Carturner, which makes devices used by dealers and people with difficult driveways, was given the boot from  Vista.
  • Carturner, which makes devices used by dealers and people with difficult driveways, was given the boot from Vista.
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It appears that San Diegans go to craft brewers located in industrial parks, put on weight, then go to to a fitness centers in industrial parks to shed that excess blubber. These are two reasons that San Diego has the lowest industrial vacancy rate in recorded history — 4.2 percent, according to Colliers International, which keeps tabs on real estate statistics.

Alan Nevin on Xpera site: “It’s difficult to find industrial space, even down at the border."

Alan Nevin on Xpera site: “It’s difficult to find industrial space, even down at the border."

“Plain old industrial buildings are fading away — being converted to other kinds of uses [including] craft brewing firms by the hundreds,” says Alan Nevin, research director at Xpera Group. “This is driving down vacancy rates and driving up lease rates. Old tacky industrial space that was 75 cents a square foot is now $2 a square foot,” often after rehabilitation. Brewers locate in industrial parks because parking clears out at 5 p.m when customers arrive to imbibe.

Brewers are filling industrial parks, and so are “gyms, personal training centers, fitness facilities,” says Ken Robak, executive vice president of Pacific Coast Commercial. “Not a significant supply has been created and demand is up.” In the last two years, lease rates have gone up 20 percent in the squeeze, he says.

Leases have also lengthened. Nick Mane of Pacific Coast Commercial says, “Most owners [of the properties] want a three- to five-year lease term. In my five years, I have never done anything less than one year.”

This is a problem for Bill Schwenker, founder and owner of Carturner, which makes devices that turn autos around, used by dealers and people with difficult driveways. Carturner was given the boot from a Vista location because he wouldn’t sign a three-year lease. His company is growing rapidly, he says, “and I don’t want to be locked in for three years and find that the space has become too small." He would like a lease of six months, perhaps out to a year, for maximum flexibility. But real estate brokers want to provide him three-year leases. He believes that’s because they want to maximize their incomes on the deal.

But Schwenker won’t get a six-month lease, says Nevin. The supply-demand squeeze has meant that “It’s difficult to find industrial space, even down at the border." Landlords can call the tune. Schwenker doubts that the vacancy rate is as low as Colliers says it is, but Nevin says it is the real deal. The market is tight.

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Comments

Visduh March 23, 2018 @ 4:34 p.m.

I'm seeing new industrial buildings going up on the eastern side of Carlsbad now, but not much anywhere else. Many users of such space find it advantageous to go there because their noise and customer parking doesn't annoy the neighbors.

It will never happen of course, but much of the now-excess retail space could be reused for industrial/commercial use. Big box retailers are even closing up (think Sports Authority), and there is a limit to the number of users standing in line waiting for the space. Convert an entire mall into an industrial park? Sounds strange, I know, but we may see that happen to one or more of the weakest local malls.

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Don Bauder March 23, 2018 @ 9:17 p.m.

Visduh: It would certainly be wiser to convert a money-draining mall to an industrial park than just tearing it down. An enclosed mall would present perhaps insuperable problems, but an outdoor mall might not. Best, Don Bauder

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Ponzi March 23, 2018 @ 9:59 p.m.

If a business just wants a 6-month to 2-year lease, go month-to-month! The only smart thing for a business to do, if they are fully convicted to their chosen location, is to demand at least a 5-year lease with a 5-year option. If your business grows, you deal with it. But I guess time have changed since I leased commercial property. The best thing to do, if you can, is own the dirt.

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Don Bauder March 24, 2018 @ 6:51 a.m.

Ponzi: Yes, owning the dirt is probably the wisest course -- unless business moves away from your location for some reason. Best, Don Bauder

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AlexClarke March 24, 2018 @ 12:02 p.m.

Nothing goes up forever. Real estate and commercial rent/own is cyclical and one day the prices will drop and the landlords will forget how high the rents were and will whine about how much money they are losing.

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Don Bauder March 24, 2018 @ 12:42 p.m.

AlexClarke: Yes, after they have stashed their boom-related loot. Best, Don Bauder

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Darren March 28, 2018 @ 1:48 p.m.

Well, the good news is you can go from industrial spot to the next and drink beer, the bad news is most of the craft breweries are too interesting in hoppy IPA's--unhappy!

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Don Bauder March 29, 2018 @ 8:43 a.m.

Darren: I can't comment because I don't imbibe, but my wife and two sons like IPAs. Best, Don Bauder

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SportsFan0000 March 30, 2018 @ 11:07 a.m.

Yes, the dilemma between entrepreneurs and landlords...

One of the major factors in failing startup and growing businesses failing is onerous business leases and lease terms... Of course, Landlords and their Brokers want maximum leases and values..maximum guaranteed revenues for at least 3-5 years etc.

Small, mid-sized and growing businesses want maximum flexibility, shorter term leases month to month or 6 month or 1 year leases..to manage their growing businesses and to have the flexibility to rapidly expand or contract as their business either takes off or tanks..

Oftentimes a bad, expensive, long term lease can be the tipping point that pushes an otherwise promising young company into financial ruin and BK court... Some of the biggest liabilities in corporate BK actions are oftentimes these long term business leases with onerous terms...

And, some of these lease terms for retail malls are just beyond outrageous for start up and growing businesses.

Percentage leases and Triple Net leases can be business killers for start ups and small growing businesses......Large brand name companies including regional and national chains are better able to pay those kinds of leases..

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Don Bauder March 30, 2018 @ 12:52 p.m.

SportsFan0000: Schwenker is offering a similar argument. He wants a short lease -- maybe 6 months -- to give him maximum flexibility to expand. But Nevin says he won't get one that short in San Diego, but there is evidence that some of the larger young companies are getting short-term leases. Best, Don Bauder

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