GlobeSt.com: Tell us about your acquisition strategy and the opportunities that you are targeting.

Robinson: We are exclusively focused on industrial and office product throughout San Diego County. We view this as a strong, durable market. Our investment thesis is to acquire quality industrial buildings well below replacement cost with significant value-add potential, meaning assets that have strong bones, a prime location and flexible layout, but are not heavily improved.

By targeting small buildings that are undermanaged or underimproved, we can drive value through strategic capital improvements, including upgrading office space, addressing deferred-maintenance items and enhancing the overall quality of each building.

We specialize in acquiring vacant buildings, which allow us to perform capital upgrades immediately after the close of escrow. We also seek out sale-leaseback opportunities, through which we can serve as short-term or long-term landlords to tenants who no longer wish to own and operate their own real estate, or who do not want to invest the capital needed to maintain or improve it.

For example, we recently acquired La Costa Meadows in San Marcos, which presented a unique sale-leaseback opportunity. The seller had decided to close his business and wanted to lease back the property for six months. This gave us an initial period of cash flow, followed by the opportunity to renovate the asset and bring rents up to market after the lease-back period.

We also purchased a 20,586-square-foot warehouse in Oceanside that was completely vacant upon acquisition. Shortly after, we leased the building to one of our existing tenants for a 10-year term, resulting in stable cash flow and strong risk-adjusted returns to our investors.

While we do pursue value-add investment opportunities like the ones mentioned, we are long-term owners, and our ultimate goal is always to stabilize and own quality assets for long periods of time.

GlobeSt.com: How are investors finding attractive deals in the San Diego industrial market? Are you seeing a lot of competition for industrial assets?

Robinson: From an investment standpoint, competition is one of the most challenging aspects of the current San Diego industrial market. Strong fundamentals, scarcity of supply and pent-up demand for quality industrial buildings are driving investor demand for this asset class.

While we're still seeing some deals, it is much harder to find acquisitions that make sense financially—meaning assets that are well-located with long-term value-add potential.

We are fortunate to have strong broker relationships, giving us steady access to off-market deals. Based on our track record and access to capital, we are able to offer surety of close, extremely fast due diligence and hands-on management with guaranteed tenant improvements—all of which helps us in this competitive environment.

Beyond these factors, differentiation is key in sourcing and acquiring attractive deals in the current investment climate. We target properties that many investors shy away from, including small vacant buildings and under-improved assets. Based on our expertise in these assets, we are able to reposition properties quickly that have struggled under previous ownership. This niche strategy enables us to find attractive deals in the tightening industrial market.

GlobeSt.com: What is your outlook on the 2017 industrial and office market in San Diego?

Robinson: All signs point to a healthy industrial and office market in 2017. More tenants are migrating to San Diego as businesses recognize the value and high quality of life in this market. Demand will continue to outpace supply, resulting in an increased tightening in 2017.

In industrial specifically, fundamentals remain very strong. It's a very good time to be an investor or owner, but it's going to become harder to find attractive deals moving forward. That is the rationale behind our current development strategy.

In addition to our small-building acquisition strategy, we are developing more than 1 million square feet of spec industrial in San Diego; we call it Creative Industrial. Our acquisition of smaller industrial buildings is a strategy to supplement these larger development projects.

SAN DIEGO—One of the primary advantages of acquiring small existing buildings as opposed to developing them is cost, RAF Pacifica's founder and principal Adam Robinson tells GlobeSt.com. The firm has been actively acquiring small industrial properties throughout San Diego County, including most recently, La Costa Meadows, a 31,246-square-foot industrial building in San Marcos for $3.75 million and a 20,586-square-foot warehouse in Oceanside for $2.2 million. We spoke with Robinson about why this strategy works and the opportunities it is targeting.

GlobeSt.com: What are the advantages of pursuing smaller office and industrial product, and why now?

Robinson: One of the primary advantages of acquiring small, existing buildings (as opposed to developing them) is cost. Because of the new storm-water, greenhouse-gas and Title 24 regulations, which require new developments to implement storm-water and energy-efficient measures, it is often very expensive to develop a small building. By acquiring existing assets well-below replacement cost, we can implement strategic capital improvements, complete aggressive lease-ups and hold these small assets within a large, cash-flowing portfolio that delivers strong long-term value.

A second advantage to acquiring small office and industrial properties is the strength of current demand. Small assets can often accommodate one or two quality tenants, and we are seeing very strong demand from small, entrepreneurial firms in the San Diego market. The assets we are acquiring, which range from 10,000 square feet to 50,000 square feet, can suit the needs of the many small business owners and emerging start-ups in this region.