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#14 Industrial Real Estate in Southern California (Gary Martinez) · Own More Doors

0:00
SPEAKER_00: What's up everyone?
0:00
SPEAKER_00: Juan Weezar here with the Own More Doors Podcast.
0:03
SPEAKER_00: This specific episode was first shared on our YouTube channel, Sage Real Estate.
0:08
SPEAKER_00: Check it out.
0:08
SPEAKER_00: And we're excited to bring it to you here.
0:11
SPEAKER_00: We hope you enjoy the interview.
0:12
SPEAKER_00: So, how's the industrial market doing in Southern California?
0:15
SPEAKER_00: Well, make sure you tune in today because I'm interviewing one of the experts in the industrial field, Gary Martinez, CCIM, SIOR.
0:23
SPEAKER_00: Tune in today to see how you could maximize the investments in industrial.
0:29
SPEAKER_00: Hey everyone, Juan Weezar here, and it's my pleasure to introduce to you Gary Martinez with Ash Rulin Associates.
0:35
SPEAKER_00: Gary is a CCIM, he's also at SIOR.
0:38
SPEAKER_00: So Gary is one of the best, one of the experts when it comes to industrial.
0:43
SPEAKER_00: And one of the things I haven't covered when it comes to the world of real estate is how's the industrial market?
0:48
SPEAKER_00: And the industrial market in Southern California is booming.
0:52
SPEAKER_00: There's lots of properties here.
0:54
SPEAKER_00: And this is something that our company, Sage Real Estate, we don't necessarily specialize in this.
0:58
SPEAKER_00: I had the chance to meet Gary.
1:00
SPEAKER_00: I was super impressed by hearing his presentation.
1:03
SPEAKER_00: And so today I want to bring you, Gary, and we were going to talk about what is going on in the industrial market 2024.
1:10
SPEAKER_00: It's uh August.
1:12
SPEAKER_00: Gary, if I were to ask you, thanks for being here, by the way.
1:15
SPEAKER_00: Thank you, Juan.
1:16
SPEAKER_00: If I were to ask you, Gary, in a nutshell, how is the state of the market right now in industrial when it comes to Southern California?
1:24
SPEAKER_01: Well, I can tell you for industrial properties in Southern California has been fantastic, has been amazing.
1:30
SPEAKER_01: Actually, it has been one of the biggest industrial markets, strongest industrial markets that we've had across the country.
1:36
SPEAKER_01: A lot of people talk about Inland Empire, right?
1:37
SPEAKER_01: Inland Empire is part of Southern California as well.
1:40
SPEAKER_01: And Inland Empire has probably been number three, number four as far as strength of industrial market across the country for several years.
1:48
SPEAKER_00: Wow.
1:49
SPEAKER_00: Wow.
1:49
SPEAKER_00: So there's a lot of business going on when it comes to industrial.
1:51
SPEAKER_00: And I know when people think people, you know, a lot of our viewers, they're all over the nation, in fact all over the world, when they think Southern California, they think cities, beach cities, but they don't necessarily think warehouses.
2:03
SPEAKER_00: And we really have a strong presence here.
2:05
SPEAKER_01: And one of the reasons for that, actually, I think the main reasons having to do with the ports that we have here.
2:10
SPEAKER_01: We have the port of Los Angeles, Port of LA.
2:13
SPEAKER_01: And so when we combine the two ports, actually we have the 10th largest port around the world.
2:19
SPEAKER_01: We think about the amount of people that we have population-wise, you know, even specifically of Los Angeles, Orange County, along with Alien Empire, we got about 18 million people specifically in our area.
2:31
SPEAKER_01: And not only do we have 18 million people, but when we figure out what the GDP is for Los Angeles, Orange County, and along with Anglian Empire, our GDP in the area is about 1.6 trillion.
2:43
SPEAKER_01: Now, the significance on that, because if we get that number and compare it to Australia, Spain, or South Korea, our specific area, Orange County, LA, Anglian Empire, is equivalent to those countries.
2:56
SPEAKER_01: And so we have a lot of people here, we got a lot of money that's here, we got a thriving port.
3:02
SPEAKER_01: So it's only natural that our industrial market would be thriving as well.
3:06
SPEAKER_00: Wow, that's really impressive.
3:08
SPEAKER_00: And it's it's it just goes to show how powerful Southern California is when it comes to the amount of business that can happen.
3:15
SPEAKER_00: Um, let's let's talk about sales, and I'll and I'll tell you this, Gary, is that in the multifamily world that I'm in, we've had sales drop between 60-70% in the last call it 24 months, right?
3:32
SPEAKER_00: So it's it's been slow and a lot of that's been interest rate driven.
3:36
SPEAKER_00: Yeah.
3:37
SPEAKER_00: What's happening in the industrial world when it comes to overall sales?
3:40
SPEAKER_00: Like what did you guys experience?
3:42
SPEAKER_01: Well, I I think to understand what's happening right now, it's to really understand what happened after COVID or because of COVID, right?
3:50
SPEAKER_01: Because of COVID, you know, essentially everything shut down.
