Rexford Industrial on SoCal Market

Kelsi Maree Borland of GlobeSt.com conducted an exclusive interview with Howard Schwimmer and Michael Frankel, the co-CEOs of Rexford Industrial, to discuss their firm's recent transactions in Southern California and their current take on the industrial market. Just this month Rexford announced the acquisition of two industrial properties for $15.4 million, another two for $29 million, along with first quarter financials which reported the Q1 acquisition of four industrial properties, totaling approximately 432,000 square feet, for an aggregate cost of $52.4 million. An excerpt of the Q&A follows:

GlobeSt.com: Are there markets within Southern California to which you are particularly attracted?

Frankel and Schwimmer: Well, 70% of our portfolio is located in L.A. and Orange County, but we are looking for opportunities in all of the markets that I mentioned. We do have a higher concentration in the San Fernando Valley, where we have close to 3 million square feet of our portfolio. That market has been a good performing market for us.

GlobeSt.com: As you mentioned, this is a very competitive industrial market and you are focusing on high barrier to entry areas. How are you finding and winning deals?

Frankel and Schwimmer: Today, a lot of the deals that we do have a value-add component to them, and a lot of times we see things that a lot of other buyers don’t. We have three licensed contractors on our staff, so we are always looking at how to create value, and in doing so we are often able to secure the deal ahead of other buyers because we are able to create stronger cash flows.

GlobeSt.com: Where do you see the Southern California market over the rest of the year?

Frankel and Schwimmer: I think it is going to continue to be strong from a fundamental standpoint, with high occupancy and growing rental rates and property values. It is a huge market and it is very fragmented in terms of ownership, so there is always a lot of opportunity in terms of buying assets, whether they are core deals or value-add. We are excited about the market, and we think there is still a lot of opportunity on the rental side in terms of the product that we focus on, and our ability to grow rents in the product that we are buying.

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