Industrial & Investment Real Estate Brokerage
CalSTRS, Panattoni Dev Co Sell Airport Distribution Center for $20.3M
Rialto, Guthrie Dev Co Acquire 222,000 SF in Ontario
October 13, 2014
< prev 2 of 3 next > Rialto Capital Management LLC and Guthrie Development Company acquired the three-building Airport Distribution Center at 1500 - 1590 Milliken Ave. in Ontario, CA from CalSTRS and Panattoni Development Company for $20.25 million, or approximately $91 per square foot.
The deal totals 222,500 square feet of industrial warehouse space in the Airport Area submarket of San Bernardino County. The buildings were constructed in 2000 and are roughly 74,000 square feet each, and each offer ten dock-high and ten grade-level doors.
Darla Longo, Barbara Emmons, and Michael Kendall of CBRE represented the sellers, while the buyers handled the sale in-house.
Economists Predict Steady CRE Growth Ahead Despite Undercurrents of Global Turmoil
Sobered but Undeterred by Recent Wall Street Woes, ULI Forecasts Three More Years of CRE Growth
October 15, 2014
A consensus survey of economists and analysts convened by the Urban Land Institute and EY Real Estate predicts solid but not spectacutar returns for U.S. real estate investors as moderate economic growth supports a steady strengthening in commercial real estate capital markets and fundamentals over the next three years.
The latest Urban Land Institute/EY Real Estate Consensus Forecast is slightly more optimistic than the previous survey in April regarding commercial property transaction volume and pricing, multifamily fundamentals and returns on institutional CRE properties.
The 43 experts representing 32 of the U.S.'s leading real estate investment, advisory, and research firms surveyed for the forecast last month included CoStar Portfolio Strategy economists Hans Nordby, Walter Page and Shaw Lupton.
"We're at a point in the cycle where things feel very good," said Josh Scoville, senior vice president for research with Hines, during a panel discussion on the forecast's release. "There's plenty of price and rent growth, but we've got to be aware of the risks, because it will change."
The panel, which included David J. Lynn, CEO and co-founder of Everest High Income Property and Martha Peyton, managing director and head of global real estate strategy for TIAA-CREF, raised concern over more recent economic news, including this week's equities market selloff, the drop in oil prices and anxiety over global economic growth.
"We've just got to be aware and not get too complacent, because things that are good tend to change for the worse," Hines' Scoville noted.
Overall, the forecasts for commercial real estate sectors remain positive, despite slightly lower sentiment from last spring on a few key indicators such as CMBS issuance, housing starts and housing price growth. And the U.S. remains a strong haven for cross-border investment, analysts agreed.
"Global investors generally have an optimistic view of real estate market opportunities worldwide," said Howard Roth, global real estate leader at EY, noting that a broad consensus of the experts predict a continued rise in global transaction volume.
The future for CRE and the economy looks bright despite the current market turmoil in the U.S. and volatile conditions around the world of late, especially in Europe.
"While some see an economic slowdown as a concern, currently, conditions remain positive for real estate investing over the next several years," Roth said.
Key findings from the Urban Land Institute/EY Real Estate Consensus Forecast include the following:
  • Commercial property transaction volume will grow, although at a declining rate, and exceed 2006 volume, which was the second highest pre-recession annual volume, by 2016 to $445 billion.
  • CMBS issuance, which increased nearly 80% in 2013, is expected to continue a more moderate annual growth pace, increasing another 43% by 2016.
  • Institutional real estate assets are expected to provide total returns of 11% in 2014, moderating to 8.5% annually by 2016.
  • Commercial property prices are expected to increase by 10% in 2014. Price increases will then moderate to 6% in 2015 and 5% in 2016.
  • Vacancy rates are expected to fall modestly for office, retail and industrial properties and rise slightly for apartments. Hotel occupancy rates are expected to continue improving.
  • Rents are expected to increase for the four major property types in 2014, ranging from a growth rate of 2% for retail up to 4% for industrial. Rent increases for all property types are projected to rise by 3% in 2016, with the exception of office space, which is predicted to increase by 4%.
  • Single-family housing starts are projected to increase to 912,500 units per year by 2016, remaining below the long-term annual average.