3:53
SPEAKER_01: One of the things that never really shut down is having to do with anything having to do with manufacturing, warehousing, and distribution.
3:59
SPEAKER_01: Those always have been a uh necessary uh type of job, you know, during that time period.
4:05
SPEAKER_01: And if we remember here, specifically in our backyard here in Long Beach, we can remember all the boats that are waiting to get their goods into the ports.
4:12
SPEAKER_01: There was just so much inventory that was coming in at the same at that time.
4:17
SPEAKER_01: And what we were having with the supply chain issue is that people were not able, which is when I say not just people, but also businesses, were not able to get the supplies that they needed in order to perform the business that they typically do.
4:31
SPEAKER_01: So, what a lot of companies were doing, warehouse distribution companies or just companies that provided e-commerce service, uh, they also started to bulk up on their inventory for warehouse that they need to put in the warehouse just in case there was a lag of them getting their supply off of the boats over here in Long Beach in LA.
4:51
SPEAKER_01: So what it what it created, it created the big need and the big demand for warehouse space, for distribution space, and people were overpiling, having oversupply of inventory to make sure that they were able to provide the services or more so the goods to their to their clients.
5:10
SPEAKER_01: So there was a big demand for industrial during that time.
5:13
SPEAKER_01: So sales would have picked up during that time?
5:15
SPEAKER_00: It picked up dramatically, it skyrocketed.
5:18
SPEAKER_00: Okay, and then pricing probably picked up during that time in terms of cost.
5:22
SPEAKER_00: Absolutely.
5:22
SPEAKER_00: Okay, so now we're outside of COVID.
5:25
SPEAKER_00: Yep.
5:26
SPEAKER_00: What what happened now?
5:28
SPEAKER_01: So what happened now is things are just leveling off, right?
5:31
SPEAKER_01: Which means prices have come down, but not necessarily coming down to a below than average market.
5:39
SPEAKER_01: I would say it's actually just leveling off to where maybe it should be at this time.
5:44
SPEAKER_01: And so even though we're seeing price drops, uh price drops from the height to where they're at right now, uh, some of it has been as significant as maybe 60, 50 percent value drops in valuations.
5:55
SPEAKER_01: Okay.
5:56
SPEAKER_01: Wow.
5:56
SPEAKER_01: Uh and to about 17, 20 percent has been pretty common and pretty typical across the board.
6:04
SPEAKER_00: You know, in multifamily real estate and Long Beach specifically, if someone one of the measurements that we would say is like, well, on average, what's the cost per door?
6:14
SPEAKER_00: So if you're looking at a 10-unit building, you know, maybe it's trading at uh$275,000 a door.
6:21
SPEAKER_00: Sometimes we might say, hey, per square foot, it trades around$375 a square foot.
6:26
SPEAKER_00: Is there that type of measurement that as industrial brokers you guys are like, hey, in the inland empire, this is what we're seeing for industrial should trade at this amount.
6:36
SPEAKER_01: Yeah, so we look at everything at price per square foot.
6:39
SPEAKER_00: Okay.
6:40
SPEAKER_01: And so when we're looking at prices right now, we start to we start to bifurcate or we start to disaggregate the type of industrial properties that we're working with as well.
6:51
SPEAKER_01: Right?
6:52
SPEAKER_01: Is it class A, which is going to be your nicer industrial prop properties that are maybe uh newly built, maybe 30 plus foot high ceilings uh with multiple docks, or is it something built like in the 80s and 90s or maybe early 2000s, which we would classify that as a class B.
7:09
SPEAKER_01: Uh, and stuff that's a little bit older, maybe 18, 16 foot ceilings, you know, we may classify that as a class C property.
7:15
SPEAKER_01: So just like you have the different classes in multifamily, we have the different classes in industrial as well.
7:21
SPEAKER_01: And so your class A properties right now uh are depending on location of where in LA, Orange County, Alien Empire, uh price per square foot on those are gonna range between 315 to maybe 415 a foot.
7:40
SPEAKER_01: Uh, we do see some of the smaller, maybe like 30,000, 50,000 square foot class A properties where property owners are trying to still get about$500 a foot, which is still pretty far off.
7:50
SPEAKER_00: And we see that sometimes, and even in multifamily, sometimes the the smaller the square footage, the better we could get in terms of cost or even per rent.
7:58
SPEAKER_00: So it's it's always like the smaller ones are gonna sell for a little more, and that's what you're talking about in that situation.
8:03
SPEAKER_01: Yeah, well, as we have the different sizes and different classes, that's gonna depend or it's gonna cause a variation in that pricing.
8:10
SPEAKER_00: Okay.
8:11
SPEAKER_00: So class A, you said anywhere, depending on location, between 315, 415.
8:16
SPEAKER_00: So what would maybe class B trade at?
8:19
SPEAKER_01: It could be equivalent to that, again, depending on the ceiling heights and location, if it has a dock-high door, if it has a yard, how much power?
8:27
SPEAKER_01: Power is extremely important these days.
8:29
SPEAKER_01: And so it's really gonna depend as to where the location is at.
8:33
SPEAKER_01: But it it should it could be between we're seeing stuff as low as uh 280 a foot, you know, for class B, Class C properties.
