Optimus Logistics Center

Optimus Logistics Center: Difficult Deal, Positive Payoff

From the start, the Optimus Logistics Center in Perris, California, presented a series of challenges for the team that guided the project to its eventual completion. The leaders of that team shared the ups and downs with attendees at I.CON West 2019.

The total 68.48-acre site came together after three years of a complicated land-assemblage project involving eight different land owners and 14 different parcels.

“We could have been held hostage at any time,” said Gary Hamro, partner with Optimus Building Corporation. When an outstanding 2,500-square-foot parcel showed up in the truck yard area of their draft site plan, Hamro talked about the back-and-forth negotiation with the seller. “Finally we asked him, ‘What’s your price?’ He told us he wanted enough to buy a new, fully loaded Chevy truck.” So they wrote the check.

The next challenge: rezoning. The city had previously wanted to build a new regional mall in the space. “And we all know how many regional malls are built these days,” joked Jim Camp, senior vice president and regional development officer, Rockefeller Group.

The first site plan the team presented to the City of Perris had 1.7 million square feet of industrial space. When the City asked them what they planned to do about the highway on-ramp planned to bisect the center of their 68-acre parcel, the team was flummoxed. They hadn’t been told of the plan. They prepared and presented a new site plan that accounted for the need for northbound egress from a residential area, but it was still panned without explanation. Finally, after a series of political changes at the state level, including the indictment of a city official and special election, the project was approved.

Then the project faced another hurdle. A California Environmental Quality Act (CEQA) lawsuit was brought against the property, costing somewhere in the neighborhood of $500,000 and countless hours and resources.

But the team’s optimism and interest in the project never lagged. “We looked at the million-square-foot market in particular, made some assumptions of time frames and lease-up periods and we could see a window of opportunity,” said Marc Berg, Vice President – Regional Director, Rockefeller Group.

Marketing the property required a special approach. “JLL had to get educated on the lawsuit and educate potential buyers on why we thought we could win,” said Peter McWilliams, International Director, Industrial Services, JLL.

No need to worry – there were over a dozen offers on the property. Rockefeller Group crossed the finish line. “They had they had done all of their homework and did all of their due diligence. They asked all the right questions,” McWilliams said. Rockefeller eventually sold one building to Ferguson Enterprises, the largest U.S. distributor of plumbing supplies, PVF, waterworks, and fire and fabrication products, and the other to global investment firm KKR.

Despite the complexities of the project, the team was upbeat about the end result. The new warehouses have created many new jobs, and higher-paying jobs at that. The e-commerce sales generated are also taxed by the city, so where Perris had one of the highest unemployment rates in the state, and was suffering financially, it now has a newer source for revenue and job opportunities for residents.

“I would do this in a heartbeat again if it were the same group of people,” said Berg. “You always learn from a new deal. In this deal in particular, the personal traits of each person brought a lot to the table. Everyone had what we needed to get this done.

Optimus Logistics Center NAIOP 2019 from NAIOP Corporate on Vimeo.

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This post is brought to you by JLL, the Social Media and Conference Blog sponsor of NAIOP’s I.CON West: The Industrial Conference. Learn more about JLL at www.us.jll.com or www.jll.ca.

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