New Industrial Build Fills Market Void

Industrial developer Ryan Cos. is months from completion on the Pacific Vista Commerce Center, a 411,000-square-foot three-building industrial project in North San Diego County, and it has already signed a lease for 112,235 square feet. PODS will occupy one full building at the project, and it will consolidate two separate facilities in North County into the new space. The storage and moving company isn’t the only industrial user looking for similar opportunities. Many companies in San Diego want to consolidate multiple locations under one roof, but there are very limited options for large industrial floor plates over 100,000 square feet.

“There are a lot of companies in San Diego that have multiple locations. As the industrial market has become so constrained and there are fewer options for tenants to choose from, a lot of tenants have had to take on a second location instead of doing a relocation and expansion,” Ryan Grove, director of real estate development at Ryan Companies, tells GlobeSt.com. “We see a very big desire from tenants that have multiple expiring leases to merge those spaces under one roof, if they can find it. However, it is such a supply-constrained market and that can be hard to find.”

While there is limited space of this size in San Diego, class-A new construction is an even tighter market. The Pacific Vista Commerce Center has 32-foot clear heights, ESFR fire suppression systems and a dock-high door for every 4,370 square feet of warehouse area, the highest ratio of dock-high loading capacity in the market. “PODS needed to consolidate two North San Diego County locations, and our project was a great fit for them because they could merge those operations under one roof,” says Grove. “What was really key to them was functionality. A couple of the design features at out project were key in their decision to pick PVCC. We have a 32-foot clear height, and much of the market of San Diego is under 28 feet. That provides more cubic volume in the warehouse and allows them to increase the containers they can store.”

San Diego is not generally a market for large-block users. Average industrial leases are closer to 50,000 square feet, but with the need for consolidation and the limited supply of space, Grove wasn’t surprised to see one tenant occupy more than 100,000 square feet at the project. “We are very happy with the timing. We are optimistic that we will have a total of five to six tenants overall, but we weren’t surprised to have a tenant of this size,” he explains. “The industrial market in San Diego has become so constrained, and there are very few options, especially over 100,000 square feet. We still have a 215,000 square foot building remaining, and tenants looking for that square footage will have very little options. From that perspective, we felt that we had a pretty good chance of leasing to a tenant of that size.”

The leasing activity on the remainder of the property is strong with interest from a mix of tenants, including last-mile distribution users. “We are very optimistic that we are going to get some very solid credit tenants and get the project leased up before schedule,” says Grove. Pacific Vista Commerce Center will deliver in the fall 2018.