8:41
SPEAKER_01: Okay, and I think one of the advantages and opportunities that we have in today's market right now is that we are in a market where it's a there's a lot of uncertainty out there.
8:50
SPEAKER_01: There's a lot of uncertainty from from buyers, from sellers, from property owners, and a lot from brokers as well.
8:56
SPEAKER_01: And so, how do we price these properties?
8:59
SPEAKER_01: And so what we're starting to see that brokers are not necessarily pricing the properties properly and not marketing the properties properly.
9:09
SPEAKER_01: And so what we're seeing is we're seeing the big opportunity for buyers to come in and buy some really good quality industrial properties at a very cheap discounted price because of the uncertainty on how to market and how to present their property to the market.
9:27
SPEAKER_00: When you say that a broker, right, some brokers are maybe not pricing them properly.
9:31
SPEAKER_00: Are they overpricing them?
9:33
SPEAKER_00: Well, we'll see overpricing as well.
9:35
SPEAKER_00: Yep.
9:36
SPEAKER_00: Yeah.
9:36
SPEAKER_00: And so um how how you know, you talk about opportunities, the uncertainty.
9:44
SPEAKER_00: Why is there uncertainty?
9:46
SPEAKER_01: I think a lot of things is election.
9:50
SPEAKER_01: We hear a lot of people are they don't want to do anything until the elections are over.
9:56
SPEAKER_01: A lot of uh people are waiting for interest rates to drop.
10:00
SPEAKER_00: Everybody.
10:01
SPEAKER_00: Everyone is waiting for that.
10:03
SPEAKER_01: Jerome Pell made a statement today, you know, saying that they're gonna start uh making a pivot.
10:08
SPEAKER_01: And so uh they're what people are waiting for that.
10:10
SPEAKER_01: Uh but at the same time, you know, once all that happens, what's gonna be happening towards the end of the year?
10:16
SPEAKER_01: People are gonna say I'm gonna wait till the end of the year because I don't want to do anything during the holidays.
10:20
SPEAKER_01: After the holidays, people are gonna say I'm gonna wait till my taxes are completed.
10:23
SPEAKER_01: So it's a forever-going uh timeline that people keep pushing themselves off.
10:29
SPEAKER_00: Correct.
10:30
SPEAKER_00: I I met with um with a couple two weeks ago.
10:34
SPEAKER_00: They have a portfolio, several multifamily properties, and they're like, and that's the whole thing, is they want to sell, and they're like, Do you think the price would be different if so-and-so wins?
10:45
SPEAKER_00: And do you think prices would be different if we wait a year?
10:48
SPEAKER_00: Or if we wait till the new year?
10:49
SPEAKER_00: And so there's all these no one wants to sell in a period where they believe that they're selling, you know, that they're leaving money on the table.
10:56
SPEAKER_00: And they're like, man, I could wait three, four months to get there.
11:00
SPEAKER_00: Now we don't know what's gonna happen once we get there, and it's our job as brokers to try to guide them and figure out the real reason on why they want to sell.
11:08
SPEAKER_00: And sometimes people wait because they think things will get better, and sometimes things get worse.
11:14
SPEAKER_00: Yeah.
11:15
SPEAKER_00: Um, how how are we looking when when you say there's opportunity?
11:19
SPEAKER_00: This is great, because I tell people with multifamily, there's tremendous opportunity.
11:23
SPEAKER_00: Great opportunity.
11:24
SPEAKER_00: Yeah, and what I'm seeing on my end is increase in inventory.
11:28
SPEAKER_00: Yep.
11:28
SPEAKER_00: How's that looking in the industrial world?
11:31
SPEAKER_01: Yeah, so we are seeing an increase in inventory at this time right now.
11:35
SPEAKER_01: Now, let me take that back a little bit, or let me give a better explanation than that.
11:41
SPEAKER_01: Is that even though we're seeing more inventory on the market these days, our vacancy rate is still between you know two to five percent, depending where the property's at located at in the market.
11:55
SPEAKER_01: And so even though there is more inventory that's available these days, we're still at a very, very low vacancy in our market price, in our in our marketplace.
12:05
SPEAKER_00: Okay.
12:06
SPEAKER_00: Um, but with with going back to inventory, with with increased inventory, then then the consumer has options and they're able to, in most cases, negotiate.
12:15
SPEAKER_01: And consumers have some options right now.
12:17
SPEAKER_01: The options that they have is that the properties are not moving as quickly as they were, right?
12:21
SPEAKER_01: So there are just not as many buyers or not as many tenants that are out there at this time.
12:25
SPEAKER_01: So, which has given us an opportunity uh from the broker standpoint, what representing a buyer or representing a tenant, where we have more negotiation power to get the better deal for our client at this time, too, because properties are not moving as quick.
12:37
SPEAKER_01: Interesting.
12:38
SPEAKER_00: Uh Gary, are are you seeing uh more activity on the leasing side when it comes to industrial or maybe more on the sales side right now?
12:45
SPEAKER_01: I think uh it's more on the leasing side.
12:49
SPEAKER_01: No, I I see more of the sales side.
