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Monday, May 23, 2022

Rare Industrial in Conejo Valley

At a time when the industrial market has seen high demand but scarce inventory, Sares Regis Group is about to bring the Conejo Spectrum Gateway project online in Thousand Oaks. 

The project features two new warehouses totaling 172, 516 square feet.

“They are the only two buildings being completed really in all of North L.A. now,” said Steve Fedde, senior vice president of Sares Regis Group.

The adjacent warehouses are nearing completion at the intersection of Rancho Conejo Boulevard and Lawrence Drive. 

The larger building is an 88,946-square-foot facility at 1515 Rancho Conejo Blvd. while the other structure spans 83,570 square feet at 1489 Lawrence Drive.

The first building will see completion this month. The 1515 Rancho Conejo warehouse includes a 5,554-square-foot office space, 17 dock-high doors, two ground-level doors, 30-foot clear heights, 201 parking spaces, 28 electric vehicle stalls and 17 bicycle parking slots.

The second building will be completed in January. The 1489 Lawrence Drive facility will offer a 5,586-square-foot office area, 30-foot clear heights, 15 dock-high doors, two ground-level doors, 172 parking spaces, 11 electric vehicle stalls and 14 bicycle parking slots.

Neither building is leased yet. “We’ve been actively negotiating with a couple people, mostly e-commerce-related,” Fedde said.

The new warehouse product comes at a time when demand has dramatically outweighed supply. According to Colliers International data for the third quarter, the industrial submarket has only 0.7 percent vacancy in the greater San Fernando Valley and 1.6 percent in Conejo Valley, where there is just under 8 million square feet of inventory.

Sares Regis certainly has experience in this type of industrial product, even in Thousand Oaks. A few years ago, the Newport Beach-based real estate firm developed Conejo Spectrum Business Park. 

All nine buildings, which range from 37,000 to 116,000 square feet and cover a total of 531,378 square feet, have been leased. Conejo Spectrum Business Park counts Atara Biotherapeutics and Amazon.com Inc. as tenants.

Rexford Industrial Realty Inc. acquired Conejo Spectrum Business Park in 2019 for $106 million.

Versatile space

Fedde explained that the current buildings Sares Regis is developing will be just as versatile for prospective tenants.

“The buildings are set up for (everything from) biotech to Amazon,” Fedde said. “The smaller companies that aren’t Amazon are the kinds of tenants that we are working with. We have all of the elements that allows for storage.”

He added that there is flexibility on the type of tenants and the number of tenants who might lease out part or all of the site.

“The truck courts face each other,” Fedde said. “A single user could take the entire 172,000 square feet and they work as one or they can work as two different properties. You never quite know what the companies’ needs will be.”

CBRE Group’s Bennett Robinson, the leasing agent on the property, believes it would be well-suited for a tenant looking to be located near biotech leaders such as Amgen Inc. and MannKind Corp.

“It could be a life science company or technology,” Robinson said. “It could be assembly distribution. We were talking to a life science (interested party)  who would change the loading to additional parking.”

At an October opening held on-site at Conejo Spectrum Gateway, 30 to 40 brokers attended. Some represented tenants coming from the Valley “because there’s so little industrial product,” Fedde said.

Fedde and Robinson said that the sites could even accommodate film production, a huge growth area currently taking place in the industrial real estate submarket.

“They weren’t designed with soundstages in mind but storage of props and materials,” Fedde said. “They could absolutely satisfy that requirement.”

Construction bottleneck

Sares Regis began developing the pair of buildings prior to the pandemic. The developer didn’t need any hearings or special permissions because the land had the proper zoning for industrial.

“Because of COVID, we saw the logistics problems starting to pop up. Before we had a construction loan on the property, we bought all the steel for the structure because we didn’t want to have the same problems,” he said. “We saw the bottleneck starting to form.”

There have been minor supply chain issues causing delay, including cap sheets for the roof, door frames and staffing challenges on the electrical installation side. 

“We had a little bit of that (logistical challenges) but nothing material,” Fedde said. “We’re probably 30 days behind.”

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