CHICAGO—The ongoing revival of manufacturing and the rise of next-day delivery has given a big boost to the US industrial market, and investors have also picked up the pace. Sitex Group, a Chicago-based private equity firm that specializes in industrial investments, for example, has just launched its eighth fund and plans to triple its footprint in just the next two years.

“Our eighth fund is five times the size of our seventh,” Cary Goldman, a Sitex principal, tells GlobeSt.com. It's a long way from 2001, when he and David Friedman helped found the firm “without much more than an itch to start an acquisitions firm.”

And Sitex has now started to spread its wings across the entire country. As reported in GlobeSt.com, it just opened an office in Manhattan Beach, CA, its third and the first on the West Coast. It also has an office in New York and has become one of the largest industrial buyers in New Jersey. To lead the California operations, the firm has hired Eric Ruehle, a local veteran, as senior vice president.

“In today's market, personal relationships are very important,” Goldman explains, and perhaps even more important, “the market insists that deals move quickly,” and rather than do things remotely, an on-site manager like Ruehle can run out to visit any prospective investments and see changes in real time.

And this new Los Angeles-area office will play a key role in Sitex's expansion. “We've found that our tenant base has needs in all three major markets,” Goldman says, largely due to their ports and importance to the national distribution network.

Furthermore, Goldman adds, “in all three of these markets there is a growing manufacturing sector." And since the supply of new construction has not exactly become a flood, many distributors have turned their sights to class B industrials, especially those that have quick access to large concentrations of people. That demand has opened up major opportunities for investors willing to take chances.

“It requires an optimistic view,” he says, “since these buildings, many of them constructed in the 1960s, 70s and 80s, are moving toward functional obsolescence every day,” he says. But one of Sitex's specialties has been to buy up such properties and use selective demolition and renovation to bring them up to modern standards. The company typically knocks down portions of the buildings to make room for additional car parking, truck parking and docks, among other changes, and brings in new tenants.

Sitex recently wrapped up the redevelopment of a two-building industrial complex located at 2680-90 West Lake St. and 2800-2840 West Lake St. in Melrose Park, IL, a Chicago suburb. The company purchased the 273,073-square-foot complex, built in the 1970s, in April 2013. At the time, the property was somewhat dilapidated, but Sitex soon launched on a capital improvement program that transformed it into a modern functional warehouse distribution center. It gave the property an exterior renovation that included a new façade, parking lots and landscaping. Inside, Sitex upgraded the office space and installed high efficiency lighting and new dock equipment. Tenants now occupy about three-fourths of the complex.

But Sitex does more than buy and refurbish older product. If given the opportunity, it will launch new top-of-the-line industrial projects. For example, in addition to the recent purchase of a 30-acre site in North Bergen, NJ with a 300,000-square-foot warehouse that Sitex plans to refurbish and modernize, the company also bought a site in nearby Secaucus right next to the Lincoln Tunnel where it plans to build a 350,000-square-foot distribution center. “You wouldn't think there would be room for industrial development right there,” Goldman says, but once it became available, the company realized it made sense to build. With its lightning-fast access to the vast consumer market of Manhattan “these tenants will be able to pay a little bit more in rent.”

And the rising rents seen in many markets, including Sitex's target areas, could open up another method of development. All of these areas have obsolete structures with 14' to 16' clear heights not suitable for modern needs. But Goldman says developers can buy these buildings and raise the roofs to sufficient heights. However, Sitex has found it difficult to buy such structures at the right price and still have sufficient funds to do the reconstruction. But he feels rents are approaching the point where reconstructions will be viable. “It's been a very, very slow progression,” Goldman says, “but it's something to keep an eye on and we'll see if the trend achieves some velocity.”