CT Realty Bulks Up National Portfolio
RECENT BUYING SPREE FOR TOP INDUSTRIAL DEVELOPER
A portion of recently completed 7M-SF NorCal Logistics Center, built on nearly 500 acres in Stockton
A lot has changed since James “Watty” Watson, Carter Ewing and Dominic Petrucci took the reins of CT Realty more than a decade ago.
The former Koll Development Co. executives have helped grow transaction volume at the 27-year-old Newport Beach company from about $50 million in 2009 during the teeth of the Great Recession to north of $1 billion last year.
“Over the past 12 years, our company has evolved into a different business that’s focused on large scale industrial and logistics facilities across the country,” said Managing Partner Watson.
Though some real estate sectors are once again troubled coming out of the pandemic, this time it’s to CT Realty’s gain.
The company, which invests and develops ground-up industrial products through institutional partnerships, is capitalizing on surging demand in the sector, currently at historic highs, to fast-track expansion in and outside of Orange County.
“The growth in the e-commerce sector during the pandemic further fueled the industrial business, which was already moving at a very high speed,” Watson said.
The company recently wrapped one of its busiest acquisition pushes to date, closing on several land deals in new and existing markets.
It now counts a development pipeline topping 20 million square feet, placing it among the ranks of the country’s top industrial developers.
The company expects to break ground on about 14 million square feet of projects with a construction value nearing $1.5 billion this year alone.
In 2020, CT Realty purchased north of 1,000 acres of industrial-zoned developable land across six markets, including two new markets: Jacksonville, Fla., and Columbus, Ohio.
The company now operates in 10 major U.S. markets, with several more slated to join in the next two years.
Early last year, CT Realty closed on a 382-acre parcel in Columbus following more than four years of planning.
Development is now underway at that site, which will house a 5.7 million-square-foot warehouse and distribution facility across eight buildings.
The dealmaking has carried over to 2021.
In May, the company announced a venture with Dallas-based Diamond Realty Investments to buy 250 acres of land for the development of an eight-building, 3.2 million-square-foot logistics park in Jacksonville.
The first phase of the project is already underway, with 1.7 million square feet in three buildings. It represents the largest spec development in Jacksonville, and includes one of only two spec million-square-foot buildings in development statewide, the company said.
Closer to home, the company is currently developing Agua Mansa Commerce Park in the Inland Empire.
“We will build just under 4 million square feet there in one single phase, making it our largest single rolling-phase project to date,” said Ewing, managing partner at CT, adding that tenant demand is not a headwind for these large-scale projects.
“There is more than 10 million square feet of demand coming from tenants in the area right now, so these markets are as tight as can be.”
All of these projects are to be built on a speculative basis, with likely tenants including major third-party-logistics companies.
“We’re definitely seeing the Amazon effect, with most companies looking to grow their e-commerce platform,” Watson said.
Rising land costs are still the highest barrier to entry for industrial markets like Orange County and Los Angeles, with the Inland Empire following closely behind.
“There’s less than 1% vacancy in Orange County, and less than 2% in the Inland Empire,” Ewing said. “That’s remarkable.”
While developers have historically viewed the Inland Empire as a more cost-effective and scalable industrial market when compared to OC and LA, that may change as land values catch up.
“Pricing in the IE is about where OC and LA infill pricing was a year ago,” Ewing said. “Land values today are easily twice what they were two years ago.”
Still, “there’s more demand than there is supply.”
So much so that industrial values in many established markets are exceeding office values on a per foot basis, added Ewing.
OC on the Horizon
Though the company has been more active outside of its home base in recent years, local deals are in the cards for CT Realty, which was founded in 1994 by the late Robert Campbell.
“We are chasing some deals in Orange County and Los Angeles, although they are relatively small compared to our other projects,” Ewing said.
The company has backed some residential redevelopment projects in the John Wayne Airport area in recent years, and also headed up a medical-focused mixed-use project in Aliso Viejo
The company is eyeing additional deals this year in existing markets like New Jersey and Ohio.
“We’ve been taking risks and making targeted investments over the past decade, and that is paying off,” Watson said.