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CapRock Partners Breaks Ground on 2 Million SF Industrial Masterplan in Inland Empire West

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Leading developer bringing new LEED certified industrial complex designed to support economic growth and positioning to key Southern California logistics location

CapRock Partners is underway on the construction of Phase I of Palomino Ranch, a large-scale, state-of-the-art master-planned industrial warehouse development in Norco, Calif. totaling approximately 2 million square feet across 24 buildings on approximately 112 acres. The initial phase of the Class A project includes eight stand-alone industrial buildings totaling approximately 700,000 square feet on 44 acres.

At total project completion, Palomino Ranch will be the largest industrial real estate development in Norco’s history. The project will be LEED certified and will feature design elements such as wrap-around wooden porches and lantern streetlighting that are reflective of Norco’s equestrian background and nickname, “Horsetown U.S.A.”

“CapRock Partners creates world-class logistics facilities, and our team has made a commitment that all new ground-up development projects we build in California will meet or exceed LEED certification standards going forward, and we are excited to initiate this commitment with the commencement of Palomino Ranch,” said Patrick Daniels, co-founder and chief executive officer at CapRock Partners. “The landmark development is designed to not only satisfy the needs of a wide range of tenants and industries requiring accessible high-quality warehouse space, but it will also reflect Norco’s rich local history and character through its equestrian-themed aesthetic.”

Phase 1 buildings will range from approximately 55,000 square feet to 156,000 square feet, with clear heights from 30 feet to 36 feet. Buildings greater than 20,000 square feet will offer up to 6,000 square feet of mezzanine office space. Other features include secured and unsecured concrete truck courts, 125-foot truck court depth, ESFR sprinklers and up to 4,000 amps of power.

“The Inland Empire industrial real estate market is near full-occupancy as retailers and suppliers continue to shift their strategies in today’s post-pandemic economy,” added Daniels. “Norco is well-positioned geographically for logistics and transportation in the Inland Empire West submarket, within minutes to Orange County, and Palomino’s Phase I will be coming online at an ideal time to provide needed warehouse space.”

Located at 1811 Mountain Avenue, Palomino Ranch is west of I-15, accessible via the Second Street exit. The property is approximately two miles north of the 91 Freeway/I-15 interchange and is easily accessible to additional regional transportation routes such as the 71 Freeway, 60 Freeway and I-10, providing quick access to nearly any location in the Los Angeles Basin.

The project is approximately one hour driving distance to Los Angeles International Airport and the ports of Long Beach and Los Angeles. The location is also within one-day truck service to key logistics nodes in Northern California’s Bay Area, Salt Lake City, Las Vegas and Phoenix. Truckers can reach further Western U.S. linkages such as Portland, Ore., Boise, Idaho, Denver and Austin, Texas within three days. Palomino Ranch’s corporate neighbors include FedEx, UP and Amazon, among others.

“Palomino Ranch is setting a new high standard for Southern California industrial real estate development, and our team is grateful for the City of Norco’s partnership in developing a facility that will elevate the city’s economic position and overall efficiency while supporting employment growth in the area,” said Jon Pharris, co-founder and president at CapRock Partners. “CapRock is investing Norco, a critical point in the supply chain, and as more national and multinational corporations establish their businesses here, CapRock is pleased to offer a modern LEED certified warehouse complex that allows them to enhance their operations.”

Jeff Ruscigno, Brian Pharris, Paul Earnhart, Ryan Earnhart, Austin Hill and Jeff Smith of Lee & Associates Commercial Real Estate Services have been retained to market the lease availabilities at the Palomino Ranch. Phase II-A, consisting of nearly 750,000 square feet is planned to begin in 2023 and Phase II-B will be approximately 533,000 square feet.

Palomino Ranch is CapRock ‘s third ground-up development project in Norco and is one of two projects the firm is currently developing within the city. CapRock is in under construction on Saddle Ranch South, a three-building, 374,000-square-foot industrial complex across 23.8 acres, located less than three blocks north of Palomino Ranch at 3000 – 3100 Horseless Carriage Drive.

In 2021, CapRock completed and sold Saddle Ranch Business Park, a 422,000-square-foot four-building Class A industrial warehouse complex in Norco. The asset was 100% leased to vitamin and nutrition company, Goli Nutrition, before the sale.

CapRock’s portfolio and proven track record include nearly 30 million square feet of industrial real estate assets in Central and Southern California, Las Vegas, Phoenix and Texas. The firm will be under construction on approximately 10 million square feet of industrial space in the next twelve months, inclusive of Palomino Ranch and Saddle Ranch South, and continues to actively pursue new investment opportunities for ground-up development and value-add repositioning in key logistics locations throughout the Southwest U.S. and Texas.