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DTZ/Cassidy Turley Merger Adding Another Global CRE Player
Can DTZ Group Take Third Place In the International Properties Services Market?
September 24, 2014
The merger of Washington, D.C.-based Cassidy Turley with DTZ announced this week pairs a mid-market company with 60 offices around the U.S. with a recapitalized international player that has long sought a bigger piece of the U.S. property market -- and now has the financial backers to bankroll its global expansion.
The new DTZ Group, created by the acquisition of Cassidy Turley by a consortium of private equity company TPG Capital, PAG Asia Capital and Ontario Teachers’ Pension Plan, would approach Cushman & Wakefield in terms of annual revenue.
The Cassidy Turley acquisition should enable DTZ to make an instant impact in the all-important U.S. market. While DTZ has a strong franchise in Europe and Asia, "They’ve been mostly an afterthought in the U.S.," said Brandon Dobell, an analyst with William Blair & Co. who tracks the CRE services industry. The challenge for the new company during the integration will be keeping top CT talent, especially tenant representation experts, from jumping ship, he added.
It's likely that DTZ will pursue an IPO down the road as part of its bid to become a true rival to CBRE, JLL, Colliers International (a unit of Toronto-based FirstService Corp.) and HFF Inc. Such a move is expected, Dobell said, given the solid performance of the CRE services sector and the new company’s need to raise cash to recruit talent and lock up key producers.

Revenue/Employee Count for Major CRE Firms Company 2013 Revenue Employees
CBRE $7.18 billion 44,000* JLL $4.46 billion 52,700 DTZ Group $2.9 billion (est.) 28,200 Cushman & Wakefield (Exor S.p.A)$2.5 billion16,000Colliers International (FirstService Corp.)$2.1 billion15,800

*Excluding 4,325 affiliate employees

"You have a private equity backer that at some point will need some liquidity -- TPG is not in the business of holding things for a decade or two," Dobell told CoStar News. "Obviously, Brett White is a tremendous asset for TPG, as well as for the operating company. He’s seen everything, been through a ton of market cycles and M&A during his time at CBRE, so he’s an invaluable resource."
Although the value of the transaction was not disclosed, the Wall Street Journal reported the deal at between $500 million and $600 million, including less than $75 million in debt, citing sources familiar with the transaction.
The Cassidy Turley transaction hinges on the expected closing of the TPG consortium’s $1.15 billion acquisition of DTZ from Australia-based UGL Limited, whose chairman, Richard Leupen, on Tuesday called the CT deal "a positive development for both companies."
"We believe the potential combination of these two companies will reinforce DTZ’s positon as a leading global property services company and enhance the future opportunities for both companies and their people," Leupen said. UGL also confirmed today that TPG has advised of its intention to complete the purchase of DTZ in early November.
Dobell said the Cassidy Turley transaction is emblematic of the consolidation wave that has swept away numerous mid-sized CRE firms, leaving a few large companies and niche players. Most recently, London-based Savills PLC paid $260 million in cash and stock for New York-based Studley Inc.
Since the 1980s, the CRE services space has resembled the investment banking industry, evolving from a couple of large firms and scores of much smaller players to a handful of large companies and niche firms competing against a pool of middle sized firms that have either lost their business identity or can’t match the global scale and reach of their larger rivals.
"The middle is going to be challenging. Just look how many firms have gone away the last four years," Dobell said. "This transaction brings together two firms that were at risk if they couldn’t get bigger -- and it probably staves off customer and broker concerns about the longevity of those businesses."
In today’s environment, service providers like JLL and CBRE that cross-sell financial services or serve multinational companies with a global list of services like property and facilities management a grabbing a disproportionate share of sales and leasing activity, Dobell explained.
"The competitive pressures for having a full suite of services globally are really relevant, and are certainly fueled by access to cheap debt," Dobell said, noting that CBRE, now a $10 billion company, was at $200 million market cap as recently as 2008.
Recurring revenue streams such as property and facilities management are much larger, constituting 40% of total revenue for JLL and CBRE compared to 15% or 20% in 2007, creating a hedge against property market peaks and valleys.
"As the CRE industry becomes more diverse, the business is becoming less cyclical, and those kinds of companies tend to be pretty good places for private equity money, as well as places where brokers will stay put through a market cycle," Dobell said.
Just Sold:  21,098/SF Freestanding Industrial Warehouse on 1.35 Acres in South Ontario.  Noah Samarin of the Samarin Industrial Group represented the buyer, Ashtel Dental LLC, in it&#8217;s purchase of the property to be used as it&#8217;s North American Headquarters.

