IRVINE, CA—Demand for industrial properties from would-be buyers in several size categories is fueling all-cash, multiple offers for space in South Orange County, particularly for off-market deals, CBRE broker Brian Cole tells GlobeSt.com. Cole recently closed a spate of industrial acquisitions in this submarket that fit this description.
As GlobeSt.com reported earlier this week, Cole represented the buyer in each of three South Orange County sales transactions that reflect the current, highly competitive environment where multiple offers and all-cash buyers are becoming the norm: 33033 Camino Capistrano in San Juan Capistrano, 24799 Alicia Pkwy. in Laguna Hills and 27002 Vista Terrace in Lake Forest. The latter two transactions were off-market transactions.
Cole says there is true demand in the market for properties in the 10,000- to 50,000-square-foot range, since so few are available. “In South Orange County, there are two buildings available for sale in this size range. From an industrial standpoint, that’s crazy low.”
He adds that in the 50,000-square-foot-and-above category, there are only five buildings available for sale in this submarket. The combined pent-up demand will be fueling new development next year, he predicts.
“There are a couple of projects coming up that have really perked up a lot of developers’ ears because of the amount of activity we’re seeing with smaller buildings,” says Cole. “There’s a boom in pricing, and everything seems to be ramping up. The main thing is the lack of inventory, and buyers have to do what they can to be portrayed in the best light in order to be the one chosen.”
Once more buildings come to market, which hasn’t been happening in the last couple of months, the frenzy might begin to tone down, Cole says. “We’re anticipating interest rates going up, but they seem to be pretty level over the past 12 months, and there just seem to be a lot of buyers on the sidelines waiting for any opportunity to come in front of them.”
In addition to the size buildings mentioned above, Cole is seeing large demand for smaller buildings—in the 5,000- to 10,000-square-foot range. “There’s a very minimal amount of on-market properties like that.” He’s also seeing a lot of overseas money coming into the market for these properties, particularly from Asia.
The highly competitive environment is creating more off-market sales than usual. “It’s making our job a little more challenging to uncover these opportunities,” says Cole. A lot of it is with our marketing and direct relationships with property owners, being able to go to the right person if we know of an opportunity. It’s a really lucrative way to go about these things.”
Even off-market deals are sometimes generating multiple all-cash offers, he adds. “Other brokers are doing the same thing we are doing. Because of the lack of inventory and the demand from buyers, we have these guys in our back pocket ready to chomp at the bit when these buildings become available. It’s creating a bidding war on off-market property, which is pretty rare.”