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It is undeniable that industrial development is focused on large warehouse and distribution facilities. While there is strong demand for these larger spaces, there continues to be significant demand for manufacturing uses. Development for small-box facilities—which manufacturing users generally need—is stunted not because of low demand but because of development costs. Industrial developer CT recently delivered the four small-box industrial properties to the market, and sold all of them to owner-users at above target pricing.

“It is impossible today to duplicate,” Carter Ewing, managing partner at CT, tells GlobeSt.com. “We got in three years ago at land prices that were significantly discounted to some of the premiums that everyone is paying today. It is also difficult to capitalize because most of the lenders and equity investors are focused on larger buildings. They want more money out and they want to have economies of scale, and you do not enjoy the economies of scale on the 50,000 to 100,000-square-foot size range that you do with 500,000 square feet and larger.”

Kelsi Maree Borland

Kelsi Maree Borland is a freelance writer and editor living in Los Angeles whose work has appeared in such publications as Travel + Leisure, Angeleno and Los Angeles Magazine.

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