Kern's industrial market scores three more big deals
Jan. 24—Kern's industrial property market continues to rack up big deals, evident most recently in a trio of transactions suggesting strong interest in three distinct areas around the county.
Wonderful Real Estate announced last week the pre-lease of a 309,681-square-foot building developed on a speculative basis in Shafter. The tenant, a New Jersey-based roofing materials company known as GAF, plans to expand into the site while continuing to operate a 118,000 manufacturing facility in the same business park.
Separately, a Santa Monica developer who for years has been active around Meadows Field Airport is moving forward with a series of "spec" buildings next to the giant Amazon distribution center. Investor Sheldon Appel closed escrow Nov. 7 on five parcels totaling 17 acres just north of Merle Haggard Drive.
The other transaction involved the purchase of the 606,000-square-foot Dollar General distribution center near the foot of the Grapevine by a pair of Texas companies that have since exercised an option to build a spec building measuring 1.1 million square feet at the Tejon Ranch Commerce Center.
Coming on the heels of recent successes, including the quick lease-up of other projects that started as spec investment, the three deals illustrate strong demand for industrial space in a county that has for years been expecting just such a surge of interest.
ASU commercial broker Barry Hibbard was enthusiastic about all three, but he saved the TRCC deal for a superlative, saying the joint purchase by Covington Group and Crow Holdings show Kern's industrial market is finally attracting the attention of big money that borders on institutional investment.
"That has never happened before," Hibbard said, referring to the financial resources and sophistication of the buyers involved. He called the Shafter lease "great news" and added the airport development is a project whose time has come.
"You're going to see that airport land really start to come together," he said. "It's taking us a little longer to get there, but we're getting there."
Los Angeles-based Wonderful said the lease at its 1,625-acre Wonderful Industrial Park will accommodate planned expansion and growing West Coast operations at GAF, whose actual name is Building Materials Manufacturing Corp. The building is expected to be inhabited later this quarter.
"Driven largely by our proximity to the Los Angeles Basin and a customer base comprised of millions of people for a wide variety of industry, we continue to experience good activity for Wonderful Industrial Park real estate and GAF's expansion within the park exemplifies these ongoing trends," Joe Vargas, president of Wonderful Real Estate Development, said in a news release last week.
The proposed spec building at TRCC followed Covington and Crow's purchase of assets owned jointly by Lebec-based Tejon Ranch Co. and Rockefeller Group, a New York-based company that remains TRC's business partner at the nearby Outlets at Tejon.
Tejon Ranch spokesman Barry Zoeller said by email the purchase of the land and marketing of the building will help attract new tenants and investors to TRCC.
"It certainly validates our location, shows that we have a proven superior value proposition, and that major players in the market are bullish on continued demand for logistics space at TRCC," Zoeller stated.
The broker on Appel's purchase, ASU Commercial's Wesley McDonald, said the proposed development follows two separate projects totaling 189,000 square feet in the same area by the same company, E&E Trust. He predicted construction will begin by the end of this year on eight to 10 buildings as large as 30,000 square feet.
At that size, Appel said by phone Tuesday, the buildings won't serve as distribution centers. His sense was that the area near the airport will continue to fill out.
"I like the airport area," Appel said. "I think it'll be an area that 10 years from now will grow materially."
