FEATURE ARTICLE, JANUARY 2007

WESTERN INDUSTRIAL ACTIVITY SPOTLIGHT

Actively developing mid-sized industrial buildings from 50,000 to 500,000 square feet, Birtcher Development & Investments knows a few things about industrial activity in the West, especially Southern California where ports, people and new parcels in the Inland Empire constitute a formula for growth.

“Rents are increasing at the rate of 15 to 20 percent, sale prices per square foot are up correspondingly with cap rates of leased projects in the 5 to 5.5 range, while new and unleased product is selling at the same cap rates,” says Brandon Birtcher, the company’s president and sole owner. “Buyers are tenants wanting to own their buildings at a 6:1 ratio over the speculative investor.”

Birtcher Business Centre at Mt. Vernon, a four-building, 426,000-square-foot industrial center in Riverside, California, will break ground this quarter. Reasonable land and building costs, city-owned electrical and water systems, convenient rail access, and a nearby municipal airport are some of the many advantages the Inland Empire development will enjoy.

— Brian A. Lee

Industrial Inroads Bentrott The Inland Empire’s warehouse distribution market is thriving, with the strongest segments comprising buildings smaller than 400,000 square feet and larger than 600,000 square feet. Excess inventory in the 400,000- to 600,000-square-foot range is becoming evident throughout the eastern part of the market. Small building sales have definitely slowed, and the market will be returning to normal absorption rates within the next 6 to 12 months. This will be a change from the 90- to 100-percent sell-out at completion developers have been enjoying during the past 3 years. Land values are cresting and should not increase significantly during 2007 due to construction cost inflation. Bryan Bentrott is co-founder and executive vice president of Newport Beach, California-based Master Development Corporation.

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