Last year brought rapid change to the Inland Empire industrial market, which finished 2008 with increased vacancy rates, rising cap rates, negative absorption and negative rent growth. Throw in the region’s unemployment rate of 10 percent — one of the highest in the country — and it’s no surprise that the Inland Empire industrial sector will continue to have its challenges in 2009. That said, this market is viewed by most as having strong long-term fundamentals, which will continue to attract institutional capital and drive tenant demand. Industrial leasing is expected to remain soft this year with landlords going to great lengths to secure and retain occupancy. Vacancy rates, currently at 22 percent in the east and 12 percent in the west, will continue to trend upward as leases expire and companies continue to downsize. Effective rental rates have dropped 20 to 25 percent in the last 9 months, with flat to negative rent growth expected for 2009. As retailers continue to downsize and outsource their distribution function, third-party logistics providers will pick up the slack. Southern California is home to more than 21 million people, who may be buying fewer jet skis and flat-screen TVs, but will still need …
Office As with many markets around the country, office development in San Diego has ground to a near halt. Many projects are stalled in the pre-development phase or are just completed, but new groundbreakings are scarce. Cash flow is king, and landlords, who were happy to purchase partially vacant buildings a couple of years ago, are now eager to lease up their buildings as quickly as possible and have come to terms with the fact that they need to lower lease rates in order to do so. The average downtime for vacant space is 1 year and then some, so landlords are willing to make concessions, including more months of free rent and increased tenant improvements. Overall, tenants can expect to enjoy a 15 to 20 percent total lease value reduction compared to a year ago, and many tenants who signed at high lease rates several years ago are opting to re-structure their leases early in exchange for reduced rates. Exceeding 25 percent in vacancy, the Carlsbad submarket has been especially hard-hit by the economic downturn, mostly due to overbuilding in that area. The ever-popular Del Mar and UTC submarkets have probably fared among the best, but still hover near …
DENVER — Locally-owned RedPeak Properties Inc. has topped out its third and final building at The Seasons of Cherry Creek, a high-rise apartment property located at 3329 E. Bayaud Ave. in Denver’s Cherry Creek neighborhood. The 13-story building will offer 148 units, which brings the project to 587 studios, one- and two-bedroom units. Completion of the third building is slated for early 2010. Designed by Denver-based Fentress Architects, the new component is sustainable featuring recycled materials, materials with low VOC, Energy Star appliances and daylight dimming systems.
VANCOUVER, WASH. — Precise, a local precision grinding company, has purchased an industrial building, which is located at 5600 NE 121st Ave. in Vancouver. California-based Elixir Industries Inc. sold the property for $4.22 million. Precise plans to move into the facility in May and market approximately 25,000 square feet for lease. Garret Harper of NAI Norris, Beggs & Simpson represented the buyer in the transaction.
RANCHO MIRAGE, CALIF. — Aqua Caliente Casino Resort Spa has completed the development of The Show, a more than 2,000-seat headliner theater located at Aqua Caliente Casino Resort Spa Rancho Mirage. The $64 million, 91,000-square-foot theater features multi-level seating, VIP box suites and lounges, multiple bars and state-of-the-art sound and lighting. Back of the house features include dressing rooms, green rooms and house management offices. Designed by San Diego-based Architects | Delawie Wilkes Rodrigues Barker, the space can accommodate musical acts, boxing, ultimate fighting championship events, fashion shows and banquet dining. Additionally, the project included the construction of a 10,000-square-foot warehouse to support hotel and casino operations, which is linked to the hotel via a 500-foot underground tunnel. The Penta Building Group served as general contractor for the project. The property is located at 32-350 Bob Hope Dr.
LOS ANGELES — Beverly Hills, Calif.-based Astani Enterprises Inc. is developing Concerto, a luxury condominium and loft development located at Ninth and Figueroa streets in downtown Los Angeles’ South Park. The $300 million project features two 30-story glass towers and a mid-rise loft building. Designed by DeStefano Partners Ltd., the development features studio, one-bedroom, two-bedroom and three-bedroom units. The units feature approximately 10-foot ceilings, full-length exterior glass walls, European cabinetry and appliances. The property also boosts a saltwater pool, cabanas and fire pits. Occupancy of the 77-unit Loft collection begins in June; occupancy of the first tower with 271 units is planned for this fall.
GREENWOOD VILLAGE, CALIF. — Greenwood Village-based Commercial Capital Inc., and its subsidiary CCI Funding I LLC, has filed for Chapter 11 bankruptcy protection. The company is a commercial real estate lender, which provides short-term commercial mortgage financing. The bankruptcy filing will leave approximately 12 large Rocky Mountain region construction projects half-built. The filing is due to the underperformance of the company’s loan portfolio, a Denver-based hedge fund and an international bank that provided financing to CCI. The two institutions failed to honor funding commitments totaling more than $30 million. Commercial Capital plans to lay off 75 percent of its workforce or approximately 15 employees. Additionally, the company plans to reorganize under Chapter 11 and continue to represent and broker commercial real estate loans throughout the United States.
LOMA LINDA, CALIF. — Los Angeles-based Downtown Gallery has acquired a single-tenant Fresh & Easy Neighborhood Market in Loma Linda. The 15,000-square-foot property, which is located at 25694 Redlands Blvd., sold for $2.86 million, representing a 6.6 percent cap rate. Built in 2009, the property is situated on a 2.1-acre land parcel. Fresh & Easy is a subsidiary of United Kingdom-based Tesco. The seller was Los Angeles-based MV Investors Inc. Edward Hanley of Hanley Investment Group Real Estate Advisors represented both parties in the transaction.
CITY OF INDUSTRY, CALIF. — Dedeaux Properties LLC has completed construction of Nogales Street Business Center, a four-unit, 71,460-square-foot multi-tenant industrial building in City of Industry. Yotrio Corp., a manufacturer of patio furniture, has signed a 5-year lease for a 20,933-square-foot space at 708 Nogales St. Brett Dedeaux, Mark Repstad and Rustin Mork of Binswanger/Realty Advisory Group represented the landlord; Chris Tolles, Robin Dodson and Erik Larson of Cushman & Wakefield represented the tenant in the transaction.
MOORPARK, CALIF. — M. W. Ossola & Associates Inc. has developed Patriot Commerce Center, a 300,000-square-foot Class A business park in Moorpark. The seven-building first phase includes 22,000 square feet of office/medical space, and approximately 140,000 square feet of industrial/R&D space. The completed project will offer 66,000 square feet of office/medical space and 240,000 square feet of industrial/R&D space. The project offers condominiums and buildings ranging in size from 734 to 21,676 square feet. RCI Builders served as general contractor; Polliquin-Kellog provided architectural services for the project.