Dedeaux looks north

Dedeaux Properties, a Santa Monica-based industrial real estate owner and developer, has just completed one of its busiest years on record, completing a transaction worth more than $800 million. It also expanded north to expand its trading footprint.

Dedeaux maintains a portfolio of approximately 6 million square feet of industrial space. Additionally, the company has an active pipeline of over 2 million square feet of industrial real estate, including warehouse/distribution, truck terminals, trailer yards and cold storage facilities.

Dedeaux Chief Operating Officer Alon Kraft said: “The Inland Empire is a big part of that.”

Founded in 2006 by Brett Dedeaux, Dedeaux Properties completed 14 acquisitions last year, bringing total budgeted project costs to $620 million and recapitalizing approximately $65 million in existing assets.

The Inland Empire is at the center of the Dedeaux story, with most of the 41 properties based in the area.

“Ontario looked like a suburb at one point,” Kraft said. “Today, Perris is a well-defined industrial market. It continues to stretch east and north.

Many of Dedeaux’s sites are terminal buildings and temporary delivery sites that are not designed for storage ranging from 35,000 to 100,000 square feet. High-speed building reaches 250,000 square feet.

“Terminal buildings tend to be a bit smaller,” Kraft says. “They don’t store a lot of the product. It’s about moving the product from ports and railroads and pushing it out to other distribution facilities.”

looking north

Dedeaux also expanded its Southern California footprint northward with the acquisition of a 12-acre development site in Tejon Ranch in Kern County last February.

The site qualifies for industrial development of up to 250,000 square feet.

Selected areas of the 270,000-acre Tejon Ranch site are being developed with approximately 6 million square feet of distribution centers, retail and multi-family projects. Dedeaux has submitted plans for a speculative dry bulk warehouse/distribution facility with a 32-foot height and extra trailer parking on the premises. Currently under construction with the wall tilted. The project should be completed in 9-12 months.

“The Greater Los Angeles market is becoming increasingly supply constrained, putting upward pressure on rents, which in turn puts even greater pressure on supply chain costs,” said Dedeaux Properties, which led the acquisition effort. of Rishi Thakkar said in a statement. “Strategically located in the southern part of California’s Central Valley, his Tejon Ranch is a location that has proven to represent an excellent value proposition for regional users who need to move goods throughout the western United States.”

Dedeaux Properties doesn’t own many warehouses in Los Angeles, but the few it does are closer to its roots.

“The company started in Central LA from the beginning,” Kraft says. “We have several sites in the Central Market. They say it’s available and the price is cheap.

Specialized in refrigeration

The construction of refrigeration facilities has become Dodo’s specialty.

“We’ve had cold storage in both Southern California and the Bay Area for many years,” Kraft says.

The company now owns dozens of cold storage facilities. Refrigerated warehouses store perishable goods such as food, pharmaceuticals, and works of art at specific temperature ranges to maintain their integrity and quality.

Refrigerated warehouses are in high demand due to low volumes available.

“There is a big void,” said Andrew Briner, Newmark’s executive managing director. “Cold storage facilities are in incredibly short supply and finding suitable parcels with underlying zoning to build those facilities is very difficult.”

Specializing in areas such as refrigeration is part of Dedeaux’s strategy.

“We tried to avoid being a commodity warehouse player,” Kraft says. We find opportunities to do better with our capital, that of our partners. ”

Some of these opportunities include warehouse sales. Dedeaux Properties unloaded $122 million worth of properties last year.

“We look at opportunities and consider selling assets,” Kraft said. “We are looking for acts that balance the types of returns we seek to obtain between ourselves and the partners involved in our transactions. Sell ​​selectively.”

continuous expansion

In addition to Kern County, Dedeaux is looking to expand beyond Southern California and has plans to expand its industrial operations into the Bay Area and other parts of California.

“Our goal is to carefully expand to most of California, including further south,” Kraft said. “San Juan He has a site in Capistrano and is looking at several sites in the San Diego area.”

Market cycles will determine how much development Dedeaux continues in its pipeline.

According to Jones Lang LaSalle data, the Los Angeles County industrial market is currently very tight, with only 1.4% vacancy in the fourth quarter. Vacancy rates have risen slightly over the past year, but Mike Tingus of Lee and Associates LA North-Ventura said the industrial asset class is still healthy in his single digits.

“The market is still relatively strong,” Kraft said. “It is safe to say that we have passed our peak. But given economic headwinds like the war in Ukraine and rising interest rates, people are likely to be a little nervous, so at least the last few quarters will have time to get things done. is at stake.”

Overall, coming out of Covid, the market remains strong despite some slowdown, Kraft said.

“We continue to see a lot of demand,” Kraft said. “A lot of people in the logistics space are still looking for a lot of space.

Kraft said a recession could continue to threaten the economy, but other key indicators remain positive.

“Consumer sales have remained strong throughout the holiday season and are likely to remain strong in 2023,” said Kraft. “We are likely to see a shift from large durables to smaller durables and other non-durables, a sign that industrial demand will remain resilient.”