From SoCal Real Estate’s November 2018 issue:
It’s not your imagination: Southern California is attracting some of the biggest commercial real estate deals in the country. The price tags on SoCal properties keep climbing higher as cap rates plummet — and yet investors can’t get enough of this region. The payoff of owning a SoCal asset, of being a part of this market, is worth the time, effort, and money it takes to get in and make that asset as desirable and profitable as possible.
Speaking of price tags, they’re going up for all property types here. Developers are spending record amounts of money to develop and redevelop sites into spectacular venues. For example, Canadian developer Ivanhoé Cambridge recently acquired two land parcels in Ontario, California, from CapRock Partners and plans to spend $450 million to develop a commerce center comprising 11 class-A industrial buildings, a source representing the buyer reports. That buyer says the demand for modern industrial buildings in one of the country’s best logistics markets justifies the expenditure.
A recent report released by representatives of CBRE showed that SoCal cap rates in many property sectors (especially industrial, retail, and multifamily) are the lowest among major markets. But that’s not deterring investors from coming here and looking for ways to get higher yield for their buck. CBRE’s Val Achtemeier recently told us to expect a lot more mega transactions and portfolio deals here as investors strategize adding SoCal to their overall business plan. And watch out for the “bridesmaids” — those bidders who came in second or third on a deal and are itching to win the next one. They are honing their craft and becoming savvier and more educated about this market in order to close the deal next time.
We’ll be talking a lot about deals in this issue of SoCal Real Estate, from retail deals to single-tenant net-lease deals to brewery deals to brokering the big office deals. We also have a Roundtable discussion on how private and institutional investors are changing their strategies for 2019, a Guest Column from Kidder Mathews’ Michael Dorsey on the how the cannabis business is affecting real estate deals, and a Policy Page by Marcus & Millichap’s Mark Bridge on what CRE professionals need to know about the new tax law.
Plus, there’s even more information in this month’s issue to help you navigate the SoCal market. To your success!