SAN DIEGO—While the San Diego market typically does not attract national big-box distribution users, some distribution and e-commerce companies are opening new industrial facilities here, CapRock Partners' SVP of acquisitions Bob O'Neill tells GlobeSt.com. As we recently reported, the private industrial real estate investment firm based in Newport Beach, CA, recently acquired two assets totaling almost 250,000 square feet in the San Diego market.
We spoke with O'Neill about what the company likes about the San Diego industrial market and where there are untapped opportunities for development and investment.
GlobeSt.com: What types of industrial properties are you most interested in acquiring in the San Diego market, and why?
O'Neill: At CapRock Partners, we have an interest in acquiring multiple types of industrial properties with varying risk profiles. They can be warehouse distribution, light manufacturing, flex, business parks or land for development. The buildings can single-tenant or multi-tenant and be vacant or leased. The only type of investment we aren't seeking is for stabilized buildings with long-term leases in place. We prefer to have the ability to use our market knowledge and expertise in repositioning properties in order to have the ability to increase the NOI in a three- to four-year period.
GlobeSt.com: Where do you see this sector headed in the San Diego market?
O'Neill: Similar to the other infill industrial markets in Southern California, San Diego is experiencing historically low vacancy rates and increased demand from tenants and owner-user buyers. While the San Diego industrial market typically does not attract the national big-box distribution users who are expanding in the L.A. Basin and Inland Empire, we have noticed distribution companies and e-commerce companies opening new industrial facilities the San Diego region.
GlobeSt.com: Where are there untapped opportunities for industrial development and/or investment in this market?
O'Neill: While this economic expansion is in its ninth year, we are still identifying interesting investment opportunities in the San Diego market. These could be situations where the current ownership is unwilling, or unable, to invest the capital necessary to renovate and re-tenant a property. This could result in “deal fatigue,” creating an opportunity for us to acquire the property. Our two most recent acquisitions in San Diego were both from owner-users who are not in the business of renovating and repositioning properties, so both buildings were attractive investment opportunities for us. For industrial development, most of the vacant sites in Central and North county are spoken for and are in various stages of entitlement or development. There are opportunities for development in South County, but our interest continues to be focused on the Central County, North County and I-15 Corridor markets.
GlobeSt.com: What else should our readers know about the San Diego industrial market?
O'Neill: We are very bullish on the San Diego market and are seeking more industrial acquisitions in the region. The county has a diverse economy with several industries (military, aerospace/defense, medical devices, biotech/pharmaceutical, tourism, breweries, healthcare, information/communications, sports equipment and action apparel, etc.) supporting a population of more than three million people.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
