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Local Land Use Decisions, NIMBYism Are Leading Causes Behind Southern California’s Lack of Housing Production Across Price Levels

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Region is Further Behind Other Locations in Developing Lower-Income Housing; New Study Recommends Zoning Based on Existing Demand 
April 11, 2019— RIVERSIDE, Calif. (www.ucr.edu) — Local land use and zoning laws, as well as opposition to development by residents, are primary obstacles to building badly needed housing across Southern California, according to a new analysis released today by the UCR School of Business Center for Economic Forecasting and Development. The report examines Southern California’s progress under the state’s Regional Housing Needs Assessment (RHNA), which mandates how many and what types of housing units each jurisdiction in California needs to allocate and plan for in order to meet local housing needs at all levels of affordability.
Compared to all jurisdictions in the state, Southern California turns in an ‘average’ performance in terms of complying with RHNA’s reporting requirements but that is not indicative of average or more housing production. The analysis examines the Southern California Association of Governments’ jurisdiction under RHNA, which includes Imperial, Los Angeles, Orange, Riverside, San Bernardino, and Ventura Counties. To date, across these areas, less than 30% of the housing units mandated by RHNA for all affordability levels have been permitted for building.
“Because of the sheer size of the region, that statistic helps to illustrate just how chronically behind most jurisdictions in California are in terms of developing new housing,” said Adam Fowler Director of Research at the Center for Economic Forecasting and one of the report authors. “We’re now halfway through the current 8-year RHNA cycle and ideally would want to see a number closer to 50%.”
Fowler and his co-author Hoyu Chong a Senior Research Associate at the Center, emphasize that the Southern California region studied in the analysis is especially critical because it is home to more than 70% of the state’s population.
Given the dominant share of residents who live in the region, and California’s acute housing shortage, it’s particularly problematic that the analysis finds the area is further behind in producing low- and moderate-income housing. In fact, the only housing units that have seen significant progress, and are closer to meeting the RHNA mandate, are units that are affordable for those with above-moderate-income levels. Across the six-county Southern California jurisdiction, more than half (52%) of these units have been permitted compared to just 9% of very-low-income, 9% of low-income, and 16% of moderate-income units. Looked at another way, 77% of all the housing units permitted within the region under the current cycle have been for the above-moderate-income level despite the fact that just 42% of the units mandated by RHNA are allocated for that level.
The same general pattern persists in all of the six counties except Imperial, where just 4% of housing units for above-moderate-income households have been permitted versus 30% for moderate-income households. Los Angeles County has the worst imbalance, with 5 out of every 6 housing units permitted falling within the above-moderate-income level, even though just 3 out of every 7 housing units mandated by RHNA are allocated for that level.
According to the analysis, the key reasons behind the lack of housing production across income levels, but especially among lower-income units, include local opposition to development and local zoning and land use laws that are simply not conducive to developing affordable housing. Within the Southern California jurisdiction, for example, the median minimum lot size is bigger than in the rest of California. Moreover, both the minimum and maximum number of single-family homes allowed per acre is lower, and the minimum unit size is considerably bigger.
“There are some really fundamental obstacles facing Southern California and jurisdictions across the state in terms of developing smaller, denser, less expensive housing,” says Fowler. The study’s authors argue that local jurisdictions should take steps that include redefining housing needs, developing zoning regulations based on existing demand, and aligning housing development with projected demographic changes.
The new report follows an analysis released by public policy group Next 10 that examined all the state’s RHNA jurisdictions and found most to be behind in permitting new homes and significant numbers not participating in the reporting process at all.
The complete analysis, California’s Housing Crisis: Goals and Production in Southern California, is available here.
The UC Riverside School of Business Center for Economic Forecasting and Development is the first major university forecasting center in Inland Southern California. The Center is dedicated to economic forecasting and policy research focused on the region, state, and nation. Learn more at UCREconomicForecast.org

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

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Commercial Real Estate

Dedeaux Properties Completes Strategic Expansion with 850,000 Square Feet of New Industrial Developments Across Southern California

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Innovative Logistics Facilities Launched Amid Scarce Market Inventory to Meet Growing Demand

Dedeaux Properties, a leader in logistics real estate, has successfully obtained Certificates of Occupancy for five newly constructed industrial developments across Southern California, cumulatively encompassing approximately 850,000 square feet. This significant expansion comes at a pivotal time when the availability of new industrial spaces in Southern California is at its lowest in over a decade, according to recent market analyses.

