IRVINE, CA—CapRock Partners has successfully closed its initial investment fund, CapRock Partners Fund I, which has exceeded investment expectations for its investors. The fund, which invested in distressed industrial commercial real estate assets including non-performing notes, spanned 13 properties and loans secured by industrial real estate from San Diego to Silicon Valley; it was launched in 2010 at the bottom of the real estate cycle.

A representative transaction from Fund I is the 2011 acquisition of a non-performing note from a publicly traded bank for an approximately 240,000-square-foot industrial building in the Bay Area. CapRock navigated the asset through bankruptcy proceedings, obtained fee title to the property via foreclosure and repositioned the building for lease. Ultimately, the property was sold to a user for its US headquarters.

According to Jerry Pharris, co-founder and CEO of CapRock, “CapRock is an entrepreneurial company, and we have evolved from acquiring non-performing notes and REO assets to developing class-A industrial buildings. We seek to find relative value for our investors in every state of the real estate cycle with an eye to minimizing risk.”

In addition, the CapRock Partners Land & Development Fund exceeded its fundraising goals and is now closed to new investors. According to Jon Pharris, co-founder and director of acquisitions for the firm, “The CapRock Partners Land & Development Fund represents a new business plan and investment approach as the real estate cycle progresses. As one of the most informed and entrepreneurial private commercial real estate investment firms in the sector, we foresaw the shortage of top-quality industrial buildings in the market and are seizing the opportunity to develop and deliver class-A product.”

Geographically, the fund can invest and develop throughout California with a focus on the Inland Empire, particularly within San Bernardino County, a prime market for Fortune 100 firms seeking distribution centers. CapRock is currently under construction or is currently entitling a pipeline of nearly 5 million square feet of class-A industrial buildings in California.

“Jerry Pharris and his family have been successfully entitling and developing land in the Inland Empire for decades,” says Pat Daniels, co-founder and COO of CapRock. “As a result, our firm has the best-in-class expertise and network to get projects off the ground expediently and to see them through to highly successful outcomes.”

For example, CapRock recently announced the forward sale of an industrial building on land held within its Land & Development Fund to Prologis. The 428,208-square-foot, state-of-the-art building is currently under construction by CapRock in Rialto, CA, and is set for completion in Spring 2015. The building is part of a larger CapRock Partners project that encompasses 45 acres and two large-scale industrial buildings. CapRock executives anticipate strong interest in the second building as well.

Moving into 2015, Daniels tells GlobeSt.com, “As a commercial property owner and developer throughout California, we anticipate that the state's commercial real estate markets will continue to improve in 2015. We base this outlook on several key indicators, including increases in business spending, a steadily growing number of commercial development/construction projects and job growth, the latter of which is perhaps the biggest catalyst for commercial real estate growth in California.”

Jon Pharris tells GlobeSt.com, “Industrial vacancy will continue to decline in 2015, despite already tight markets, as e-commerce and improving consumer spending will fuel industrial demand. Most real estate users have limited options to accommodate their expansion needs in California markets. Landlords will continue to experience above-average rent increases. In contrast, we see several notes of caution related to a dragging international economy, the risk of international events and housing affordability concerns in the Bay Area.”