The Appeal of Small-Bay Industrial

SAN DIEGO—Having greater control over occupancy numbers as a tenant moves out, combined with the low-finish quality of multi-tenant industrial, is what Harsch Investment Properties likes about this asset type, regional manager Bill Rodewald tells GlobeSt.com. The Portland, OR-based privately held real estate investment, development and management company recently acquired Scenic View Business Park, an industrial campus in Poway, CA, that includes 147,848 square feet across eight multi-tenant buildings. The 98%-occupied property features seven manufacturing buildings and a distribution building. We spoke exclusively with Rodewald about the San Diego industrial market and why the firm finds it so appealing.

GlobeSt.com: How would you characterize the industrial market in this part of San Diego?

Rodewald: The market is very strong. There's less than a 2% vacancy factor right now for multi-tenant industrial in Poway. We have another property around the corner on Kirkham Rd. that we've owned for 15 years. We're really happy with that market; it has performed very well.

GlobeSt.com: What do you seek in the industrial properties you acquire?

Rodewald: We like small-bay multi-tenant. We're not always looking for large distribution-warehouse plays like in Mira Mesa, Kearny Mesa or Miramar. We tend toward management-intensive tenants, and we understand that going in. If you have a 100,000-square-foot industrial property, and one or two tenants move out, it's still 95% leased. If you have an industrial park with three tenants and one leaves, you're already 33% vacant. We like that it's fairly consistent and fairly low finish, meaning there's not a lot of office; it's much easier to turn over to a new tenant because it's simple and quick to paint and carpet.

GlobeSt.com: Which other San Diego or Southern California markets appeal to you?

Rodewald: We really only have some retail up in Irvine and a lot of property in San Diego, but we're actively looking in pretty much all of the Southern California markets. We look pretty seriously at the Inland Empire and Orange County for the same reasons we like San Diego: it's land constrained, and there's not a lot of land for new construction. But we haven't been very successful in finding stuff in those markets.

GlobeSt.com: What else should our readers know about this purchase?

Rodewald: It's very well maintained, and it butts up against a natural preserve, which offers great views off the property, and that's unusual for an industrial park. Also, we have properties in Miramar and Kearny Mesa and El Cajon, and if you continue on Scripps Poway Parkway, you end up in El Cajon—we can foresee potential growth for our tenants either going to or from El Cajon or Miramar.

SAN DIEGO—Having greater control over occupancy numbers as a tenant moves out, combined with the low-finish quality of multi-tenant industrial, is what Harsch Investment Properties likes about this asset type, regional manager Bill Rodewald tells GlobeSt.com. The Portland, OR-based privately held real estate investment, development and management company recently acquired Scenic View Business Park, an industrial campus in Poway, CA, that includes 147,848 square feet across eight multi-tenant buildings. The 98%-occupied property features seven manufacturing buildings and a distribution building. We spoke exclusively with Rodewald about the San Diego industrial market and why the firm finds it so appealing.

GlobeSt.com: How would you characterize the industrial market in this part of San Diego?

Rodewald: The market is very strong. There's less than a 2% vacancy factor right now for multi-tenant industrial in Poway. We have another property around the corner on Kirkham Rd. that we've owned for 15 years. We're really happy with that market; it has performed very well.

GlobeSt.com: What do you seek in the industrial properties you acquire?

Rodewald: We like small-bay multi-tenant. We're not always looking for large distribution-warehouse plays like in Mira Mesa, Kearny Mesa or Miramar. We tend toward management-intensive tenants, and we understand that going in. If you have a 100,000-square-foot industrial property, and one or two tenants move out, it's still 95% leased. If you have an industrial park with three tenants and one leaves, you're already 33% vacant. We like that it's fairly consistent and fairly low finish, meaning there's not a lot of office; it's much easier to turn over to a new tenant because it's simple and quick to paint and carpet.

GlobeSt.com: Which other San Diego or Southern California markets appeal to you?

Rodewald: We really only have some retail up in Irvine and a lot of property in San Diego, but we're actively looking in pretty much all of the Southern California markets. We look pretty seriously at the Inland Empire and Orange County for the same reasons we like San Diego: it's land constrained, and there's not a lot of land for new construction. But we haven't been very successful in finding stuff in those markets.

GlobeSt.com: What else should our readers know about this purchase?

Rodewald: It's very well maintained, and it butts up against a natural preserve, which offers great views off the property, and that's unusual for an industrial park. Also, we have properties in Miramar and Kearny Mesa and El Cajon, and if you continue on Scripps Poway Parkway, you end up in El Cajon—we can foresee potential growth for our tenants either going to or from El Cajon or Miramar.