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Value-add Industrial Takes Off

With so much demand for class-A distribution facilities, opportunistic investors are entering the market to revitalize dated and obsolete manufacturing buildings.

By Kelsi Maree Borland | kelsimareeborland | Updated on October 06, 2017

The value-add industrial niche is taking off. The Los Angeles industrial market is one of the tightest in the country—with vacancy rates dipping below 1% in some submarkets—and the most fervent demand is for class-A distribution centers. Of course, in our established infill market, brand new class-A distribution centers are hard to find. Opportunistic investors, like the newly launched West Harbor Capital —founded by industrial veterans Adam Deierling and Eric Ruehle—are coming to the rescue—or at least seizing the moment—to revitalize dated and obsolete properties into functional and highly desired warehouses for ecommerce use.

The demand and stock of industrial properties in Los Angeles makes it an ideal market for value-add industrial investment. “Given the average age of the properties in the Southern California market, which is late 70s and early 80s, and given what has gone on in the evolution of our overall economy, going from a more manufacturing-based economy to distribution marketplace, the properties themselves need to be re-adapted,” Ruehle tells GlobeSt.com. “We have an opportunity to get a hold of these properties and create value for our tenants, clients and investors by redeveloping those properties into more functional distribution buildings.”

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