Allen Boerner
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Trends in Southern California Industrial Properties

4/25/2025

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​In the Southern California commercial real estate marketplace, industrial properties represent one of the most transacted asset types. Given increases in regional land prices, acquiring, retrofitting, or repositioning existing industrial properties increasingly makes sense to many investors.

Because demand is still below pre-pandemic levels, the landscape requires in-depth knowledge of economic trends, labor, and market potentialities.

Purchases often involve a price discovery phase to avoid negative leverage situations. These involve the costs of debt exceeding the current cash flow generated by the property. Buyers want certainty that such a situation is unlikely to impact them moving forward. They seek to acquire properties at a discount and look to address below-market legacy rents through rent increases as tenants move in.

Another trend is toward smaller deals, driven by all-cash purchasers who can obtain the best prices by paying full upfront without interest-charging banks and other lenders. With more considerable industrial assets in the $100 million range, such arrangements are often not feasible. This has slowed the pace of more significant transactions.

Regional banks and debt funds have stepped in to a certain extent and taken on the role of primary lenders, preventing too steep of a drop-off. While greater transactional volume would be optimal, discounted prices provide future-focused investors with opportunity.

Allen Boerner

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    Granite Investment Group Founder Allen Boerner

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