Just-In-Time Delivery Need to Spark Distribution Space Demand, ‘Networkers’ Told
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A mounting necessity for major companies to assure “just-in-time” delivery of goods stemming from port uncertainties and high fuel costs will spark more development of major distribution facilities in Southern California, a leading Foreign Trade Zone and supply chain consultant has stated. |
Speaking at the AIR’s May 28 “Broker Networking Event” at the American Express Stadium Club of the Home Depot Center in Carson, Curtis D. Spencer, president of Houston-based IMS Worldwide, Inc., said port reliability is the central issue. Over 120 people attended the popular event. IMS has over 30 years experience in the Foreign-Trade Zone consulting field, with an emphasis on international Supply Chain Solutions. |
“Delays in the supply chain due to uncertainty are creating a major problem no matter where you import from. It means you’ll need more industrial space for storage of goods in order to assure just-in-time delivery to end users. |
“If they can’t control the supply chain, suppliers of goods will build up stocks in regions of the U.S. This requires more places to store goods. Reliability is the shipper’s primary concern,” Spencer said. |
He reported that a one day delay in the supply chain equals one-half of one percent in profit. He said missing a shipment can cost as much as 10 percent in profits. “This is unacceptable to retailers,” Spencer declared. |
Spencer explained that though 35-40 percent of the cargo coming through the Ports of Los Angeles and Long Beach stays here, discretionary freight arriving is gradually dropping, though only by one percent currently. |
“LA/Long Beach is slowly being bypassed, but the Ports really don’t want any more business because of environmental concerns. So importers are increasingly re-routing cargo to eastern ports like Savannah, GA,” Spencer said. |
Spencer noted that LA/Long Beach leads the nation in goods coming into the country by far, so logistics impacts real estate in a big way. Yet a problem is brewing, pointing to a threat to truckers which has “shippers worried,” he said. |
“We have a port export problem starting to show up. Of the top 10 ports in the U.S. in terms of growth from 2006-2007, the West Coast showed a decline. The eastern ports have done better because a larger percent of goods received through LA/Long Beach was diverted east. Savannah was the darling of the eastern ports,” Spencer stated. |
| Despite that trend, Spencer emphasized that the increasing convergence of importers (tenants) and real estate is becoming more pronounced, boding well for real estate. |
| “The largest Real Estate Investment Trusts (REITS) and developers have become very logistics conscious and have developed port strategies. This will mean more distribution facilities. Buildings of one million square feet or more will drive the real estate market in Southern California,” Spencer said. |
| Spencer concluded by reporting that while import volume will be flat for 2008 and 2009, a 4-5 percent upturn is projected for 2010. To view Spencer’s entire PowerPoint presentation on AIR’s web site, click here. |
| Prior to Spencer’s presentation, AIR’s Executive Officer Tim Hayes reported several new “value added” Association initiatives. He announced the formal roll-out of the CDX property data system in LA County, noting that a system demonstration had already been completed in the Southeast Region. Demonstrations will follow in all regions. |
| He also emphasized the availability of AIR’s new site planning service in association with the design firm of Ware Malcomb. Click here to access AIR-Ware Malcomb. Finally, he announced that AIR has welcomed 60 new office brokers as members during the last two months. |
AIR Unveils Purchase Agreement Customized for Vacant Land
Member Benefit
Responding to increasing interest among AIR members for a document tailored specifically for the purchase of vacant land, the Association has unveiled a customized Standard Form to meet that need. |
| Joy De La Cruz, AIR’s COO, announces that the “Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate – Vacant Land” is now available to the membership.The new form adds to over 50 standardized forms developed by AIR and “reflects our ongoing goal of maintaining our forms as the benchmark for the industry,” De La Cruz said. |
| Rick Riemer, legal counsel for AIR’s Forms Committee, said the new form represents an enhanced version of the regular purchase agreement by being tailored to vacant land. |
| “We get a lot of calls from members for a form covering vacant land, so we set one up more specific to this requirement. The new form is more flexible, featuring custom provisions for vacant land that is to be developed,” Riemer said. |
| Riemer explained that a key revision to the form reflects that objective. He said Provision 3.1 of the form dealing with Purchase Price now reads: |
| “The purchase price (‘Purchase Price’) to be paid by Buyer to Seller for the property shall be: $_________or (complete only if purchase price will be determined based on a per unit cost instead of a fixed price) $ __________ per unit. The unit used to determine the Purchase Price shall be: ___ lot ___ acre ___ square foot____ other, prorating areas of less than a full unit. The number of units shall be based on a calculation of total area of the Property as certified to the Parties by a licensed surveyor in accordance with paragraph 9.1 (a). However, the following rights of way and other areas will be excluded from such calculations __________________. The Purchase Price shall be payable as follows”, et. al. |
AIR
Member Deals
Central Region
•
Little Tokyo Shopping Center Sold for $35.3 Million
Robin Yi, a partner in Coldwell Banker Commercial Wilshire Properties and his team, represented Los Angeles-based 3 Alameda Plaza, LLC in the investment purchase of a 192,300 square foot Little Tokyo Shopping Center located at 333 S. Alameda in Los Angeles. The seller, 333 South Alameda Corporation, was represented by Meruelo Maddux Properties, Inc.