The assortment of state-of-the-art developments includes:

  • A 167,000-square-foot warehouse strategically located in Ontario.
  • A sprawling 326,000-square-foot warehouse in Riverside.
  • A 165,000-square-foot high-velocity distribution center in Fontana, tailored for rapid logistics operations.
  • A 53,000-square-foot cross-dock facility in Perris, designed to enhance transshipment efficiency.
  • A 52,000-square-foot cross-dock in San Bernardino, geared towards facilitating quicker load transfers.
  • An 83,000-square-foot distribution center in Rialto, optimized for both storage and distribution functionalities.

These projects have been meticulously developed to cater to the surging demand for high-quality logistics real estate fueled by the consistent record cargo volumes handled at the Ports of Los Angeles and Long Beach.

Matt Evans, President of Dedeaux Properties, reflects on the current market dynamics and the firm’s strategic response. “The recent disruptions in capital markets have posed significant challenges for many developers in securing construction financing, leading to a thinner market. However, the Inland Empire continues to be a magnet for industrial activities, thanks to its proximity to major ports. Our new facilities are not just buildings; they are state-of-the-art logistics solutions designed to support the dynamic needs of modern supply chains.”

To further position itself for sustained growth and leverage potential market opportunities in 2025 and beyond, Dedeaux Properties has also successfully executed several strategic financial initiatives:

  • Recapitalization of a stabilized Industrial Outdoor Storage Portfolio that includes three sites totaling 1.1 million square feet of land in San Bernardino County. This transaction was conducted in partnership with the Carlyle Group, ensuring continued benefits from stable cash flows.
  • Divestiture of the firm’s inaugural Kern County development at Tejon Ranch to a textile owner/user, which has also facilitated an expanded relationship with Tejon Ranch Company for an additional warehouse project in Lebec.
  • Refinancing and restructuring of the financing arrangements for the majority of the projects completed in 2024, which has freed up substantial equity for future acquisitions and developments.

“These proactive steps have not only solidified our financial foundation but have also allowed us to optimize our asset base, ensuring substantial returns for our stakeholders and enhancing our capacity to seize emerging opportunities in the logistics sector,” Evans concluded.

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Commercial Real Estate

Affinius Capital and McDonald Property Group Execute Pre-Lease with Otto Cap at The HUB @ Ontario International Airport

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Affinius Capital and McDonald Property Group are pleased to announce the signing of a major lease with Otto International, Inc., at The HUB. This 254,677-sq.- ft.-building lease located at 3551 East Jurupa Street, City of Ontario establishes The HUB’s first lease at its premier master-planned logistics park in Ontario, Calif. It has been secured six months prior to the scheduled completion of its initial Phase 1 of the project totaling two million sq. ft. consisting of four buildings.

The project ownership is CanAm Ontario, LLC, which consists of a notable Canadian pension fund, an investment affiliate of Affinius Capital, and McDonald Property Group. CanAm Ontario recently executed a 55-year ground lease with Ontario International Airport Authority to develop the entire 200-acre site.

“Securing this lease ahead of completion underscores the appeal of The HUB’s quality and location adjacent to Ontario International Airport,” said Eddie Gonzalez, managing director of asset management for Affinius Capital. “We are privileged that Otto International selected our Inland Empire development and pleased to count them among the companies we serve throughout our global industrial and logistics portfolio.”

Otto International committed to this long-term 154-month lease with CanAm Ontario to satisfy its expansion and future growth needs. The building will operate to scale up Otto’s next day’s shipping promise at larger volumes and reduce costs through new fulfillment automation integrated in the facility. With over 70 years of experience, Otto has established itself as a leading global manufacturer of quality headwear with 20,000 active wholesale partners. 

“Otto is extremely proud to partner with Affinius Capital and McDonald Property Group in the development of our soon-to-be flagship West Coast Distribution Center in Ontario, California,” stated Mr. Razgo Lee, Chief Executive Officer of Otto International. “Our new robotic automated facility at The HUB will allow us to streamline our West Coast logistical hub and distribution point as the premier tenant in this amazing facility. We are honored to participate in such a monumental project which will support our growth plan and commitment to our valued customers.”

Darla LongoBarbara PerrierWalt ArringtonJoey Sugar and Joe Werdein represented McDonald Property Group and Affinius Capital in the lease transaction. Dylan McDonald and Dillon Dummit of Savills International represented Otto International.

