California’s Manufacturers & Technology: A New Commitment

By Jonathan Manning We just completed our first industrial real estate transaction in Los Angeles last quarter, delivering 1 million square feet to a leading grocery store operator. The completed building in Mar Vista…

California’s Manufacturers & Technology: A New Commitment

By Jonathan Manning

We just completed our first industrial real estate transaction in Los Angeles last quarter, delivering 1 million square feet to a leading grocery store operator. The completed building in Mar Vista is our 12th, and we expect to continue to expand our portfolio of competitive assets. The Los Angeles market continues to show strength as the California economy achieves some of the strongest growth seen in decades.

But this strong performance isn’t an end in itself. Rather, it’s a prelude to greater opportunities as California’s economy continues to gain momentum. There is a disconnect between the jobs being created and the outmoded infrastructure. We need to invest now in getting the right tools in the hands of California’s manufacturing sector.

This investment makes good economic sense, too. The result is not only better access to world-class manufacturing, but it also helps improve California’s labor market, a must for any successful state. We anticipate adding one to two million square feet of new construction in the year ahead and pushing occupancy rates higher throughout the portfolio. This will, in turn, create significant additional demand for existing tenant space.

Of course, we’re not the only ones investing in California’s infrastructure. We all benefit when businesses are growing. But while we like to brag about the state’s fiscal condition, the fact remains that we still haven’t put the basic infrastructure together that an advanced economy needs. The lesson? There is always more money to be made.

Over the long term, this investment will undoubtedly boost the state’s business climate and the quality of life. We’re talking about a $52 billion building binge that’s poised to create more than 400,000 jobs. Other countries spend ten times as much as we do, yet we don’t benefit from all of the technologies they have and still don’t have a strong infrastructure. We need to build it now and get it right.

California is already home to some of the world’s most important companies. It’s imperative that this state continue to be a magnet for talent, finance, and, yes, manufacturing.

Mortgage loan underwriter Wells Fargo & Company and its private-equity affiliate, Wells Fargo Growth Partners, have committed to a $2 billion program to help California’s economy by facilitating construction of more productive and efficient distribution facilities.

California is already home to some of the world’s most important companies. It’s imperative that this state continue to be a magnet for talent, finance, and, yes, manufacturing.

They are certainly taking part of that responsibility into their own hands. Wells Fargo has committed to produce $1 billion of the $2 billion in contributions in concert with other local and national leading industrial real estate developers and investors, including Bank of America Merrill Lynch, CME Group Inc., CalPERS, Duke Realty, Mitsui Fudosan Co., Realogy Corp., and The Carlyle Group.

Based in Minneapolis, Wells Fargo is one of the world’s most respected financial institutions. We’re fortunate to have a customer that has a truly global perspective and leadership. They recognize that the best interest of California and our global economy is served by a robust and productive manufacturing sector.

It’s also important that we nurture the entrepreneurial spirit of California’s manufacturers and entrepreneurs. We believe this ambitious program is part of a solution to our state’s greatest economic challenges. If we do it right, it will attract both investments from within and outside of California – and, importantly, it will leverage existing networks for business development and job creation.

Earlier this month, the California Manufacturers and Technology Association kicked off Manufacturing Day, helping showcase the state’s manufacturing community, and welcoming companies from around the country. It’s a good start to building the critical infrastructure that’s in place and, we believe, a sign of the kind of ancillary benefits that will flow from such investment.

Jonathan Manning is the president and CEO of CBRE for the Southern California submarket that includes L.A. and Orange counties.

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