NEWPORT BEACH, CA—Small industrial owners have become a major force in the Orange County market, Rob Guthrie, CEO and founder of Guthrie Development, tells GlobeSt.com. As we reported earlier this week, the firm has sold two units and has three others in escrow at Foothill Business Park in Lake Forest, CA, an industrial property designed to accommodate small business owners, with 25 separate units ranging in size from 1,517 square feet to 3,203 square feet. We spoke with Guthrie about these smaller industrial owners and why they're so important to the economy.

GlobeSt.com: How is this group of smaller industrial owners impacting real estate, particularly in Orange County?

Guthrie: If you look at the recovery in Southern California industrial, it's been more Inland Empire based, more institutional and large corporate big-box opportunities, and Orange County is a more entrepreneurial area. Small business took a little longer to recover, but now it's back. Year after year, small business owners want to work close to where they live. They understand that they could operate their businesses cheaper in the Inland Empire or other areas, but they choose to be closer to where they live. Small business owners are going to represent a higher percentage of real estate sales activity as corporate America sees more locations that are attractive to them in the infill markets.

GlobeSt.com: Is this a national trend?

Guthrie: I don't know since I'm such a regional, locally focused guy. A couple of times when we've gone into other markets, the answer has been no. For example, in Dallas they say, “Why would I want to own real estate when I can lease it?” They didn't see the appreciation and scarcity of land and the potential investment side of things like in California. They view owning real estate as a liability: “What happens when I outgrow the building and want to move?” From our perspective, Orange County is unique. There are other areas like Orange County, but we are still a bit unique.

There has been even more of an increase in the conversion of industrial land to urban residential than the last time we spoke. It's harder and harder to find those types of locations for these small businesses. That's why we're seeing success in Lake Forest in those products. There's nothing on the horizon in terms of new development in this area of South Orange County.

GlobeSt.com: What other trends are you noticing?

Guthrie: A lot of what has been splashed around the media lately about creative space and the demand for a better environment in terms of live/work is true, and amenities will filter through to us in terms of what we need to provide these guys. They're willing to pay a premium, but they have high expectations of what they get in return. In South Orange County, the industrial space tends to be a hybrid, and the warehousing is either light assembly or warehouse—not heavy manufacturing. There are even also some pure office users using warehouses as storage for their toys, like boats and RVs.

The trend is heading away from manufacturing and warehousing product, which has been happening for a long time. There's no need now in today's modern era of logistics for these companies to receive their product—it's made overseas and shipped directly to customers. So, in Orange County, they're looking for higher amenities. They're not focused on clear height and other manufacturing/warehousing issues because it's all being done elsewhere. Their corporate headquarters are remaining here in Orange County, where the owner lives and outsources the manufacturing and uses a logistics company to deliver to customers.