South Bay
• Goodglick Firm Assists School District
The Wiseburn School District, one of LA County’s few remaining small school districts, has acquired an industrial building in the El Segundo Industrial Park, which it intends to convert into its new headquarters, announces William S. Goodglick, president of The Goodglick Company, who represented Wiseburn in the $6.55 million purchase. The 28,182 square foot facility is located at 2330 Utah Ave. The 1.49-acre property was previously owned by First Industrial Investment, Inc., which was represented in the transaction by Jeff Kernochan and Patrick O’Loughlin of The Fischer Company. The Wiseburn School District was founded over 110 years ago and serves students from Western Hawthorne and the surrounding unincorporated areas of Los Angeles County.
Ventura County
•
Wax Wraps Port Hueneme-Oxnard Buy
Mike Wax, vice president and a principal of Industrial Park Associates of Oxnard, announces the purchase of 51,000 square feet of steel buildings on five acres of land at 5901 Edison Ave. in Oxnard by the Port Hueneme-Oxnard Harbor District for $5.75 million. Borla Performance Industries was the seller. Mike Wax and Doug Wax, also of IPA, represented both parties in the transaction. They said the purchase is part of a long-term strategy by the Harbor District to acquire industrial properties within its sphere of influence to help attract port users.
Southeast Region
•Ta Chen Inks $6 Million Lease in Santa Fe Springs
Ta Chen International, a Taiwan-based manufacturer and distributor of stainless specialty metal products for service centers and wholesale supply houses, has signed a seven-year lease for a 92,348 square foot industrial building in Santa Fe Springs. The property is located at 12825 Carmenita Rd. Cameron Driscoll, senior vice president of Voit Commercial Brokerage’s Anaheim Metro office, and Luke McDaniel of Voit’s same office represented the lessee. Clyde Stauff and Steve Calhoun of Colliers International represented the lessor, Golden Springs Development Company. Lease consideration was $6 million.
Orange County
•Voit’s Hefner, Caputo Aid Business Park Buyer
Burke Real Estate Group, an Orange County-based investor and developer, has acquired a 79,926 square foot multi-tenant business park on 5.29 acres in Garden Grove for $10.2 million. Mike Hefner, SIOR, senior vice president of Voit Commercial Brokerage’s Anaheim Metro office, and Paul Caputo of Voit’s Anaheim Metro office represented the buyer, Cedar Grove Investments. The seller, Herd Partnership, was represented by John Gates of Central DeAnza, LLC. Cedargrove Business Park consists of four buildings and is located at 13311 to 13341 Garden Grove Blvd.
Inland Empire
•DAUM Handles $3 Million Corona Lease
DAUM Commercial Real Estate Services has assisted Husqvarna Construction Products, a manufacturer of equipment and diamond tools for the construction and stone industries, in signing a five-year lease on an 87,000 square foot industrial building in Corona for approximately $3 million. Chris Migliori and Paul Gingrich DAUM’s Anaheim office represented Husqvarna, which will use the facility at 265 Radio Rd. as its Southern California manufacturing and warehouse facility. Tim Hawke of Strata Realty represented the lessor, Rexmor, LLC.