12:50
SPEAKER_01: I do I do more sales, but we do do a good portion of leasing as well.
12:54
SPEAKER_01: An example would be, you know, like we just sold one of our clients a property in the city of Anaheim.
13:00
SPEAKER_01: Uh they had a couple of tenants or a couple units that were there, so we had to do some leasing for them.
13:05
SPEAKER_01: But overall, just if you're to look at the ratio between the amount of properties that are being purchased and the amount of properties that are being leased, there's a lot more properties that are always being leased as opposed to being purchased.
13:19
SPEAKER_00: Okay, thanks for that, Gary.
13:20
SPEAKER_00: Um let's talk cap rates.
13:22
SPEAKER_00: Cap rates, yes.
13:23
SPEAKER_00: Where I I mean, I going back to hey, during COVID, there was a lot of factors that that that increased demand.
13:30
SPEAKER_00: So I would imagine that during COVID, you probably had a much lower cap rate.
13:34
SPEAKER_00: You did.
13:35
SPEAKER_00: Okay.
13:35
SPEAKER_00: Where was that cap rate?
13:37
SPEAKER_00: Well, why don't we do this?
13:38
SPEAKER_00: Before COVID, more or less, where were the cap rates trading at?
13:42
SPEAKER_00: What cap what what COVID did to the cap rates and where they're at now?
13:47
SPEAKER_01: If I remember back where cap rates were at before COVID, and and what I should say before COVID was also before uh the feds dropped the interest rate to essentially uh zero in the federal exchange rate.
14:00
SPEAKER_01: Uh what interest or what cap rates were at during that time, uh they're between floating between four and a half to five and a half percent, depending on the quality and location of the property.
14:12
SPEAKER_00: Okay.
14:13
SPEAKER_00: And so they were they probably decreased during COVID.
14:16
SPEAKER_01: They decreased during COVID.
14:18
SPEAKER_01: And where where are cap rates today?
14:20
SPEAKER_01: Well, when they decreased, they actually decreased to as low as three percent during that time.
14:25
SPEAKER_01: Uh some cases, uh, some properties were purchased maybe in the mid or even high twos.
14:31
SPEAKER_01: And fast forward to today, uh, cap rates for industrial properties uh they really range between like five, five and a half.
14:39
SPEAKER_01: Every once in a while we'll see something between five and a half and six, but majority are gonna be between five, five and a half.
14:45
SPEAKER_00: You know what's interesting, Gary, is that I would say that that's probably where multifamily is trading at now.
14:49
SPEAKER_00: It's very similar to that.
14:50
SPEAKER_00: It's it's very similar.
14:52
SPEAKER_00: So what Gary's pretty much saying is that um with the lower cap rate, you're gonna have a much, much higher price.
14:58
SPEAKER_00: And so anyone who paid for a higher price now, now if they're thinking about trading or hey, we no longer need this for for our business, um, or the environment changed, now they're they're looking at Gary, hey, can we sell this building?
15:12
SPEAKER_00: But now the cap rates being higher, then lowers down the the value of their property.
15:17
SPEAKER_00: And so it may not be the best time for them to sell, depending on when they bought, right?
15:21
SPEAKER_00: That's correct.
15:22
SPEAKER_00: That's right.
15:23
SPEAKER_00: Um, let's let's get into let's get into who's buying industrial right now.
15:30
SPEAKER_00: Are these these huge corporations, are they um owner users?
15:38
SPEAKER_00: Who's buying industrial space right now?
15:41
SPEAKER_01: Well, I can tell you there's still a lot of people, owner users that are out there looking to purchase properties.
15:47
SPEAKER_01: If you were to look at our call it a client tracker, we have we got about 200 buyers that are active active in the market today looking for industrial properties.
15:57
SPEAKER_01: And these 200 are owner users or maybe some you know investors.
16:02
SPEAKER_01: That doesn't include our institutional buyers.
16:05
SPEAKER_01: And so what another thing I'm hearing a lot of, and part of the reason why I think there's a lot of people that are interested in purchasing property right now is because they want to get out of cash.
16:16
SPEAKER_01: Now, this year or let and last year was the first time that I've heard so many people say, I want to buy real estate because I want to get out of cash.
16:26
SPEAKER_01: And they want to start buying assets and they want to start buying real estate uh because they're scared of the value of our dollar.
16:32
SPEAKER_01: Okay.
16:33
SPEAKER_01: Yes.
16:34
SPEAKER_00: Um and they're buying other things as well.
16:35
SPEAKER_00: They're buying other things as well.
16:36
SPEAKER_00: Yes, just to get out of cash.
16:38
SPEAKER_00: Um, when we're talking about the owner-user, what what type of financing is this owner-user utilizing to be able to buy these industrial buildings?
16:47
SPEAKER_01: Uh SBA financing is still a fantastic source where they could just put 10% down and finance 90% of it.
16:54
SPEAKER_01: Traditional financing, you know, from you know your Bank of America's your Wells Fargo's Chase banks, there's still a lot of money out there for a traditional owner-user manufacturing warehousing companies these days.
