RANCHO CUCAMONGA, CA—The launch of GoodmanBirtcher's 1.6-million-square-foot industrialdevelopment, reported last week on GlobeSt.com, is only thebeginning. The firm is planning five developments in the SouthernCalifornia market, totaling 6.3 million square feet and 15 millionsquare feet of industrial developments nationwide, an estimatedcost of $1.4 billion for work in progress. The North Americansubsidy of the Australian-based Goodman Group,Goodman Birtcher CEO Brandon Birtcher sat downwith GlobeSt.com to talk about the firm's plans for the SouthernCalifornia market, its choice to launch the company's SoCal rolloutin Rancho Cucamonga and how it is funding this stream of class-Aindustrial developments. Here is what he has to say:

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GlobeSt.com: Why did you choose Rancho Cucamonga,CA, as one of your development locations?

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Birtcher: The Inland Empire has twomarkets, the east and the west, and I think if logistics could findthe appropriate location, most would want to be located in the westbecause they could get twice the turns out of the Port of L.A. Thatis significant. If you are in the ecommerce industry, it is alsoimportant because it is central to fulfillment centers. So, thewest has been a really important part of our strategy. Although theeast has some great opportunities and wonderful sites, if I had thechoice to kick off our Southern California portfolio, it would bein the Inland Empire west. The site was attractive to us because itis 75 acres, which is difficult to find in the west, and because ithas remarkably convenient access to the 10 and 15 freeways. Thoseare very important arteries to the Inland Empire. We liked thecommunity. Rancho Cucamonga has a very business friendly,forward-thinking set of leadership, and it brought the best out inboth of us. They were very excited about what we were proposing sothat they could compete for some of these fulfillment and ecommerceusers to move into the city and generate additional sale tax.

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GlobeSt.com: You purchased the land in 2012. Whathas been happening since the original landpurchase?

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Birtcher: The seller had occupied thesite until February 29, 2014. That gave us plenty of time to workwith the city, design the project and obtain all of the necessaryentitlements. When the former tenant vacated the site, weimmediately commenced construction. There are two buildings: a500,050-square-foot building will be completed in March 2015 and a1.03-square-foot building that will be completed in May 2015.

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GlobeSt.com: Are you targeting a single tenant ormultiple tenants for the site?

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Birtcher: These are fairly typicalsized buildings for today's logistics companies. We do plan tolease to single-user occupants. They have, however, been designedto be easily divisible. All of the buildings we are developing inCalifornia are being designed with ultimate and maximum flexibilityfor a number of uses. But, our customers tend to be a largeraverage size globally. We have 185 million square feet in ourportfolio and 1,500 customers. When you think about the averagesized customer in our buildings, that is a pretty large average forthe conventional industrial user. In the last five years, the bulkof what Goodman has been building globally has been over a third ofa million square feet in size, and they have been single tenantoccupants. That is what we expect to experience here nationally aswell.

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GlobeSt.com: How are you funding thesedevelopments?

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Birtcher: When we were formed in June2012, we were capitalized with 890 million of equity. That came 55%from the Goodman Group in Australia and 45%, which is $400 million,roughly, from the Canadian Pension Plan Investment Board, thesocial security system in Canada. Both partners are looking to growtheir stake in this partnership, and continue to fund ouractivities. We haven't taken on any debt at this time. We certainlywill as we move into stabilization on these buildings. When thefirst wave of buildings are leased, we will place a modest amountof debt. Goodman's philosophy as is CPPIB's is to be low leverage.At the company level in Australia, Goodman is only 20% leverage,which is one of the lowest leverage organizations in the world inour space. That makes us very competitive, and we have a tremendousamount of cash available for these projects. We'll probablyleverage these buildings between 40% and 50%.

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GlobeSt.com: What are some of the other developmentsyou have planned for Southern California?

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Birtcher: We have five projects and6.3 million square feet planned for Southern California. Ourstrategy has a very important infill component in SouthernCalifornia and North New Jersey. It isn't all about big boxlocations. We want to be taking down 5-10 acres sites as well,redeveloping them and providing state-of-the-art, class-Afacilities for the logistics business. One of the five projects isa five-acre site in Compton for 102,000-square-foot building, andwe really intend to do much more of that in the years ahead.

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GlobeSt.com: Last thoughts?

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Birtcher: In my 38 years, I have neverseen this sector in such a reinvention state as it is now. The bigdrivers of this change are ecommerce and same day delivery, whichis bringing the buildings closer the consumers, the cost of fuelbeing upwards of $5 per gallon, the 600 inner mobile yardsthroughout America and the issue of carbon consciousness withefficiencies in transportations models. These buildings generallyhave 10-20 year leases with these customers, so you really have tothink 20 years in advance in terms of reducing the carbonfootprint. One of the big game changers for our designs have beenthe super post panamax and the ultra post panamax ship designs,which have 14,000 to 15,000 TEUs on a ship being dropped at onetime versus the conventional 4,400 TEUs at a time. It forces thetransportation industry, in a very short time, to pick the shipmentup before they have to pay a penalty, and then bring them in to afacility that doesn't have enough truck doors to handle them. Wehave added 185-foot truck yards at our buildings to accommodateonsite trailer storage. Now, we can put more storage onsite ratherthan relying on secondary locations, like ports, for storage.

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.