All posts by singlemalt

Native Angeleno and Industrial real estate agent since 1994.
Deal File, Food Industry

Real Mex Food Expands Food Processing Plant

Leave a comment

Real Mex Foods expanded food processing plant in Vernon, CaliforniaReal Mex Foods supplies more than 200 restaurants as the distribution branch of Real Mex Restaurants, Cypress, Calif., including Chevy’s, El Torito and Acapulco restaurant concepts located in Arizona, California, Nevada, Oregon and Washington.  In addition, Real Mex Foods has branched into broader frozen foods processing for foodservice, co-pack and retail channels serving clients such as Sysco Distributors, El Pollo Loco, Carl’s Jr.-Green Burrito, Albertson’s and U.S. Foods.

In February, Real Mex closed its 32,000-square-foot manufacturing plant in Santa Fe Springs, Calif., and moved into a 100,000-square-foot space in Vernon, California. The city of Vernon and a developer came to us and proposed a deal where we got a 100,000-square-foot building retrofitted to a state-of-the-art USDA manufacturing plant, Angulo explains.  It was an opportunistic deal.   They got us into 100,000 square feet at the cost that we would have gotten a build-to-suit 65,000-square-foot building.

Food safety also was a major priority for Real Mex in building out the new plant. The company built an in-house lab and hired a complete quality assurance team. Other food safety precautions include a triple boiler system, floor foamers, centralized sanitation system, in-house chlorination system for vegetables and a full quality assurance staff.

The developer invested $10 million in the build out, while Real Mex spent about $4 million on equipment. The completely refurbished plant quadrupled the company’s previous capacity and allowed it to more than double the number of kettles, tumble chillers and blast freezers. www.realmexfoods.com

Market Trends & Indicators

Market Update – Q4 2008

Leave a comment

untitled-1Deceleration.  Real estate industry investors and professionals expect financial and real estate markets in the United States to bottom in 2009 and flounder for much of 2010, with ongoing drops in property values, more foreclosures and delinquencies, and a limping economy that will continue to crimp property cash flows, according to the Emerging Trends in Real Estate 2009 Report.

Losses are projected in real estate values from their 2007 peaks.  The lack of real estate financing will prevent us from finding the bottom of the market.   However, the Central Los Angeles industrial real estate market is not expected to suffer as much as other industrial markets not only in Southern California but also across the country.

Despite an increase in vacancy rate,  the Central Los Angeles industrial real estate submarket continues to maintain the lowest vacancy rates for the nation, despite a decline in demand.  Other commercial sectors such as multi-family, office and retail will suffer a far worse fate in the coming 12-24 months.  We do expect continued softening in values as demand from buyers and tenants has fallen off substantially.  Many companies report revenue drops in the range of 30 to 40 percent for 2008.  More properties continue to become available providing a better selection for those who need such space.

The consensus is that the problems which have plagued the second half of 2008 will persist, and possibly worsen into 2009. Consumers have significantly scaled back spending and the reverberations are filtering down all the way to the Los Angeles industrial market as retailers cut their orders for merchandise that once filled warehouse distribution centers to capacity.

The impact of lagging activity will show up in the asking rents and in the increasing levels of available sublease space, especially in industrial markets along the ports’ distribution path. What is unique about thisdownturn is the increase in available warehouse/distribution sublease space. Asking rates will dip as vacancy increases moderately. However the largest concern facing the market in the coming year is how long the national downturn will last and how widespread its effects will be.

As economic specialists scratch their heads in Washington, the rest of the nation and world is forced to wait and see. Because of the overarching economic issues, vacancy will increase a half point and absorption will remain negative in 2009, as rents see a 6-8 percent decrease.

Market Trends & Indicators

California To Curb Truck Emissions

Leave a comment

truck trailer logisticsNew regulations in California for heavy-duty diesel trucks could force a sweeping overhaul of the state’s trucking industry and pave the way for similar changes elsewhere.

The California Air Resources Board voted Friday to require trucks after 2011 to gradually reduce emissions of soot and, eventually, nitrous oxides implicated in smog formation. Remedies range from installing diesel exhaust filters at a cost of $10,000 and higher, to buying new engines or replacing trucks altogether.

Nearly all vehicles must be upgraded by 2014, and engines older than 2010 models will have to be replaced between 2012 and 2022. The goal: Reduce soot pollution 85% by 2022.  Full article in the Wall Street Journal newspaper.

Market Trends & Indicators

Cost of Building Materials In Check

Leave a comment

costofstainlesssteelAccording to Engineering News Record, the average price of standard structural steel fell 5% in November from the previous month to $45.86 per 100 pounds, marking the third consecutive monthly decline, though prices still remain 13% higher than in 2007.  After rising steadily during the real estate boom, the costs of cement and the minerals required to make concrete have shown little movement over the past six months.