17:06
SPEAKER_01: And uh for investors, uh there's gonna be a little bit less, there's gonna be less banks that are that are out there that are interested in giving a loan for an investment property, but still, industrial is still a product that a lot of banks still like.
17:22
SPEAKER_01: So we have a lot more banks that are interested in investing or giving the loan for industrial investments in other classes at this time.
17:31
SPEAKER_00: Okay.
17:32
SPEAKER_00: Um, let's let's hop over from from sales and let's get into leasing.
17:38
SPEAKER_00: How's the leasing of industrial buildings doing right now?
17:42
SPEAKER_01: It's it's slowed down as well.
17:43
SPEAKER_01: Okay, right.
17:44
SPEAKER_01: So it's tapered.
17:45
SPEAKER_01: Uh pricing has come down probably probably from the past year, anywhere between 16 to 20 percent, depending on the type of property and the location.
17:53
SPEAKER_01: And so uh pricing has come down as a whole.
17:57
SPEAKER_01: Um, and properties are sitting on the market a little bit longer, so tenants are in a better position to negotiate not only a better rate, but also to negotiate some additional concessions from a property owner, which may include some free rent, a tenant improvement allowance, a moving allowance, uh maybe some type of half rent today and half rent, you know, in a year from now, uh, maybe lower secure deposits.
18:25
SPEAKER_01: So there's a lot more opportunity for a tenant these days to negotiate a better deal, which is something we haven't seen in years.
18:33
SPEAKER_01: Okay.
18:33
SPEAKER_00: Years.
18:34
SPEAKER_00: Right.
18:35
SPEAKER_00: So can you walk us through?
18:37
SPEAKER_00: Give us an example of a lease.
18:41
SPEAKER_00: Tell us what that lease is for, and then something, you know, when you're talking about concessions, kind of walk us through like this is what you might see.
18:48
SPEAKER_00: Sure.
18:49
SPEAKER_01: Uh an example is we just did a lease in the city of Yorbelinda.
18:52
SPEAKER_01: It was a 20,000 square foot lease, and in this case we represented the property owner, and so we had uh multiple tenants that came to us with multiple offers, you know, which was which was nice, yeah, because we had some options that we could choose from.
19:06
SPEAKER_01: Um but what we had to give in the form of uh concessions is we gave them two months of free rent, and it's for a five-year lease, okay, two months of free rent, and there was no rental discount.
19:19
SPEAKER_01: Uh, there was no tenant improvement allowance that we gave to a specific tenant uh only because the property was already decked out.
19:26
SPEAKER_01: Okay.
19:27
SPEAKER_01: But in other situations where we represented the tenant, where we had an opportunity to get for a five-year lease, you know, three months of free rent, some discounted rent up in the beginning, uh, along with a tenant approvement allowance, which a tenant approvement allowance is essentially that owner is going to give us or give the tenant some money so they could put back into the property for a new carpet, new paint, or maybe they need to do some type of modification for office space.
19:54
SPEAKER_01: And so there's uh when I say years as far as how long we haven't been in this type of environment for a tenant, it's it's probably been since 2013, 2014 that we've seen that the tenant have as much leverage on the transaction today uh you know since that time frame.
20:15
SPEAKER_00: So this is great.
20:16
SPEAKER_00: I mean, this is great for tenants.
20:17
SPEAKER_00: I I get it, it may not be great for a landlord, but the landlord has had a lot of good years in front of them, right?
20:23
SPEAKER_00: So let's talk about where are price per square foot from a rental basis?
20:28
SPEAKER_00: Like if someone's looking at an industrial building, where are those leasing at?
20:33
SPEAKER_01: Rental rates for industrial properties, again, kind of going based off location and size, it's gonna go between let's just say a 10,000 square foot industrial property.
20:44
SPEAKER_01: Uh let's just say here in uh in Long Beach, um, assuming class B type property, rent's gonna be between a dollar fifty to a dollar seventy-five a square foot.
20:57
SPEAKER_01: Depending on the age of the property, the the newer the property, the property owner might have it on a triple net lease.
21:03
SPEAKER_00: Okay.
21:04
SPEAKER_01: And if it's an older property, it's probably gonna be a gross lease.
21:07
SPEAKER_01: Again, a triple net is where the tenant pays for the property taxes, the property insurance, and the maintenance on the property.
21:14
SPEAKER_01: On a gross lease, the property owner is paying for the taxes, insurance, and maintenance.
21:19
SPEAKER_01: In in most cases, then an owner would wish for a triple net lease.
21:23
SPEAKER_01: Ideally, they would like a triple net lease.
21:25
SPEAKER_01: The only time they won't want to do a triple net lease is if they have multiple tenants at one property.
21:29
SPEAKER_01: Okay, it it becomes a management headache to kind of monitor all the expenses.
21:34
SPEAKER_01: Right.
21:35
SPEAKER_01: So therefore they they might put it on a gross lease and put their rent a little bit higher.
21:39
SPEAKER_00: So so to today I'm hearing both from a buying or or leasing perspective, we have more inventory.
21:49
SPEAKER_00: So if you're if you're leasing or buying, there's just simply more options out there for you.
21:54
SPEAKER_00: They're sitting on the market longer.