Hilands. The Finisher for 50 Years!
Member Profile
Jim Hilands finishes what he starts. It’s a philosophy he learned from the late Jack Heger a half century ago, and Hilands cherishes it as he celebrates his 50th anniversary at The Heger Company of Los Angeles. |
Hilands is senior vice president for the only company he’s known since starting out in industrial real estate in 1958. He joined AIR in 1987. |
“I joined Jack and his wife just after they started the company. He told me to go to Vernon and knock on doors, so I did. He also told me to stay after things and finish what you start in terms of service. It became the only style I’ve known. As a result I’ve had many of the same clients for over 40 years. |
Hilands, however, has become a standout performer in the area’s industrial real estate in his own right. His focus has historically been in rehabbing what others felt should be torn down, |
“We opted to rehab buildings because they ultimately formed a good base for our property management services. Rehabs are my favorite activity. They allow finished structures to come on line at below market rents so they can be rented more readily. We seldom have vacancies for our clients. Vacancies are the most expensive thing in real estate,” Hilands said. Significantly, he has provided preliminary designs and function studies for the rehabilitation of over two million square feet of functionally obsolete industrial buildings. |
Hilands’ expertise has enabled him to represent numerous clients in appealing Los Angeles County Real Property Tax Assessments. He has also processed Industrial Land Subdivisions and other types of land divisions. |
Among his recent transactions is a lease with a garment firm in Vernon for 170,000 square feet of industrial space at Soto Industrial Center. |
| Hilands is a member of the National Association of Realtors, the Society of Industrial and Office Realtors, the Rotary Club of Vernon, the City Club of San Marino, and the Phi Delta Theta fraternity. |
| He is a graduate of the University of Oregon in Business Management and Economics. He participated on Oregon’s fine track team during Coach Bill Bowerman’s fabled tenure (Bowerman founded Nike with Phil Knight). |
| Hilands resides in San Marino with his wife, Lucy. He has two children, Kristin and Mark, two granddaughters, Tatum and Samantha, and a grandson, Matthew. In his leisure, Hilands has enjoyed coaching youth baseball and dabbling in Numismatics. |
MEMBER PROFILE CORRECTION
| Due to an inadvertent production error in the May 29 issue of AIRWaves, reference to a transaction completed by Tom Walsmith as part of his Member Profile was reported incorrectly. The text should have read: |
| True to his transition, one of Walsmith’s outstanding recent deals was the lease of a 50,000 square foot warehouse on National Blvd. in West Los Angeles for 30 years to Turning Point School, which is converting the property to a middle school. The transaction was valued at $17 million. |
A Quick
Bursts And Coming Events
Broker Networking Event -October 22, Orange County. The Pacific Club, Newport Beach; 5:30 p.m. FREE.
26th Annual AIR Golf Classic - September 9, City of Industry. Industry Hills Golf Club at Pacific Palms Resort. Entry Fees: Members $150; Non-Members $170.
In-House Training - The AIR offers
training for e-MULTIPLE, WinAIR Forms, and AIRMail.
If a group of brokers or staff from your office would
like to have the AIR bring training to you in-house,
contact Martin Vartanian at (213) 687-8777. A number
of firms have already taken advantage of this great
service and been very pleased with the results.
Member Deals and Profiles - As soon as you
close a substantial deal, make sure you give Art Ansoorian
a call. Your deal will be featured in the next issue
of AIRWaves. Also be sure to get your personal bio over
to Art and be a featured member in the newsletter; it's
a great way for everyone to meet fellow members! Call
Art at (805) 653-1648, or email him at artpr@earthlink.net.
We Need Your Photos and Bios –
AIR is in the process of building its database of member
photos and bios. If you would like your photo and bio
to appear on the AIR website at www.airea.com,
please send them via mail or e-mail to Martin,
or if you have questions, call him at (213) 687-8777.
Tech
Tip
WinAIR Forms 2 - Online Demo is available on the AIR Website.
AIR has provided an Online demo featuring some of the major functionality benefits of the WinAIR Forms 2 program. Please click here to view the online demo.
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