A New Model for Industrial Users

AZUSA, CA—Lagunitas Brewing Co. has signed a 255,000-square-foot lease with Xebec for two buildings at an industrial facility in Azusa, CA. The tenant will use the property to both manufacture its beer and as a retail store and tasting room. This is a unique model for manufacturing users, which have had a steadily decreasing presence in the market. Manufacturers in general have been finding unique and non-traditional uses for the remaining manufacturing spaces.

“I think that because of our large population and proximity to the ports for exporting domestically manufactured goods that we will continue to see some non-traditional uses like a Brewery coming to this region for users wanting to simultaneously tap into a huge consumer base and have access to global markets from an export perspective,” Nicole Welch, a broker at JLL, tells GlobeSt.com. “We have been losing manufacturing jobs instead of gaining them and the fact that Lagunitas will be brewing their beer on site and having a 4,000-square-foot retail component with a tasting room is very innovative as opposed to the normal warehouse and distribution space that comprises the bulk of industrial space around here.” Welch represented the landlord and tenant in the transaction with her JLL colleagues Paul Sablock and Peter McWilliams.

While the team was able to secure a great tenant for the space, they did had limited competition with nearby and similarly sized facilities because the City of Azusa has its own utility supply. As a result, the nearby options would have cost Lagunitas more. “There was no competitive product elsewhere in the city,” says Welch.  “Neighboring cities did have comparable inventory availability but were not able to check every box that Lagunitas wanted because of the utility and water.”

Still, the San Gabriel Valley is—like most of Los Angeles County industrial markets—extremely tight with low vacancies and little developable land for new construction. It is one of the strongest submarkets in the region. “Low vacancy rates, low availability of developable land and high user demand have created the perfect storm for developers looking to capitalize on these market dynamics,” Welch adds. “New construction is pre-leasing or pre-selling at a rapid pace and meeting or exceeding developer proformas.”

Located at 1207-1223 10th Street in Azusa, the property is part of a larger 21.6-acre industrial park with three buildings totalling 342,629 square feet. It is near the I-210 and I-605 freeways, as well as nearby I-5 and SR-57, and sits on the major trade corridors. “The space was a great fit for the tenant because the site had all the preexisting attributes that were important to Lagunitas: location, highway access, proximity to a large population, water availability and a city with its own utility for cost savings,” says Welch. “In addition, Xebec really stepped up to the plate in negotiations and were able to quickly accommodate specific building amenities that were required.”