21:56
SPEAKER_00: So that means I don't know.
21:58
SPEAKER_00: I hear that, I'm like, we can negotiate.
22:00
SPEAKER_00: Yes, we can.
22:00
SPEAKER_00: Yes.
22:01
SPEAKER_00: Prices are down.
22:02
SPEAKER_00: Yes.
22:03
SPEAKER_00: Both on the leasing side, cap rates are up, so values are down.
22:07
SPEAKER_00: So if you're a buyer looking in an industrial, this would be a perfect time to try to get in.
22:13
SPEAKER_01: This would be a great time.
22:14
SPEAKER_01: Yes.
22:15
SPEAKER_01: And I think for industrial properties, I don't think.
22:18
SPEAKER_01: I I I feel very confident that for the industrial market, because everything goes in cycles, we are on the bottom part of the cycle for industrial.
22:30
SPEAKER_01: So meaning that we've been in a recession for industrial properties for probably the past two years.
22:38
SPEAKER_01: And meaning when we are in when prices are down, it's the best time to buy.
22:44
SPEAKER_01: Yeah.
22:45
SPEAKER_01: And so it's buy low, sell high.
22:47
SPEAKER_01: Yeah.
22:47
SPEAKER_01: Yeah.
22:47
SPEAKER_01: And that's the market that we're in today.
22:49
SPEAKER_01: So if you're a buyer, this is a fantastic time to be buying properties.
22:53
SPEAKER_01: But again, remember, we're in a recession.
22:55
SPEAKER_01: I'm calling this a recession for industrial properties.
22:57
SPEAKER_01: Okay.
22:58
SPEAKER_01: But our vacancy for industrial is still between three to five percent, which is still extremely, extremely low.
23:08
SPEAKER_01: And as consumers continue to buy things online, online sales are just increasing, right?
23:16
SPEAKER_01: Online sales requires more warehouse space.
23:18
SPEAKER_01: So if you require more warehouse space, so then you need more industrial demands gonna start to increase.
23:25
SPEAKER_01: But one thing that they're not doing right now, they have been doing in for many, many years, they're not building industrial properties that are under 100,000 square feet.
23:33
SPEAKER_01: And so that the amount of inventory is not increasing, in fact, it's decreasing because they're making way for guys like you to put more multifamily there.
23:43
SPEAKER_01: And at the same time, since we have a bigger demand for industrial properties, the uh the supply is going to be very challenging for a long time.
23:53
SPEAKER_01: And so we're gonna come back up from this recession very quickly.
23:57
SPEAKER_01: And so right now, this is a time to be buying properties before we things go back up.
24:03
SPEAKER_00: What do you tell, and thank you for that.
24:06
SPEAKER_00: Anyone watching this, it if you're if you're sitting on some money or you're trying to trying to think, well, where should I place some some money?
24:13
SPEAKER_00: Maybe you inherited some money, or you've been thinking of, man, do I go into multifamily industrial?
24:18
SPEAKER_00: Um, this is a great opportunity, and everything that Gary's saying makes a lot of sense.
24:22
SPEAKER_00: What do you say to the the investor, the buyer, the owner, user who says, Gary, I hear you, it's the right time, but I'm waiting for interest rates to drop, and then, Gary, then I'll write the offer.
24:34
SPEAKER_00: What do we say out of that person?
24:36
SPEAKER_01: Well, I think right now is the opportune time to be looking at properties because everyone's waiting for interest rates to drop.
24:43
SPEAKER_01: And so once interest rates drop, what happens to all the buyers?
24:47
SPEAKER_01: They all come into the market.
24:49
SPEAKER_01: Now you have more competition.
24:51
SPEAKER_01: The more competition that you have, it's gonna push prices up.
24:55
SPEAKER_01: Correct.
24:56
SPEAKER_01: So right now is the best time, and we all want to wait until elections, we all want to wait until interest rates, we all want to wait until we get out of the holidays.
25:05
SPEAKER_01: We all want to wait until something happens, until it's a more appropriate time.
25:10
SPEAKER_01: But right now is the best time to be buying industrial properties.
25:13
SPEAKER_01: I think right now is the best time to be buying multifamily properties right now as well.
25:17
SPEAKER_01: Correct.
25:18
SPEAKER_01: And so this is the best time.
25:19
SPEAKER_01: Let everyone else wait.
25:21
SPEAKER_01: Let's not wait, let's get out there and let's buy.
25:23
SPEAKER_00: Gary, what um tell us uh tell us about your your focus in Southern California.
25:31
SPEAKER_00: Where do you where do you do the most of your business and where can you help our viewers?
25:35
SPEAKER_00: Like where like where's your your market?
25:39
SPEAKER_00: How far can you go?
25:40
SPEAKER_00: What's the best way for them to reach out to you?
25:43
SPEAKER_01: So I grew up in Pico Rivera in Santa Fe Springs, Whittier, you know, so that's the area I grew up in.
25:49
SPEAKER_01: So that's the area that I know really well just growing up at from a kid.
25:53
SPEAKER_01: Yeah.