Just Sold:  21,098/SF Freestanding Industrial Warehouse on 1.35 Acres in South Ontario.  Noah Samarin of the Samarin Industrial Group represented the buyer, Ashtel Dental LLC, in it’s purchase of the property to be used as it’s North American Headquarters.

GUTHRIE BUYS AIRPORT DISTRIBUTION CENTER IN ONTARIO - See more at: http://www.rebusinessonline.com/main.cfm?id=17&date=20140923&region=Western#sthash.wUJBuFGY.dpuf

ONTARIO, CALIF. — Guthrie Development Company and its private equity partner have acquired Airport Distribution Center, a 221,171-square-foot industrial park in Ontario, for a reported $20.2 million. The center is located at 1500, 1550, and 1590 Milliken Ave. The park contains three buildings and 30 units. The Class A space is 93 percent leased. The seller, Panattoni Development Company - See more at: http://www.rebusinessonline.com/main.cfm?id=17&date=20140923&region=Western#sthash.wUJBuFGY.dpuf

Just Leased:  49,000/SF Freestanding Manufacturing Warehouse in Riverside, CA

Just Leased:  49,000/SF Freestanding Manufacturing Warehouse in Riverside, CA

Market Trend: Select Top Five Inland Empire Industrial Leases Signed in Q2 2014
The select top industrial lease signed during the second quarter of 2014 in the Inland Empire market was at Empire Gateway Bldg 2 in the West San Bernardino submarket. Yokahama Tire Corporation leased 658,756 square feet there. Colliers International represented the landlord.
Restoration Hardware leased 625,000 square feet at 5085-5125 Schaefer Ave. in the West San Bernardino submarket. Lee & Associates represented the tenant and the landlord in the deal.
Federal Mogul signed a 522,772-square-foot lease at 22750 Cactus Ave. in the Riverside submarket. Colliers International represented the landlord, while CBRE represented the tenant.
Ownes & Minor leased 520,161 square feet at 5125 Ontario Mills Pky in the Airport Area submarket. Lee & Associates represented the landlord.
United Furniture Industries renewed its 505,192-square-foot lease at Distribution Centre 1 in the North San Bernardino submarket. CBRE represented the landlord, while The Bradco Companies represented the tenant.
In the first quarter, Euro-Pro Operating leased 779,052 square feet at Empire Gateway Bldg 1 in the West San Bernardino submarket. Colliers International represented the landlord.
This trend is compared to the U.S. National Industrial select largest lease signings occurring in Q2 2014, which include the 1.7 million-square-foot lease signed by Michelin at RidgePort Logistics Center in the Chicago market, RosKam Baking Co.’s lease of 885,781 square feet in the Western Michigan market, United Furniture Industries’ 800,000-square-foot lease in the Greensboro / Winston-Salem market, CEVA Logistics’ 648,758-square-foot renewal in the Memphis market, and the 620,000-square-foot lease by 99 Cents Only in the Los Angeles market. In the first quarter, Exel leased 947,715 square feet in the Charlotte market.
The information in this news report is based on CoStar’s Second Quarter 2014 Market Report, a 40+ page comprehensive research report available to CoStar subscribers. To learn more about quarterly research reports and other benefits available to CoStar subscribers, please call 888-226-7404.
Newcastle Buys 13 Acres at Meridian Business Park in Riverside

Newcastle   built a 600,000-square-foot, Class A distribution building at Meridian   Business Park in 2013.