The Inland Empire Business Journal (IEBJ) is the official business news publication of Southern California’s Inland Empire region - covering San Bernardino & Riverside Counties.

Commercial Real Estate Transactions

Hanley Investment Group Arranges Sale of New Chipotle Drive-Thru-Anchored Pad in Riverside, Calif., for $5.84 Million

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Strategic Growth: Highlighting the Appeal of Prime Retail Investments in Riverside’s Expanding Market

Hanley Investment Group Real Estate Advisors, a nationally recognized real estate brokerage and advisory firm specializing in retail property sales, announced today that the firm arranged the sale of a recently constructed, three-tenant net-leased investment anchored by a Chipotle Mexican Grill with a drive-thru “Chipotlane” in Riverside, California. The property is situated directly off the Interstate 215 on/off ramps (154,680 cars per day). Adjacent to the Interstate 215 is March Air Reserve Base, a 2,075-acre facility with over 8,000 personnel assigned to it and a 1,750-civilian population.

Hanley Investment Group’s Executive Vice President Eric Wohl and Associate CJ Kiehler represented the seller and developer, Greens Development Inc., of Irvine, California. The buyer, a Los Angeles-based 1031 exchange investor, was represented by Justin Altemus of The Altemus Company in Los Angeles. The sale price was $5.84 million.

“As part of this off-market transaction, we successfully sourced a 1031 exchange buyer who needed to close quickly and ended up closing escrow while BHC Chicken, one of the pad building’s tenants, was still completing their buildout,” noted Wohl.

The 6,300-square-foot Chipotle-anchored pad building, completed in 2020, sits on a 0.90-acre parcel at 22430 Van Buren Boulevard in Riverside. The three-tenant building also includes MA Dental and BHC Chicken, which is expected to open in October.

The pad building is a part of Veteran’s Plaza, a community shopping center and hotel complex developed by Greens Development Inc. It includes In-N-Out, a four-tenant Starbucks-anchored multi-tenant retail pad building, Hampton Inn + Home2 Suites, Circle K convenience store with a 76 gas station and others, promoting crossover shopping.

The Chipotle-anchored pad building is situated between Hampton Inn + Home2 Suites and In-N-Out near the signalized intersection of Van Buren and Opportunity Road (over 40,000 cars per day). Traffic on Van Buren Boulevard is projected to increase to 72,000 cars per day. The Interstate 215 and Van Buren interchange was completely remodeled at a cost exceeding $32 million. The site also benefits from excellent freeway signage along Interstate 215.

Veteran’s Plaza is located within Meridian Business Park, a 1,290-acre master-planned commerce and distribution center planned to have 16 million square feet of building space, creating up to 18,000 jobs. Current tenants include Amazon, UPS, Sysco, Kaiser Permanente, Kia Automotive, McLane Foods and others.

There are over 232,000 residents with an average household income in excess of $91,000 within a five-mile radius of the property. The daytime population exceeds 189,000, providing an additional consumer base. Lake Perris, an 8,800-acre state recreation area, is just two exits south off of Interstate 215 and is known for its boating, hiking, fishing, swimming, picnicking, rock climbing, horseback riding and camping.

In May 2023, Hanley Investment Group arranged the sale of the Starbucks Drive-Thru-anchored property at Veterans Plaza for the same seller.

“With the current volatile market and economic conditions, investors are seeking ‘safe-haven’ investments in robust markets to protect and grow their equity,” noted Wohl. “This Chipotle-anchored pad, located adjacent to a Starbucks-anchored multi-tenant retail pad and In-N-Out, exemplifies the type of product attracting many investors in the present market landscape.”

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Commercial Real Estate Transactions

SRS Real Estate Partners Announces Record-Breaking $6.15 Million Ground Lease Sale of a New Construction Chick-fil-A Property in Murrieta, California

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Commercial Real Estate Transaction Alert

SRS Real Estate Partners Capital Markets has completed the $6.15 million ground lease (land ownership) sale of a 5,000-square-foot Chick-fil-A property located at 27960 Clinton Keith Road in Murrieta, Calif. The new construction property recently opened for business in March this year and has a 15-year ground lease in place.

The transaction marks two sales records. First, at 3.9%, it is the lowest cap rate for a Chick-fil-A property sold this year nationwide. Second, the sale is the lowest cap rate this year for all Quick Service Restaurant (QSR) sales in Southern California with annual rent above $200,000.

SRS Capital Markets First Vice President Winston Guest and Managing Principals Matthew Mousavi and Patrick Luther represented the seller and developer of the property, Newport Beach, CA-based Sage Investco, as well as the all-cash buyer, a private family trust from California.