25:54
SPEAKER_01: I I most of my business right now is having to do with industrial properties, uh, primarily in North Orange County and Mid-Counties.
26:03
SPEAKER_01: Now, mid-counties is going to include, you know, Piquet Rivera, Santa Fe Springs, Whittier.
26:07
SPEAKER_01: But I do a lot of work in the City of Commerce, Vernon, Anaheim, and all that area is the area that I'm in day in and day out.
26:16
SPEAKER_01: We do a lot of work in Inland Empire as well.
26:19
SPEAKER_01: We're not in that market, you know, on a day-to-day basis, but we do a lot of work out there.
26:23
SPEAKER_01: And so if I were to have to pick a spot or a uh an area, it's really from downtown LA to uh all of North Orange County to uh Santa Ana, you know, Irvine area.
26:36
SPEAKER_01: Okay.
26:37
SPEAKER_00: And if someone says, Kit Kit, I'm out of state, can you can you assist me?
26:42
SPEAKER_00: Is that is is that a call you'd like to take?
26:45
SPEAKER_01: Uh we can, and we've done deals out of state.
26:47
SPEAKER_01: We've done multiple deals in Florida, Alabama, like we were talking about, Arizona, Nevada, Texas.
26:55
SPEAKER_01: Uh, we're looking at something right now in Utah.
26:57
SPEAKER_01: And so we can, and we have a lot of relationships that are outside of state as well.
27:03
SPEAKER_01: You know, so one thing being a CCIM, an SIOR, uh, our network and our reach uh is very broad, and we have a lot of good relationships with other professionals that are outside of our area in those markets that we could just make some quick phone calls and get people either in the right uh with the right person to start talking to, or we could also assist the best that we can as well.
27:28
SPEAKER_01: And we've done many stuff outside of state, and we don't do a whole lot of it, but we've done a lot of it over the years.
27:34
SPEAKER_00: Awesome.
27:35
SPEAKER_00: Um, I know you mentioned CCIM, so CCIM, certified commercial investment member.
27:40
SPEAKER_00: I've been, I earned that designation over 12 years ago, and and I did it at the time, Gary, because my mentor was a CCIM, he was an MAI, so he was also an appraiser.
27:53
SPEAKER_00: And he he paid for me to go to one class, so CCIM 101.
27:59
SPEAKER_00: It's a great class.
28:00
SPEAKER_00: It's a great class.
28:01
SPEAKER_00: And when I the people I'd met, I was there for a week, I sat in front of the class, and I felt so much more confident in what I was talking about.
28:11
SPEAKER_00: And then from the from then on, I went on and paid for the rest of my other courses.
28:16
SPEAKER_00: It took a couple years.
28:17
SPEAKER_00: When it was all said and done, and I and I earned the CCIM badge.
28:20
SPEAKER_00: I looked back and I said, I learned more from CCIM than my degree in accounting.
28:24
SPEAKER_01: Yes.
28:25
SPEAKER_00: And accounting is a very difficult major, and I'm like, I I took more away from this designation.
28:30
SPEAKER_00: Um, Gary's not only a CCIM, he's also one of the instructors.
28:34
SPEAKER_00: It's very hard to become an instructor.
28:36
SPEAKER_00: Gary, talk to us about CCIM, what you do for them, the role you play, and just what it means to you.
28:42
SPEAKER_01: Well, I guess I could even talk about how I got into CCIM or why I got into CCIM.
28:49
SPEAKER_01: But one thing that I found once I started taking my CCM courses, well, after I took my 101, I also had a lot of confidence after that course.
28:57
SPEAKER_01: And I I continued on into the rest of my courses, 102, 103, 104.
29:02
SPEAKER_01: I did a lot of Ward Center courses as well.
29:06
SPEAKER_01: And what I found is that I learned a lot of good information, and a lot of good information that I was able to help my clients on, which gave them a really good opportunity with whatever transaction that we were working on, which essentially helped me get some nice commissions as well.
29:22
SPEAKER_01: Yeah.
29:23
SPEAKER_01: And I I I personally felt very guilty because I felt like I took all this value from CCIM and I felt the need to give back.
29:31
SPEAKER_01: And the way I started giving back was getting into leadership roles into my local chapter to SoCal CCIM.
29:39
SPEAKER_01: And I just took it a couple of notches up and put my hand up to uh to uh be an instructor as well, which was an easy thing to do.
29:49
SPEAKER_01: But now that I'm an instructor, it's been giving me even more gratification to give back to our commercial real estate uh community, not only here locally, but across the country as well.
29:59
SPEAKER_01: And it's been fantastic, it's been wonderful, and I have a lot of fun uh teaching what I teach, you know, which is CI 102 market analysis.
30:08
SPEAKER_00: Got it, got it.
30:09
SPEAKER_00: Um, for for anyone hearing this, whether you want to be a better investor and you want to invest in yourself, and there's a lot of courses out there, the CCIM, even if you weren't gonna sell real estate, I think if you just learn how to analyze, how to view a property, figure out its highest and best use, uh, just get confident in your uh financial decision making, it's the CCIM.
30:33
SPEAKER_00: I know that we have a lot of real estate friends that sell single family homes that are our viewers, and um if you're want to help that one client, this is this is the courses to take.
