Shortage of real estate inventory? No problem! – Daily News
There is an acute shortage of available rental and retail buildings in Orange County and the Inland Empire.
In most cities and size ranges 98 to 99 out of 100 places are occupied. The guilty? Lack of new buildings, exponential growth of industrial operations and increased competition from well-financed investors. In short, demand has exceeded supply and has been around for several years.
This time last year – when a pandemic-triggered hiatus continued – we believed the end of the bottlenecks was finally near. Unfortunately, the turbo-charged appetite for production and logistics locations returned insatiable in June 2020.
There are ways to creatively solve the space dilemma. Below are just a few.
If you’re looking to buy, consider leasing.
We are currently representing a well-qualified buyer looking to purchase 200,000 square feet in the Inland Empire. Buying alternatives are less common than Elvis sightings. A quick scan of websites gives less availability than digits on the left. However, a similar overview of leasing options is better with several more options. Sure, with one lease, you would pay someone else’s rent if you could finance your retirement, but at least your income will grow in the larger building. Once your rental terms have expired, you should consider re-entering the buying war.
If you want to lease, you should consider buying it.
Our food processing customer is fed up with finding a facility to rent. Ideally, the spot has some of the special extras it needs, such as: B. Floor drains, washable walls and significant performance. Slim selection! However, we found a first class offer for him. We can pair our tenant with an investor who will buy the building, sign a long term lease and voila, everyone wins!
Make unsolicited suggestions.
Occasionally we find a gem by looking for gold. Be aware that offering a property that is not on the market is inefficient. Generally there is little room for maneuver. Sellers did not fully take into account the tax implications. Third party reports such as inspections, surveys, environmental and assessment work must be prepared.
After all, sales motivation is based solely on the price you are offering. Any deviation from your offered price – if you discover something wrong – will be answered with a clear no. We found some sales opportunities by searching buildings for rental properties. The math of selling a vacancy or waiting for a tenant can sometimes make sense.
Wiggle, wiggle to make it work.
My wife is a seamstress. In the past she taught countless young people how to sew. One of her statements was “wiggle, wiggle to make it work” when supporting a pattern.
If you look at your current setting, additional square feet may be found. How wide are the aisles in your warehouse? If you shrink it to “very tight”, you multiply the capacity. Are you maximizing the cube of your space? You can achieve this by stacking higher.
I’ve seen some very cool production mezzanines that are double the footprint. If you don’t have space for that new injection molding machine, consider a mezzanine floor.
Find the weak point.
We recently signed a contract with a logistics company. When all of their musts were identified, nothing was available for a tour. The reason? They required more office space than the typical warehouse building. Our solution was to separate office supplies from operations. We found a variety of available suites near the mothership.
Outsource employees, inventory, machines.
In general, these three segments result in higher sales and require more space, albeit of different types.
People need an air-conditioned office with a carpeted floor. Inventory? Racking and stacking. This new CNC machine that cranks out parts takes up floor space.
Careful analysis of the enlarged company is appropriate. Will the business be generated by a larger sales team? Perhaps a virtual group could be considered. Factory representatives do this type of work. For finished goods that need a place to rest – many of our customers use an external logistics service provider for up and down storage. A long-term commitment to the number of square meters is avoided. Have you considered using a different manufacturer to make it for you? Until you scale and reach cost-benefit levels – you can produce more without investing in machines and without taking up space in your plant.
Allen C. Buchanan, SIOR, is a Principal at Lee & Associates Commercial Real Estate Services, Orange. He can be reached at [email protected] or 714.564.7104.