SAN DIEGO—Servicemen and –women stationed in San Diego who were trained in electronics and naval warfare are choosing to remain in the region after their service is done, providing a wide pool of tech talent, Harsch Investment Properties‘ president Jordan Schnitzer tells GlobeSt.com. As we recently reported, Harsch, a Portland-based real estate investment, development and management company founded in 1950 by Schnitzer’s father Harold, has made its seventh acquisition of the year with the purchase of Center Pointe Business Park, a 246,621-square-foot multi-tenant industrial property in El Cajon, CA, here. We spoke exclusively with Schnitzer about why the firm is attracted to the San Diego market, the challenges industrial investors face in this market and where the best opportunities lie for this type of investment.
GlobeSt.com: What do you like about the San Diego industrial market?
Schnitzer: I love the West Coast; it has fabulous communities. While there’s no perfect place, and each has its own idiosyncrasies, the weather in San Diego is incredible, and it’s very land constrained by four defined orders. As long as people want to live there—which they do—property values over the long term will go up. That doesn’t mean there won’t be cycles in between where they’ll go down, but there are strong demographics and a diversified job base in San Diego that help. There are servicemen and ‘women who are very well trained in electronics and naval warfare who wanted to keep living there after they’re out of the service. In addition to Qualcomm, there are lots of smart, high-tech, 21st-Century businesses. Also, San Diego is a major tourist destination; it’s got Sea World, Legoland and the beaches, Old Town and Downtown San Diego, which are all good, powerful drivers.
GlobeSt.com: What are the challenges to industrial acquisitions in this market?
Schnitzer: There are some negatives. Real estate prices are high, and cap rates are low, although returns are larger in some markets. Traffic is getting worse, and it’s very difficult to find property to buy. There’s hardly anything for sale, and what is for sale is very high priced. It’s hard to get a return.
GlobeSt.com: Which San Diego submarkets have the best opportunities for industrial investment?
Schnitzer: Mira Mesa, Kearny Mesa, Otay Mesa and Sorrento Mesa all have good opportunities. The problem is there’s just not a lot of product. And with driving times getting increasingly longer, one of the problems is that it’s so close to the Inland Empire that it’s pretty easy for most companies to have a big distribution center in the Inland Empire and service the whole market. San Diego is not a distribution hub; it’s more of a local-market industrial business.
GlobeSt.com: What else should our readers know about the Center Pointe transaction and your company?
Schnitzer: The Center Pointe project has some tenants with solid businesses, although it has some vacancy and some capital problems we need to fix. We keep things forever—we’re a family -owned company, and we will spend the money to do what’s right for the property. In the end, the most important thing in real estate is keeping your property up; then you can give customer service that makes a difference and builds relationships.