Seventh Street Sells Seven Buildings

Real Estate News Television

December 26, 2007

Industrial buildings in the Inland Empire must be on a lot of Christmas wish lists, as reported end-of-year sales have been higher than some expected. In just the past 30 days, Long Beach-based Seventh Street Development has sold seven small buildings totaling 120k sf, with a combined value of approximately $16.5 mil, at its projects in San Bernardino, Pomona and Irwindale. They also have two more buildings currently in escrow.

While the havoc in the capital markets appears to be spreading to commercial from the residential sector, the sales at Seventh Street’s three properties illustrate not only the continuing demand for small to midsize industrial buildings, but the availability of financing for such product, according to company Principal Craig Furniss.

“There are certainly some concerns about where the economy is headed, but the demand for industrial space is still strong, although it can best be characterized as going from white hot, to just plain hot,” says Furniss. “Small, fast-growing companies are continuing to drive the Southern California economy, which helps to explain why well-located industrial submarkets offering this type of product continue to enjoy extremely low vacancies,” says Furniss.

“Our buyers have been a mix of users and investors. For users, the availability of SBA 504 financing means buyers of smaller buildings are not hindered by lending community’s more conservative underwriting, which has been brought on by the capital crunch. We are also seeing savvy investors with existing banking relationships or cash, who are attracted by industrial’s low vacancies and rising leases rates, especially in submarkets where there is no new supply on the horizon. The long-term interest rate environment is very attractive for these investors right now and they like the low intensity management effort required by industrial,” says Furniss.

In two separate transactions, Seventh Street sold buildings of 16.2k sf, 12.8k sf and 9.6k sf to two private investors at its newly opened Waterman Business Center in San Bernardino. The 191k sf industrial park was completed this month and has remaining units sized from 2k sf to 13.7k sf.

“A third of the buildings at Waterman were sold or in escrow prior to project completion and we have deals in the works that include sales, leasing and purchase options,” adds Herrick Johnson of Lee & Associates. ”

Seventh Street was represented by Johnson and Alexey Zabolotskikh of Lee & Associates and John Bosko of NAI Capital. The buyers were repped by Frank Artura of TVM Commercial Realty.

RJ Sports, a manufacturer and distributor of golf and sports bags, will relocate its headquarters and distribution facility from Chino to Seventh Street’s just completed Mission 71-Business Park in Pomona, after acquiring a 16.7k sf warehouse building on nearly an acre of land.

The first phase of the master-planned Mission-71 Business Park which fronts the Chino Valley Fwy (71) near the I-10 and 57 freeways, was also completed this month by Seventh Street and includes 11 buildings ranging in size from 16.5k sf to 60.8k sf.

Seventh Street was represented by the CB Richard Ellis team of Lyn Knox, Barbara Emmons, John Privett and Lynn Eisenhower. RJ Sports was repped by Brad Yates of Grubb & Ellis.

At its Speedway Business Park in Irwindale, CD and DVD manufacturer I-Pak DVD, a subsidiary of Arion International, acquired three freestanding buildings totaling 64.6k sf.

I-Pak had been leasing the space since the park opened in September 2006 and exercised a purchase option in its lease on the 27.4k sf, 20.2k sf and 17k sf buildings. Seventh Street was represented by Mitch Ashwill of Ashwill Associates while Jonathan Fan of Remax 2000 Realty handled matters for I-Pak.

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Posted December 26, 2007 by jcowan in News