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It is no secret that industrial product is in high demand throughout Southern California, and conversion projects might be a good way to bring more supply to market. The first office-to industrial conversion project has kicked off in San Diego. Pacific Southwest Mortgage is converting a dated three-story office building that it developed in the 1970s into a state-of-the art industrial facility. The property was functionally obsolete, making it a good candidate for conversion.

“This particular site was fairly unique,” Bill Dolan, SVP at CBRE, tells GlobeSt.com. “The existing office building had some functional obsolescence, mainly it had a fairly low parking count for today’s office users. Today’s users are putting more bodies into spaces, and what used to work 15 to 20 years ago for parking in an office building is no longer the case. The functional obsolescence coupled with the fact that the office spaces needed a full tenant improvement. You don’t get the upside in rent that the class-A buildings can command, but often times the tenant improvement costs are similar. As a result, it is becoming more and more costly for lower-end office buildings to compete.”

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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