RIVERSIDE, CALIF. — Newcastle Partners has acquired 13 acres of land at Meridian Business Park, a 1,290-acre, master-planned commerce center in Riverside, for an undisclosed sum.

Newcastle plans to develop a new speculative industrial distribution facility totaling 260,000 square feet at the site. Construction is expected to begin later this year, with completion slated for next fall.

Newcastle’s development activity within the park now totals 1.37 million square feet on 66 acres of land. It delivered a 600,000-square-foot, Class A distribution building at the end of last year. The company recently finalized plans for an additional 510,000-square-foot, Class A distribution building.

"The quality of Meridian Business Park and its amenities rivals all other state-of-the-art product throughout the Inland Empire region," says Dennis Higgs, Newcastle’s managing partner and founder. "The visibility, access to the freeway system and ports, and quality of its tenant base is unsurpassed. Kia Motors, McLane Foodservice, Sysco Foods and the University of California at Riverside all have located here for these reasons." 

Market Trend: Select Top Five Inland Empire Office Leases Signed in Q2 2014
September 5, 2014
The select top office lease signed during the second quarter of 2014 in the Inland Empire market was at 43455 Business Park Dr. in the South Riverside submarket. EMD Millipore leased 42,299 square feet there. Cassidy Turley represented the landlord in the direct deal.
The County of Riverside Department of Public Health leased 40,353 square feet at The Towers at Riverwalk - Bldg B in the Riverside submarket. Davenport Partners, Inc. represented the landlord in the direct deal.
California Preparatory College signed a 26,785-square-foot lease at 1060 E. Washington St. in the East San Bernardino submarket. Towers & Associates represented the landlord in the direct deal.
Lee & Associates represented the landlord in an 18,181-square-foot lease at Lakeshore Plaza in the South Riverside submarket.
CoStar Group, Inc. leased 10,060 square feet at One Piemonte in the Airport Area submarket. Cushman & Wakefield, Inc. represented the landlord, while Cresa represented the tenant.
This trend is compared to the U.S. National Office select largest new lease signings occurring in Q2 2014, which include the 713,727-square-foot deal signed by Salesforce.com in the San Francisco market; AbbVie's 558,859-square-foot office lease in Chicago; Sandoz, Inc. taking 154,101 square feet in the Northern New Jersey market; Boeing's lease of 144,073 square feet in the Seattle/Puget Sound market; and Time Warner, Inc.'s first-quarter deal totaling 943,438 square feet in New York City.
The information in this news report is based on CoStar’s Second Quarter 2014 Market Report, a 40+ page comprehensive research report available to CoStar subscribers. To learn more about quarterly research reports and other benefits available to CoStar subscribers, please call 888-226-7404.
PPF INDUSTRIAL BUYS ONTARIO INDUSTRIAL

ONTARIO, CALIF. — PPF Industrial LLC has acquired a 386,598-square-foot industrial building in Ontario for $23.8 million. The building is located at 1671 Champagne Ave. The property is situated just east of Interstate 15 and south of Interstate 10 in the Inland Empire West industrial warehouse/distribution submarket. The area is serviced by the Union Pacific Railroad. Notable tenants at the building include Precision Foam LLC, Pacific Urethane and Bericap LLC. The space was renovated and retrofitted in 2011. - See more at: http://www.rebusinessonline.com/main.cfm?id=17&date=20140911&region=Western#sthash.xETvjBgJ.dpuf