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Cash Is “Especially King” for Industrial Product

LOS ANGELES—Capital is not overbuilding the marketplace. At least not in industrial, said RealShare Los Angeles panelists, who say that buildings below 300,000 to 400,000 square feet are becoming tighter and tighter with rental rates and prices moving up rapidly.

By Natalie Dolce | nataliedolce | | Updated on March 29, 2016
RealShare Los Angeles Industrial Outlook panel. RealShare Los Angeles Industrial Outlook panel.
LOS ANGELES—According to RealShare Los Angles industrial panelists, there may be a tumultuous financial market in the next few years and those who can pay all cash, and who don’t have to raise any outside capital, will prevail. Those thoughts are according to Andrew Van Tuyle , chief acquisitions officer of BH Properties . While cash has always been king, it is especially king for industrial product, panelists said. Tuyle, along with other panelists, pointed out that capital is not overbuilding the marketplace. In fact, the panel explained that there is a tight supply and a high demand—with vacancy rates as low as 1% in some markets. Panel moderator Paul Earnhart , SVP of Lee & Associates , said that for the most part, buildings below 300,000 to 400,000 square feet are becoming tighter and tighter with rental rates and prices moving up rapidly. One of the problems existing today? According to Earnhart, it is financing for small entrepreneurial developers. “One of the things I think coming at us, more than we realize, is the financing issue.” Todd Lorber , SVP of NAI Capital , who focuses on the San Fernando Valley marketplace, points out that that region isn’t a pure distribution market and is looking at about a 2% vacancy right now. And some of that, he says, is even phantom because the existing occupant hasn’t found a place to go yet. As for the financing in that market? Lorber said it is typically all cash deals. “We have no available land to speak of,” he said. “And we have a market where if any industrial come down, it is replaced by apartments or retail.” Continue to check back with GlobeSt.com for more stories from the RealShare L.A. event. And click the below stories to read more. What Will Happen to SoCal’s 1980s Product? Where are we in the Investment Cycle? Richard Ziman Talks L.A., Receives Legends Award Metrics Look Good, But Wild Cards Remain How Do You Define an Emerging Neighborhood?

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