Cushman Arranges 1.1 MSF Industrial Lease Re-Up in California
- Jun 15, 2012
Conopco Inc., a subsidiary of Unilever, has decided to stay put in its 1.1 million-square-foot home at 305 W. Resource Dr. in Rialto, Calif. The company, manufacturer and distributer of Unilever’s personal and home care products in the U.S., renewed its lease of the entire building with property owner Prologis, and will continue to occupy the facility in the thriving Inland Empire industrial market for another three years.
Renewing at the Class A distribution center after nine years of occupancy was not a foregone conclusion when Conopco tapped commercial real estate services firm Cushman & Wakefield Inc. to spearhead the decision-making process. “We looked around quite a bit,” Chuck Belden, executive director with Cushman, told Commercial Property Executive. “We actually went out and considered new construction and some buildings that were either available immediately or had leases coming due, so it was a very competitive market for us to take a look at. At the end of the day, what we looked at was the location of the building, the quality of the building and as importantly, the quality of institutional ownership that the current situation afforded us. Putting all those things in the basket, Conopco decided to remain.”
Timing is everything and Conopco picked a good time to secure as favorable a deal as possible in a market where the price tag on industrial real estate is on the upswing.
The Inland Empire, home to over 400,000 square feet of Southern California’s approximately 2 billion square feet of industrial space, has long been one of the leading industrial markets in the country and as demand climbs, so do the rental rates. Additionally, as Belden pointed out, developers answering the increasingly loud cry for premier accommodations are being hit with higher land costs and California’s steepening state fees on new construction–and they are responding accordingly. Year-over-year asking rents jumped 8.6 percent, as per a first quarter report by Cushman.
“So the expectation by owners of new product has increased and rents will continue to rise at a very rapid rate,” he added. “While the Conopco transaction it is very much a market transaction with regard to the lease rate, the tenant got a great deal, a great deal that is going to be made even better by time.”
As for the Inland Empire industrial market, the future looks quite bright. “We’ve been showing about 26 million square feet of occupier demand in the marketplace, which is a very stable demand number from a square footage perspective,” Belden noted. The year-over-year vacancy rate dropped 2.5 percentage points to an enviable 7.7 percent, according to the Cushman report. “I think that, looking at my crystal ball for the next 18 months, the Inland Empire is going to remain one of the top, if not the top, market in the U.S. From a landlord perspective it’s going to remain very strong.”