Chinese 3PLs are increasingly leasing space in the Inland Empire, Orange County, and LA County due to the growth of manufacturing in China and the need for storage and distribution in the US. Despite initial concerns about the financial stability of these companies, many have honored their commitments and even received security deposit refunds. Landlords have become more flexible in underwriting credit for these tenants. Tenant representation for Chinese 3PLs often involves providing full client service support and coordinating with various vendors for services such as office design, security, IT, and signage. The language barrier and time zone difference can be overcome through effective communication and daily interaction. Relocating can be challenging and time-consuming, requiring careful coordination and project management.

Key Takeaways

• Chinese 3PLs are leasing space in the Inland Empire, Orange County, and LA County due to the growth of manufacturing in China.
• Despite initial concerns, many Chinese 3PLs have honored their commitments and received security deposit refunds.
• Landlords have become more flexible in underwriting credit for Chinese 3PLs.
• Tenant representation for Chinese 3PLs involves providing full client service support and coordinating with various vendors.
• Effective communication and daily interaction can overcome the language barrier and time zone difference.
• Relocating can be challenging and time-consuming, requiring careful coordination and project management.

Chapters

Episode Resources

Connect with Chris Vassilian

• https://www.linkedin.com/in/chris-vassilian/

Connect with Justin Smith

• https://smithcre.com/
• https://www.lee-associates.com/
• [email protected]
• https://www.linkedin.com/in/justinbsmith

Rob Guthrie, founder of Guthrie Development, shares his experience in industrial real estate, specifically in condo conversions and value-add strategies. He discusses his background in real estate development and his specialization in small industrial buildings for sale. Rob emphasizes the importance of location and demographics when considering condo conversions and highlights the benefits of owning a small business property. He also talks about the challenges and pitfalls of condo conversions, including market fluctuations and the need for flexibility in financing and leasing options. In this conversation, Rob Guthrie and Justin Smith discuss the real estate industry, specifically focusing on multi-tenant industrial properties. They talk about the target market for these properties, the challenges of attracting institutional investors, and the value-add process for improving older properties. They also touch on design features, dealing with environmental issues, and advice for those interested in entering the industry.

Key Takeaways

• Condo conversions can be a successful strategy in industrial real estate, especially for small business owners who want to own their own space.
• Location and demographics play a crucial role in the success of condo conversions, as buyers often prefer to work close to where they live.
• Condo conversions provide flexibility in terms of leasing and financing options, allowing for income generation even in a slow sales market.
• Pitfalls of condo conversions include market fluctuations, the discretionary nature of the purchase decision, and the need for careful management of timelines and entitlements.
• Private equity investment, including friends and family and country club equity, is common in the industrial real estate market. The target market for multi-tenant industrial properties is younger brokers with experience and knowledge in the industry.
• Attracting institutional investors can be challenging due to their preference for other asset classes.
• The value-add process for improving older properties involves making functional improvements, re-tenanting, and enhancing the exterior appearance.
• Dealing with environmental issues can be time-consuming and costly, so it's important to carefully consider the feasibility of such projects.
• Joint ventures with building owners can be a win-win situation, allowing for shared profits and mitigating risk.
• Having a good listing agent is crucial for finding deals and navigating the real estate market.
• It's important to be patient and leave room for unexpected expenses in real estate projects.
• Soft costs, such as permits and fees, can significantly impact the profitability of a project.
• The real estate industry offers opportunities for those willing to start small and gain experience.
• Aligning interests and forming partnerships can lead to long-term benefits in real estate projects.

Episode Resources

Connect with Rob Guthrie

• https://guthriedevelopment.com/

Connect with Justin Smith

• https://smithcre.com/
• https://www.lee-associates.com/
• [email protected]
• https://www.linkedin.com/in/justinbsmith

Chapters

00:00 Introduction and Background 06:38 Condo Conversions and Association Management 08:06 Underwriting and Comparing Lease vs. Buy 09:30 Location and Demographics in Condo Conversions 11:05 Benefits and Challenges of Condo Conversions 19:13 Value-Add Strategies and Successful Projects 25:20 Expanding Territory and Market Insights 26:16 Condo Project Pitfalls and Risk Mitigation 28:03 Lease Options and Financing Solutions 31:23 Private Equity Investment in Industrial Real Estate 32:02 Targeting the Sweet Spot: Young Brokers in the Multi-Tenant Industrial Market 34:22 Challenges in Attracting Institutional Investors to Multi-Tenant Industrial Properties 35:59 The Value-Add Process: Improving Older Properties for Higher Returns 39:13 Dealing with Environmental Issues in Multi-Tenant Industrial Projects 52:27 Joint Ventures: A Win-Win Approach to Real Estate Development 53:52 The Importance of a Good Listing Agent in the Real Estate Market 55:30 Patience and Contingency: Key Factors in Real Estate Projects 56:00 Starting Small: Opportunities for Newcomers in the Real Estate Industry 59:44 Aligning Interests: The Power of Partnerships in Real Estate

In this episode, Justin Smith interviews Michael Schulte of Intralog about setting up a warehouse and the role of brokers in the process. Intralog is a material handling systems integrator that brings data-driven design to customers who may not have access to it. They discuss network optimization, which involves using mathematical optimization to minimize costs and improve service levels in supply chain network design. They also explore the latest trends in warehouse design, including considerations for activity areas such as picking and value-added services. In this conversation, Justin Smith and Michael Schulte discuss the implementation and challenges of warehouse design and optimization. They cover topics such as the importance of communication, the role of data in designing storage solutions, the impact of supply chain network design, and the value of strategic equipment selection. They also touch on the influence of municipalities on warehouse design and the considerations involved in real estate negotiations. Overall, the conversation provides insights into the key factors and best practices for successful warehouse design and optimization.

Takeaways

• Setting up a warehouse requires careful consideration of factors such as customer demand, growth projections, and optimization of processes.
• Network optimization, using mathematical optimization, can help minimize costs and improve service levels in supply chain network design.
• Warehouse design involves determining the size of the footprint, considering activity areas such as picking and value-added services, and balancing time and space constraints.
• Brokers play a valuable role in matching theoretical design concepts to the reality of the market and helping customers make informed decisions. Effective communication is crucial in warehouse design and optimization projects.
• Accurate and clean data is essential for designing storage solutions.
• Strategic equipment selection can lead to cost savings and improved efficiency.
• Considerations such as fire codes and municipal regulations can impact warehouse design.
• Real estate negotiations require careful consideration of the investment in the facility and the potential for future growth.

Episode Resources

Connect with Michael Schulte

• https://www.linkedin.com/in/michaeldschulte/
• https://intralog.io/ 

Connect with Justin Smith

• https://smithcre.com/
• https://www.lee-associates.com/
• [email protected]
• https://www.linkedin.com/in/justinbsmith

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