Situated directly across from Ontario International Airport (ONT) in San Bernardino County, the project is notable for its scope, location, timeline and complexity. It will also be one of the first large-scale developments in Southern California to incorporate an innovative carbon-reduction system for the slab, tilt wall panels and paving as part of Affinius Capital’s strategic plan for achieving its environmental sustainability goals through concrete decarbonization methods. Multiple strategies for incorporating concrete decarbonization, sustainable elements and achieving LEED® Gold certification for this industrial development were identified. The carbon reduction of emissions volume resulting from this project, as compared to conventional concrete design for industrial projects, will achieve 35% less embodied carbon from a conventional concrete design or approximately 44,000 tons less embodied carbon released into the atmosphere across the entire HUB development.

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Commercial Real Estate Transactions

Hanley Investment Group Arranges Sale of Chipotle Mexican Grill and Starbucks Drive-Thru in Rancho Cucamonga, Calif., for $6.22 Million  

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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 two stand-alone buildings occupied by a Chipotle Mexican Grill and the adjacent Starbucks Drive-Thru in Rancho Cucamonga, California. The sales price was $6.22 million.

Hanley Investment Group’s Executive Vice Presidents Bill Asher and Jeff Lefko represented the seller, Chase Partners Ltd., based in Glendale, California. The buyer, a private investor based in Los Angeles, was represented by Shirley Kim at Epique Realty, also of Los Angeles.

The property involved a complete rehabilitation of the facility and the expansion of Starbucks by the developer, Chase Partners Ltd., a leading retail and industrial developer in Southern California since 1993. Chase is an active developer of Starbucks and Chipotle sites, as well as other name-brand retail developments, with a dozen projects currently underway. Michael Carter served as the project manager for Chase.

“We generated multiple qualified offers primarily from Southern California-based buyers and leveraged our extensive broker relationships to procure a repeat all-cash buyer, ensuring a smooth and timely closing by year-end,” said Asher.

Built in 2003, the two freestanding properties occupied by a 2,508-square-foot Chipotle Mexican Grill and a 4,000-square-foot Starbucks Drive-Thru sit on a 1.31-acre parcel located at 10811-10831 Foothill Boulevard, near the signalized intersection of Foothill Boulevard (U.S. Route 66 with over 32,000 cars per day) and Aspen Avenue.

Starbucks (NASDAQ: SBUX) recently signed a new 10-year extension, expanding into the adjacent 2,500-square-foot space for a total of 4,000 square feet, showing its continued long-term commitment to this location. The Rancho Cucamonga Starbucks is a top 15% location nationwide, based on customer traffic (Placer.ai). Starbucks is the largest coffee house chain globally, with approximately 40,199 stores in 84 countries, and Fortune ranked it as one of the “World’s Most Admired Companies” from 2009 to 2024.

Chipotle (NYSE: CMG) is ranked on the Fortune 500 and is recognized on Fortune’s Most Admired Companies 2024 list and Time Magazine’s Most Influential Companies. There are over 3,600 restaurants in the United States, Canada, the United Kingdom, France, Germany, and Kuwait and it is the only restaurant company of its size that owns and operates all its restaurants in North America and Europe.

According to Asher, Chipotle has nine years remaining on its lease, having recently extended early for five years, demonstrating its ongoing investment in the site. The Rancho Cucamonga Chipotle is a top 25% location in California, based on customer traffic (Placer.ai).

Chipotle and Starbucks are located across from Terra Vista Town Center, one of Rancho Cucamonga’s most established and premier regional shopping centers. The 645,000-square-foot Terra Vista Town Center is ranked within the top 25% of power centers nationwide, based on customer traffic, according to Placer.ai. The center is anchored by Target, Hobby Lobby, and LA Fitness, along with other national tenants including Ross Dress for Less, Michaels, HomeGoods, Panera Bread, Wells Fargo, CVS, Bank of America, and Five Below. The property is ideally situated in the center of the city within minutes of the 10, 15, and 215 freeways. The property is located next to Rancho Cucamonga’s 44 million square feet of office and industrial space, which combined employs over 65,000 employees.

The population of Rancho Cucamonga grew 53.5% from 2010 to 2020. Within one mile of the property, the population experienced a 317.8% growth in population from 2010 to 2020. More than 276,000 residents with an average household income in excess of nearly $113,000 are within a five-mile radius.

Asher added, “It was one of our most sought-after listings in 2024, receiving significant interest and activity from both buyers and brokers. The combination of two corporate leases with two of the most recognizable national credit QSR tenants in the U.S., both with a 21-year operating history at the site, made it a highly desirable investment.”

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