REAL ESTATE - Clarion Partners has created a joint venture with Trammell Crow Company to develop two new industrial buildings in Beaumont, Calif.
The development will build two warehouse/distribution buildings within the Beaumont Business Park on 26 acres. There will be a total of 560,000 square feet constructed.
Clarion managing director Doug Bowen said: “The industrial market in the Inland Empire is one of the strongest areas for industrial product in the country. Vacancies in the East Inland Empire sub market is currently at 2% to 3%. Just about everything gets leased as soon as its being constructed.”
Clarion will be developing these projects on a spec basis. Bowen said, “We are not concerned about leasing the space up, given the recent history of demand from tenants in this market.”
The total cost of the development is at $26m. Clarion will be the majority equity investor in this project. The space will be leased to companies looking to distribute their projects on a regional basis.
Clarion would be interested in setting up other JV ventures to develop more industrial product around the country. The other markets that it likes include Northern New Jersey, Tampa, South Florida and Chicago. These projects could be for warehouse/distribution or flex industrial space.
Clarion made the investment in Southern California for its commingled fund, ING Clarion Development Ventures II. The real estate manager raised $205m of equity for the fund earlier this year. One of the investors with a $50m commitment was the Alaska State Pension Investment Board.
Clarion figures that industrial properties will make up 20% of the deals for the fund. It will also invest in apartments, condos, office buildings and retail properties.
The investment strategy for the fund is to make equity investments in new development projects and buy existing properties that can be improved. It seeks gross leveraged IRRs of 20%. This yield assumes a holding period of two to four years.
