market has typically been home to owner/operator types of users.