Another Reason Commercial Condos Are Surging

Guthrie: “We’re seeing a trend were more of our buyers are coming in with non-SBA financing. We’re also seeing a surge in investment buyers who are buying these units as leased investments.”

NEWPORT BEACH, CA—The entrepreneurial spirit is alive and well in Southern California, leading to a swell of demand for office and industrial condos in the region, Guthrie Development’s CEO and founder Rob Guthrie tells GlobeSt.com. As we recently reported exclusively, Guthrie Development  has sold the last of 25  industrial-condominium  units at its  Foothill Business Park  and has completed the  repositioning  and  entitlement  for  Brea Central Business Center , along with its first unit sale. We met with Guthrie for another exclusive interview on the economic factors that have led to the rise of industrial condos as well as office condos in Orange County and where he sees this trend leading. GlobeSt.com: What economic factors have led to the rise of industrial condos in Orange County? Guthrie: Two primary things: one is rising lease rates because there’s been no more new product added. And two is low interest rates, making the buy-vs.-lease analysis look really good now. We haven’t hit the replacement-cost threshold for ground-up development on small product—you can still buy an existing condo for less than the cost of building new product. Primarily, right now buyers are saying now is a good time for us to buy; many last signed a lease between 2010 and 2012 and are realizing it’s expensive to lease—they’re better off to buy.

Guthrie has completed the repositioning and entitlement for Brea Central Business Center in Brea, CA.

GlobeSt.com: Is the surge of start-ups and small businesses—i.e., the same factors contributing to the rise of smaller office space and co-working spaces—at least in part leading to industrial condos’ increased popularity? Guthrie: Yes. We’re seeing companies where the executives are breaking away and starting their own gig now. Things look good. We’re continuing to see a higher percentage of Asian-related businesses, especially imports —exports have been a little hammered lately, but we deal with a lot of high-dollar-volume exporters. GlobeSt.com: Where do you see this trend leading for the commercial real estate industry in the near future? Guthrie: In certain markets where there was pent-up demand, we’re now seeing things level off a bit. Our projections are that demand will increase, but at a decreasing rate on the sales side. GlobeSt.com: What else should our readers know about industrial condos? Guthrie: We’re seeing a trend were more of our buyers are coming in with non-SBA financing . We’re also seeing a surge in investment buyers who are buying these units as leased investments . We were recently at a conference in San Diego where the general consensus was cautious optimism: no one sees a recession coming for the next two years or longer.