Goal-oriented Schwartz is a former NCAA Division 1 quarterback at Cal and Academic All-American
CHINO, CA – July 3, 2017 – Colliers International Executive Vice President Richard Schwartz, a veteran investment broker who has made a mark for himself in Southern California’s hyper-competitive industrial market, has watched the sprawling Inland Empire in Southern California grow from a minor, tertiary market dotted with dairy farms and chicken ranches to its present state as the nation’s largest and arguably most important industrial market.
Based on research numbers generated by Colliers and validated by such government agencies as the U.S. Census Bureau and the U.S. Chamber of Commerce, as well as academic institutions like USC and UCLA, the 27,000-square-mile region, which includes all of San Bernardino and Riverside counties and a slice of Los Angeles County, leads the nation in every category of industrial real estate.
Those include the number of existing and planned buildings, largest buildings under single roofs, total existing square footage, lowest overall vacancy rates, highest net absorption, and total number of structures dedicated to supply-chain and logistics operations, warehousing, manufacturing, and distribution. It has no equal in the United States.
That’s why a trio of recent negotiations led by Schwartz on three separate properties serve as classic examples of why and how that market has entered record territory during the past two years in every statistical category and why lease and sales rates are rising as developers race to fill a pipeline that was nearly empty during The Great Recession.
Gun shy developers who cautiously re-entered the market beginning in 2008 with build-to-suit structures, no speculative buildings, did not foresee the strength of the economy, especially the tidal wave of online buying and the competition it would spur among logistics firms to meet ever more immediate delivery schedules.
It’s also why Schwartz, who is just 34 years old, in the first half of 2017, is again heading toward the rarefied air of the top sales rankings for Colliers’ industrial brokers in the firm’s Greater Los Angeles Region, which is the brokerage firm’s largest in terms of offices, brokers, geography and population. He current ranks No. 5 in the region and at 34 that is a major accomplishment.
Both transactions—a $13.1 million sale and a $4 million lease—were located in the west San Bernardino County municipality of Chino, one of the most favored of all Inland Empire locations due to its close proximity to the largest population center in the U.S., where developers cannot find enough land to build on to meet demand by online retailers like Amazon, which already occupies a pair of mammoth buildings, one that totals 1 million square feet and another that’s 850,000 square feet in Moreno Valley.
Walmart, and every other national-chain retailer, has watched its online orders skyrocket as it downsizes, or eliminates, its bricks-and-mortar retail operations. As a result, logistics firms, competing to make “next-day”, and even “same-day” delivery a standard practice, are fueling the market at a record clip.
“What we are seeing and what our brokers, like Richard, are part of, is a vast market shift, a sea change of the industrial market landscape, not just here but throughout the region, as developers struggle to find developable land to meet record demand, especially among logistics and supply-chain firms,” said Colliers’ Executive Managing Director Hans Mumper, who oversees the Greater Los Angeles Region. “As fast as new buildings go up, they are sold or leased, and the dearth of available land in places like Chino mean prices for older properties have risen to record highs, as developers buy aging properties only to tear them down in order to build modern facilities required by logistics firms. That, in turn, adds to the sale or lease costs.”
Predictably, Schwartz’s first of two recent transactions in Chino, which perfectly illustrate the market forces that make up today’s industrial real estate market, negotiated a transaction with EMD Logistics, a regional firm that warehouses and delivers all types of electronic products. EMD has a diverse client base and decided to locate its warehouse in Chino because of its close proximity to the vast population base and economic locomotive composed of the contiguous counties of Los Angeles, Orange, San Bernardino and Riverside. Schwartz represented the seller, Monte Vista Partners, a private investment group based in Manhattan Beach.
In a second recent transaction, Schwartz and his associate, Joey Reaume, who’s also based in Colliers’ Inland Empire office, led negotiations on a five-year lease of a new, state-of-the-art manufacturing facility in Chino. Located at 15780 El Prado, the free-standing 103,014-square-foot facility will be occupied by JL Furnishings, a long-established provider of furnishings to the hospitality and institutional markets. Schwartz and Reaume represented both parties to the $4 million transaction.
Unlike logistics firms that require new, state-of-the-art construction to meet specific floor plans that shave minutes or hours off delivery schedules and feature flexible power plants and drive-thru egress and exit for the rapid, around-the-clock and often robotized packing of delivery vans, this was a classic industrial transaction that has little in common with the logistics facilities demarking practically every other building surrounding it.
“This transaction is emblematic of the types of firms that have traditionally made up the majority of companies occupying space in the Inland Empire,” said Schwartz. “Manufacturing firms like this one, whether they are building custom furniture for the Ritz Carlton or a new medical center, continue to favor this wide-open market that has direct access to the ports, as well as adjacent access to an inter-connected network of air, rail and surface transit options.
“What we are seeing in places like Chino, which is just over the line separating Los Angeles and San Bernardino counties, and considered part of the Inland Empire, are a combination of traditional manufacturing and warehousing buildings and, now, hybrid industrial buildings constructed for one purpose only -- the one- or two-day storage of consumer products before they are packed and shipped online customers,” Schwartz said. “These are not factory warehouses in any sense of the term, but waystations, where companies like Amazon, Walmart, Costco, Target and so many others can meet the demands of consumers who’ve become conditioned to lives of immediate gratification, whether it’s fast food or a package from Macy’s.”
Schwartz’s claim has been validated by Colliers’ own research, which showed in the first quarter of 2017, there was no letup in demand for buildings ranging from 300,000 to 1 million square feet. In fact, vacancy rates in the west San Bernardino County submarket that includes Chino, reached record low levels in the first quarter of this year where they have remained in the sub-1% range, while demand rose at an equally record rate.
“I can remember when my mother would order something out of a magazine when I was a kid, and she’d tell me it was going to take 6-8 weeks for delivery, which seemed like an eternity and it was,” said Schwartz. “Now, consumers would laugh at that wondering how long it’s going to take -- in hours, not weeks -- before their groceries, the latest computers, or trendiest pair of jeans, and just about anything else you can imagine, are delivered to their door.”
Schwartz, a well-read and former highly recruited NCAA (National Collegiate Athletic Association) Division 1 quarterback out of Edison High School in Huntington Beach, and an academic all-American at the University of California at Berkeley (Cal), said the industrial real estate landscape is like the title of the late writer-philosopher Aldous Huxley’s book, ‘Brave New World.’
“That’s exactly what we are in – a new world -- and to put food on our families’ tables, as brokers, we need to embrace it,” he added. “And, to remind me every day of the mission I am on, I keep close a U.S. Marine Corps motto that applies here:
‘Marines are built to improvise, adapt and overcome any and all obstacles they may face on the battle field and to always move forward, never back. That’s what we, in this new brave new world, must to do survive an ever-changing landscape.”
About Colliers International Group
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