From left: Kim Snyder, Stephen Batcheller, John Magness and John Condas.

INLAND EMPIRE, CA-The desire to own and develop industrial properties in the Inland Empire is so great that investor and developer appetites are “insatiable,” according to a panel of experts at RealShare Inland Empire here yesterday. The frenzy to buy large parcels of land and develop large industrial buildings for end users that are gung-ho on this market is making these parcels harder to find.

Kim Snyder, president, southwest region, for Prologis, said that while the northern part of the Inland Empire is “dormant,” IE West is hot, and 2013 saw 7.5 million square feet of absorption. “There’s tremendous momentum here, although there are land constraints.”

John Magness, SVP for Hillwood Investment Properties, added that land is so scarce that his firm is “starting to look at repurposing land for industrial” and is considering developing smaller-size industrial properties to address that need. “The appetite is insatiable for large properties, but it’s harder to find and get large blocks of land, so we like repurposed land.”

On the investment side, national REITs and pension funds are “desperate to get into this market,” said Stephen Batcheller, a partner with Panattoni Development Co. Inc. “Cap rates are really low, so many want to get in on the value-add, and that means redevelopment.”

Magness added that land constraints are driving spec development down in size. “It took awhile to absorb the space put on the market during the recession, and now we’re back to a shortage. There’s a void in that size range in this market,” so it can be a good niche for investors and developers.

Many investors are relying on debt to finance these acquisitions since interest rates are low, said Batcheller, and Magness said the debt market has become more diversified since the recession. “We’re in the third inning of a nine-inning game,” Magness concluded. “It’s going to be a good year ahead for rent growth and absorption.”

During the investment panel, in addition to industrial properties panelists showed interest in retail and apartment properties going forward, with office coming in as the least interesting category. Paul Boneham, EVP and head of transactions for Bentall Kennedy US, said he sees lots of opportunities in medical-office buildings; David Otte, director of acquisitions for TIAA-CREF, said that the fundamentals in the IE are strong enough that we’re in the fifth or sixth inning, but the lack of product to buy is a major drawback; and Alan Carmichael, VP, investments, for Alere Property Group, said that housing will be a big driver for all of Southern California on the industrial side and he is looking forward to rental-rate growth.