Speculative development is intensifying in the Kern County industrial real estate industry, most recently evident in a large warehouse currently under construction along Interstate 5 at the Tejon Ranch Commerce Center.
As the latest joint venture between Lebec-based Tejon Ranch Co. and Southern California development titan Majestic Realty Co., the 629,274 square foot distribution center-style project spans nearly 39 acres near the foot of The Grapevine. With 136 platform-height doors, it should be ready to accommodate one or more tenants within a year or so.
The project is the latest in a growing trend of speculative development that is gaining momentum at the local level. Most of the buildings under construction are large companies measuring hundreds of thousands of square feet, but there are also a few as small as 10,000 square feet – and that kind of construction activity hasn’t been seen. in Kern for years.
The developments are remarkable not because they stand out in an increasingly large warehouse landscape, in an area that clearly benefits from a lack of distribution space available in Southern California. What is more striking is the pace at which such investments occur and the confidence they reflect on the part of developers.
Bakersfield industrial real estate broker Wayne Kress said investors have responded with greater urgency over the past three years to the county’s central location offering the potential to reach 40 million consumers in a single day of truck. Kern warehouse tenants can easily reach ports in southern and northern California, and they don’t have to deal with the crowded industrial property market in the traditional logistics hub of the Inland Empire.
Kress, Director at Cushman & Wakefield | Pacific Commercial Realty Advisors in Bakersfield, noted two “spec” developments of 1 million square feet or more under development at Shafter, one at Wonderful Industrial Park and one adjacent to it. Others are also in the works locally, but Kress said he was not free to discuss them.
Local industrial broker Boyd Binninger, senior vice president of industrial services at ASU Commercial, said demand has been increasing lately for small buildings as well.
He pointed to two specification buildings that began construction about a month ago at the Silver Wings Mall near Meadows Field Airport. One is about 15,000 square feet, he said, and the other is about 10,000 square feet. By his calculations, it has been about seven years or more since a speculative development of this magnitude took place in the Bakersfield area.
“We hadn’t seen a lot of specific builds except for the big boys,” he said, adding that the developer hopes to undertake further specification development once current projects are leased.
Tenants expected to fill those spaces will likely be in manufacturing or small-scale distribution operations, he said. What has made such projects difficult, aside from the risk associated with developing specifications, has recently been the high material costs. Despite this, he predicted that more industrial development will take place near the airport as these projects gain momentum in the years to come.
Tejon Ranch Co.’s executive vice president of real estate, Joseph N. Rentfro, said in a press release that he is very happy to be working again with Majestic, which is said to be the states largest private industrial developer. -United.
The two companies first partnered in 2016 on a 651,909 square foot fully leased property that they owned and managed together. Since then, they have custom developed a 480,480 square foot building and another measuring 579,040 square feet, both of which would have encountered heavy pre-rental activity and remain fully leased.
The two companies’ latest joint venture is their largest specification project to date.
“Given the historic success we have had without prior speculative developments, the lack of vacant space within the Tejon Ranch Commerce Center, and the level of demand we are meeting for light manufacturing, warehouses and distribution spaces in California South and elsewhere, “Rentfro said,” we wanted to move as quickly as possible to bring another new building online. “
The shopping center near the merger of Interstate 5 and Highway 99 is a planned commercial and industrial development covering 1,450 acres.
For its part, Majestic sees the latest partnership with Tejon Ranch as attractive to tenants looking for a low-cost option compared to the Los Angeles Basin, where it said the costs of living, hand -work and rentals are relatively high. He said the building will have 136 platform-height doors and a headroom of 36 feet.
“From our initial partnership agreement in 2016, we have remained incredibly optimistic about Tejon Ranch and are delighted to inaugurate our third new building with a partner who sees and is committed to implementing a development vision. through the same long term, ”said Tom Simmons, vice president of Majestic Realty Co. in his press release.