The Chick-fil-A property sale is part of a break-up strategy valued in excess of $20 million for the class A pads at The Vineyard Shopping Center, a 26.3-acre retail project anchored by Costco Wholesale and ALDI near Interstate 15. Other parcels being sold by SRS include Chase Bank, Chipotle and Verizon Wireless, Ono Hawaiian BBQ, and Ramona Tires.

“Despite current market conditions, we are seeing specific segments of the buyer pool come forward seeking high-quality real estate and certain credits, as was the case here with this Chick-fil-A sale that was acquired by a repeat non-1031 client for a long-term hold,” said Mousavi. “Our SRS team is pleased to complete this record-breaking sale for both parties and we look forward to the completion and sale of the remaining parcels.”

“High profile retail developments like this in Southern California can take years to get to this point and are scarcer as markets saturate and become further developed,” added Guest. “The remaining parcels for sale adjacent to this Chick-fil-A represent some of the best real estate available, and we expect the demand for those to increase as a result of this record-breaking sale.”

Situated on 2.09 acres, the property is strategically positioned within an expanding retail corridor with numerous plans for additional development. Nearby development projects include a 522 home single-family residential project in Murrieta Hills; a 210-unit apartment complex near Interstate 15; and a commercial and retail center, among others.

According to Technomic Ignite, since 2018 Chick-fil-A has doubled its total sales volume. Last year the chain generated $21.58 billion in sales which is a 14.7% increase over the previous year’s $18.81 billion and over 43% over 2021’s $15 billion. This brand has also continued to gain market share over its biggest competitors in the Quick Service Restaurant (QSR) chicken sandwich category – Popeyes and KFC. Further, Chick-fil-A released its latest Franchisee Disclosure last month which showed that the average unit volume (AUV) for non-mall locations in 2023 reached a record $9.3 million, an 8.1% increase over the previous record of $8.67 million in 2022.

Over the past 12 months, SRS has sold Chick-fil-A assets in Arizona, California, Texas, Michigan, Florida, Kansas, New Jersey and Georgia, and has locations on the market in California, Florida, Texas, Maryland, Arkansas, on the market.

Year to date, SRS Capital Markets has completed approximately $840 million in deal volume comprised of over 200 transactions in 34 states. SRS currently has in excess of 698 properties actively on the market with a market value surpassing $3.7 billion.

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Commercial Real Estate Transactions

DAUM Commercial Completes $16M Sale of 49,561 Square Foot Industrial Property in Corona

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Deal follows value-add strategy with brokerage assisting ​ with upgrades, repositioning in strong Inland Empire market

DAUM Commercial Real Estate Services, a leading provider of commercial real estate services including brokerage, tenant representation, consulting, leasing, sales, and property management, has completed the sale of a 49,561 square foot industrial building in Corona, Calif. The total consideration for sale of the building was $15.99 million.

The property at 1141 California Ave. in Corona, Riverside County, was built in 1988. In 2023, the asset was purchased by PPVS Properties LLC. With the assistance of their Daum Commercial team, the company worked to renovate the property and reposition the site for possible industrial lease or sale.

The free-standing industrial building of over 49,000 square feet sits on a more than 2.5-acre site with ample space for employees, customers, and commercial truck parking. The warehouse building consists of cross-dock loading with four grade level doors and six dock high doors. The property has a fenced-in yard area, an interior warehouse clearance of 24 feet, and a 2,169 square foot office space. The warehouse, office, yard, and loading areas were all fully renovated to a turnkey, move-in position.

With close access to the I-15 Freeway, Ontario International Airport, and the Port of Long Beach, Riverside County is the 10th largest county in the U.S. with a gross domestic product of $115.4 billion as of 2021. These strategic advantages have bolstered the region’s industrial real estate market amid the recent uncertainty in the national economy.

According to DAUM’s Q1 2024 Market Report, Southern California’s Eastern Inland Empire is currently experiencing direct vacancy rates of 5.2% and an overall vacancy of 7.6% driven primarily by an increase in available sublet space. New deliveries of industrial space accounted for 1.6 million square feet with another 5.5 million under construction. Asking rents fell in Q1 to $1.21 per square foot. High interest rates have tempered overall sales with volume in Q1 down 27.9% compared to Q4 2023 with a median per square foot price of $235.89.

Commercial Edge, a real estate data provider, noted that in-place rents increased in February by 12.7% year-over-year across the entire Inland Empire leading the entire country. Between 2021 and Q1 2024 rents in this market have grown by over 60%.

The DAUM Commercial team of Johnson, Joseph Harmon, SIOR; and Noah Samarin, EVP and Principal, represented the seller. Clyde Stauff, SIOR, Jace Gan, and Jackson Marlow of Colliers International’s Orange County represented the buyer, who will use the property to expand their existing flooring business.

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