Business-Condo Biz Almost Too Good to be True

NEWPORT BEACH, CA—As wages rise, individual business sectors grow stronger and Chinese investors eye the market, Guthrie Development's CEO Rob Guthrie tells GlobeSt.com he is trying to temper his enthusiasm for the for-sale multi-tenant industrial- and office-condo sector. The firm recently acquired a six- building multi-tenant retail, office and service commercial project totaling 24,535 square feet of space at 27781-27841 La Paz Rd. in Laguna Niguel, CA, from La Paz Partners for $5.8 million, and Guthrie says his firm will continue to target existing multi-tenant properties from both a value-add and long-term hold perspective.

In this recent transaction, Larry Schuler of CBRE represented the buyer, and Josh Cunningham and Travis Dunn of Newmark Grubb Knight Frank represented the seller. “South Orange County is a great entrepreneurial market with plenty of business owners looking to purchase their own building among very limited options,” says Guthrie. He adds that his firm sees this as a great opportunity to transition a successful property from a leased investment into what the company brands “Homes for Business.” “This type of conversion is our expertise. We look forward to expanding our portfolio in south Orange County.”

The property consists of ten individual units, and each of the buildings resides on its own parcel. Guthrie will do some initial capital improvements and in turn sell each building to an owner/user or as a leased investment. The flexible zoning permits a wide range of retail and office uses.

Guthrie has also acquired 4200 Bonita, a 64,250-square-foot occupied industrial building in Fullerton, CA, from owner and tenant BI Technologies, an electronics parts supplier. The tenant plans to lease back the building until June. Zach Niles, SVP at JLL, represented the buyer and seller in the $7.75 million transaction.

The building is located on an oversized 208,740-square-foot fully-improved lot, with a 5:1000 parking ratio. Guthrie plans to renovate the building and convert the excess parking to a large truck court and fenced yard. “The infill warehouse/distribution market is red-hot right now,” says Guthrie. “With so much surplus land, this building is attracting interest from industrial, office, and institutional users.”

“Guthrie's vision enabled them to see a property originally designed for a manufacturing use that has left the state and reposition it into something that is rare and in very high demand,” says Niles.

We spoke with Guthrie about the multi-tenant industrial-condo market and what the prospects for this sector look like for this year.

GlobeSt.com: How would you characterize the multi-tenant industrial-condo market today?

Guthrie: It is at one of the hottest points I've seen in my entire career. The sales market on the condo side has been extremely hot. Businesspeople have a positive outlook toward the foreseeable future with regard to the economy and are acting now.

GlobeSt.com: What do prospects look like for 2017 in this market?

Guthrie: I'm trying to temper my enthusiasm right now because it's so good. The sense of urgency for us to acquire new projects is strong, and we're selling completed ones faster than we can bring new ones in the door. In the month leading up to the election and a couple weeks after, it was crickets, but things picked up after that. I think people just stopped what they were doing for a while in the course of the election, and then there was a surge.

GlobeSt.com: What economic factors are leading this type of property to success?

Guthrie: Most of my comments are regarding industrial condos, but we're branching out a little bit into office and retail. Income is up and spending is increasing, and that's affecting small businesses. Buyers are experiencing real growth in their businesses, and it's not just a real estate play—there's fundamental growth in their businesses. The China effect is still going on. In the past, we sold buildings to Chinese business owners that had a business, but now we're selling to Chinese investors trying to get capital out of China; they're buying and leaving the properties vacant. This will diminish as China cracks down on that; we've seen the best of that market.

GlobeSt.com: What else should our readers know about changes in multi-tenant industrial condos?

Guthrie: There's been a lot of fear about rising rates, but as long as it's a slow, gradual process, it will not impact sales as much as people were fearful of happening.

NEWPORT BEACH, CA—As wages rise, individual business sectors grow stronger and Chinese investors eye the market, Guthrie Development's CEO Rob Guthrie tells GlobeSt.com he is trying to temper his enthusiasm for the for-sale multi-tenant industrial- and office-condo sector. The firm recently acquired a six- building multi-tenant retail, office and service commercial project totaling 24,535 square feet of space at 27781-27841 La Paz Rd. in Laguna Niguel, CA, from La Paz Partners for $5.8 million, and Guthrie says his firm will continue to target existing multi-tenant properties from both a value-add and long-term hold perspective.

In this recent transaction, Larry Schuler of CBRE represented the buyer, and Josh Cunningham and Travis Dunn of Newmark Grubb Knight Frank represented the seller. “South Orange County is a great entrepreneurial market with plenty of business owners looking to purchase their own building among very limited options,” says Guthrie. He adds that his firm sees this as a great opportunity to transition a successful property from a leased investment into what the company brands “Homes for Business.” “This type of conversion is our expertise. We look forward to expanding our portfolio in south Orange County.”

The property consists of ten individual units, and each of the buildings resides on its own parcel. Guthrie will do some initial capital improvements and in turn sell each building to an owner/user or as a leased investment. The flexible zoning permits a wide range of retail and office uses.

Guthrie has also acquired 4200 Bonita, a 64,250-square-foot occupied industrial building in Fullerton, CA, from owner and tenant BI Technologies, an electronics parts supplier. The tenant plans to lease back the building until June. Zach Niles, SVP at JLL, represented the buyer and seller in the $7.75 million transaction.

The building is located on an oversized 208,740-square-foot fully-improved lot, with a 5:1000 parking ratio. Guthrie plans to renovate the building and convert the excess parking to a large truck court and fenced yard. “The infill warehouse/distribution market is red-hot right now,” says Guthrie. “With so much surplus land, this building is attracting interest from industrial, office, and institutional users.”

“Guthrie's vision enabled them to see a property originally designed for a manufacturing use that has left the state and reposition it into something that is rare and in very high demand,” says Niles.

We spoke with Guthrie about the multi-tenant industrial-condo market and what the prospects for this sector look like for this year.

GlobeSt.com: How would you characterize the multi-tenant industrial-condo market today?

Guthrie: It is at one of the hottest points I've seen in my entire career. The sales market on the condo side has been extremely hot. Businesspeople have a positive outlook toward the foreseeable future with regard to the economy and are acting now.

GlobeSt.com: What do prospects look like for 2017 in this market?

Guthrie: I'm trying to temper my enthusiasm right now because it's so good. The sense of urgency for us to acquire new projects is strong, and we're selling completed ones faster than we can bring new ones in the door. In the month leading up to the election and a couple weeks after, it was crickets, but things picked up after that. I think people just stopped what they were doing for a while in the course of the election, and then there was a surge.

GlobeSt.com: What economic factors are leading this type of property to success?

Guthrie: Most of my comments are regarding industrial condos, but we're branching out a little bit into office and retail. Income is up and spending is increasing, and that's affecting small businesses. Buyers are experiencing real growth in their businesses, and it's not just a real estate play—there's fundamental growth in their businesses. The China effect is still going on. In the past, we sold buildings to Chinese business owners that had a business, but now we're selling to Chinese investors trying to get capital out of China; they're buying and leaving the properties vacant. This will diminish as China cracks down on that; we've seen the best of that market.

GlobeSt.com: What else should our readers know about changes in multi-tenant industrial condos?

Guthrie: There's been a lot of fear about rising rates, but as long as it's a slow, gradual process, it will not impact sales as much as people were fearful of happening.