Stirling Capital Investments’ Parno: LEED in Demand
- Jul 16, 2008
Stirling Capital Investments recently announced it is pursuing LEED certification on its new industrial buildings at its Southern California Logistics Center, part of the Global Access industrial development in Victorville, Calif., in San Bernadino County. Brian Parno (pictured), vice president of Stirling, talks about the company’s decision to go green, and other trends in the industrial market. CPN: Please talk about what drove Stirling’s decision to go green at the Southern California Logistics Centre? Parno: It really encompasses a number of reasons. The compelling reason is that tenants and users are demanding it, and major companies want it in their portfolio. So, if you are providing a product, you have to satisfy that demand. I think if you’re not building environmentally friendly buildings, five to ten years down the road, that building is going to be obsolete. Also, when you are spending $20 million to $30 million to build an industrial building, to spend perhaps $100,000 more to get LEED certification, that’s not a lot. It’s really something that is going to be a mandate in Class A buildings. CPN: What are tenants demanding today in their warehouse space? Parno: They really want flexibility, to be able to adjust to business cycles. So, they may need 500,000 square feet of space now, but that need may shrink to 300,000 square feet, or it may grow to 700,000 square feet. At Global Access in Victorville, we believe we can provide that, since we have thousands of acres. Tenants are also looking for buildings that offer a great deal of natural light, so energy costs can be reduced. Also, they are looking for an optimal number of docking doors. We provide one docking door for every 5,000 square feet of space, or less. Tenants also want to have room to store containers and trailers. They are looking for very efficient space. CPN: How do you see the Inland Empire’s industrial market performing this year? Parno: It’s definitely slower. Deal flow has slowed down, but Southern California hasn’t been as hard hit as New Jersey or Atlanta. We haven’t seen rental rates fall, but we have seen some months of free rent being offered. I think we are going to see both lower rents and free rent. That’s for all of Southern California, the Inland Empire is a major part of that. Long term, though, Southern California is going to have job and population growth. People still want to move here. We think the slowdown should end in the third quarter of 2009. From an industrial real estate viewpoint, that’s a short-term downturn. CPN: Are you seeing more activity from exporters, and have you made any accommodations for them?Parno: There’s been a lot of talk about that. The people at the ports have been saying that, but we haven’t seen it. An exporter needs the same things [as an importer] in their space, such as natural light and good cube space.