30:43
SPEAKER_00: And I I strongly believe in them, and and I'd um thank you.
30:47
SPEAKER_00: Thank you for uh for telling us about it.
30:49
SPEAKER_00: Um, Gary, I'm gonna give you the final say.
30:51
SPEAKER_00: Is there anything that you want to uh let us know, something that maybe I didn't touch on, or anything you just want to uh leave leave our uh our viewers with?
30:59
SPEAKER_01: Yeah, I I I would say right now has been a fantastic time to be in the commercial real estate business for multiple reasons.
31:05
SPEAKER_01: And we haven't seen this type of market, I haven't seen this type of market, and it is different in a lot of different ways from 2089, you know, during the Great Recession.
31:14
SPEAKER_01: There is a lot of uncertainty in that market.
31:16
SPEAKER_01: Uh, there's a lot of uncertainty in this market as well.
31:19
SPEAKER_01: Uh the market is a little bit different, you know, between between the two, but it's creating a lot of opportunities today as an investor, as a buyer, to be buying commercial real estate, to be buying real estate, because there is a lot of property owners that are not handling their properties properly, they're not marketing the properties properly.
31:41
SPEAKER_01: And what we're finding, we're finding so many deals right now for our buyers that it I'm just so excited, I can't wait to get up in the morning of every day, hurry up and get to the office because the assignments that we're working on is gonna make our clients tons of money.
31:57
SPEAKER_01: We see it, we know it, and an example is we helped one of our clients purchase a property in the city of Placentia.
32:05
SPEAKER_01: The property last year was appraised at$6.7 million.
32:09
SPEAKER_01: We purchased the property at 4.95.
32:11
SPEAKER_01: Wow.
32:12
SPEAKER_01: Now, okay, it's not because there was a drop in market value, but what it was, the property was sitting on the market for a little bit too long from what the seller wanted to uh uh you know wait for, and the property wasn't being marketed properly, so it gave us an opportunity uh to purchase that property at 4.95, but that property is worth 6.6.
32:34
SPEAKER_01: That our client has walked into 1.6 equity, 1.6 million equity from the time we close escrow.
32:43
SPEAKER_00: And that doesn't happen if you work with just any agent.
32:47
SPEAKER_00: You have to work with someone who's skilled, who has a market niche, who knows the area, and has been doing this for years and is what I would consider the uh knowledge broker of their area.
32:58
SPEAKER_00: Um, Gary, thank you so much for sharing with our viewers.
33:01
SPEAKER_00: I learned a lot.
33:02
SPEAKER_00: I hope you guys did too.
33:03
SPEAKER_00: We're gonna make sure to have Gary's information down in the bio.
33:06
SPEAKER_00: If you have any questions, feel free to reach reach out to Gary directly.
33:10
SPEAKER_00: Uh make sure to comment any questions below.
33:12
SPEAKER_00: I'll make sure to get those over to Gary and until next time.
33:16
SPEAKER_00: So there you have it, my interview with Gary Martinez.
33:18
SPEAKER_00: I took a lot away from it.
33:19
SPEAKER_00: It's similar dynamics as to what's happening in multifamily.
33:25
SPEAKER_00: High cap rates means low values, high inventory means better negotiation.
33:30
SPEAKER_00: So if you're someone who's thinking of investing, you have some money, maybe you're an owner user, maybe you're tired of leasing, give industrial a shot.
33:41
SPEAKER_00: Feel free to reach out to Gary or reach out to me and then I'll make the connection from there.
33:45
SPEAKER_00: But um there was a lot to take away, and I agree with them.
33:49
SPEAKER_00: This is the time to get in.
33:50
SPEAKER_00: Whether it's industrial or multifamily, this is the time to make your cash work for you.
33:58
SPEAKER_00: Now I want to talk to you, my viewers.
34:00
SPEAKER_00: Um I want to just say thank you guys.
34:03
SPEAKER_00: Thank you so much for your comments, for your subscription, for tuning in, for reaching out, for calling me, for giving me leads, for referring me.
34:14
SPEAKER_00: I want to say thank you.
34:15
SPEAKER_00: Uh when I started this journey five years ago, I would have never imagined that it would have been this promising for my business.
34:23
SPEAKER_00: The the amount of uh positive feedback that that you folks give me, it just means so much.
34:30
SPEAKER_00: And so I just want to I want to personally say thank you.
34:33
SPEAKER_00: Um your your comments, you reaching out, your words make me want to keep doing this.
34:40
SPEAKER_00: Before I was fearful of speaking in front of the camera, I did not want to do it.
34:44
SPEAKER_00: I would pray that the videographer would would get a flat tire because I did not want to do this, but it just means so much working with you, being able to reach you, being able to provide value.
34:58
SPEAKER_00: You know, listen, sometimes I watch the videos, I'm like, yeah, it wasn't that good.
35:02
SPEAKER_00: But then you folks say that it was and that it changed something or it motivated you, and then you call me and you want to work with me, and it means so much.
35:09
SPEAKER_00: And what I want to say to that is thank you so much, and we're gonna continue doing this.