Real Estate Blog

Demand spurs development of industrial space in Fresno

Developer pours foundation for growth

Diversified Development Group poured the concrete foundations and pads for three large buildings on 30 acres at Central and Minnewawa avenues in Malaga. The size: 553,000 square feet of space or approximately 12 football fields. The cost: $32 mill
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Diversified Development Group poured the concrete foundations and pads for three large buildings on 30 acres at Central and Minnewawa avenues in Malaga. The size: 553,000 square feet of space or approximately 12 football fields. The cost: $32 mill

Fresno County lost out on the chance to bring at least three manufacturing and distribution companies to the area recently because of space – there is none.

Companies are OK waiting six months for a property, but not a year or two years for one to be built, says Lee Ann Eager, president and chief executive officer of the Economic Development Corporation serving Fresno County.

The warehouses that sat empty during the recession are getting sucked up as the economy recovers. And developers, for years, have shied away from building speculative developments or a building without a specific use or tenant signed on.

The EDC, determined not to miss another opportunity, put out a call to local developers to build. While some have started small projects or buildings in industrial parks around Fresno, Diversified Development Group has jumped into the game, breaking ground in July on the county’s largest speculative development in years.

The Fresno company this week poured the concrete foundations and pads for three large buildings on 30 acres at Central and Minnewawa avenues in Malaga. The size: 553,000 square feet of space or approximately 12 football fields. The cost: $32 million.

90 percent of the project’s subcontractors are based in Fresno.

The first building is expected to be finished and available by the first week of December.

Developer John Brelsford wants to provide businesses with options “so that if anybody comes to town, there’s a building that is finished – boom, they can move into it in 90 days,” he says. “That’s what is really needed in large users.”

Brelsford says two businesses have expressed interest in the new development, but no tenants have been signed.

The buildings can be divided up depending on the amount of space each business needs. Brelsford expects the development to bring in more than 500 jobs once the site is filled.

The site will have one 121,200-square-foot, one-sided building, which means it has a loading dock on one side. A 249,600-square-foot building and a 181,800-square-foot building will have docks on both sides to accommodate distribution companies that need to unload product on one end and load on the other for delivery.

DDG, as the company is often referred to, got its start 36 years ago building office, retail and industrial developments in the central San Joaquin Valley. But the small company has concentrated on industrial real estate for the last 20 years, averaging more than 1 million square feet of speculative industrial space a year in the early 2000s.

I can go around the country and say, ‘I already have a place for you.’

Lee Ann Eager, president and chief executive officer of the Economic Development Corporation serving Fresno County, in eager anticipation of what the new industrial development means for recruiting business

Then the recession hit and new construction came to a halt. In retrospect, it was a good thing, Brelsford says: It allowed for existing space to fill up.

The vacancy rate for DDG properties during the height of the recession was around 7 percent to 7.5 percent, compared to the market-wide high of 11.5 percent to 12 percent, says Nicholas Audino, senior vice president/industrial at Newmark Grubb Pearson Commercial, a Fresno commercial brokerage company. Now, vacancy rates are down to 6.5 percent and for Class A space (what DDG is building) it’s close to 2 percent, Audino says.

“The economy has gotten better organically,” Audino says, and “we’ve pulled out of the recession.” Companies are growing, but their existing buildings don’t allow for expansion, forcing them back into the market. Another factor affecting demand is company relocations for high-speed rail, which will continue for at least two more years.

DDG owns and operates 7 million square feet of industrial space in Fresno and Visalia, leasing to national and international companies attracted to the central location between San Francisco and Los Angeles. Tenants include Graybar Electric Co., Hilti, Dairy America, International Paper, Kraft Foods, Sally Beauty, Pro Flowers and Mission Foods.

DDG owns and operates 1.5 million square feet of industrial space in the city of Fresno, 4 million in Fresno County and 1.5 million in Visalia.

About 1.5 million square feet turns over every year with many of the existing tenants expanding two, three and four times to larger buildings that the company owns, Brelsford says.

Ideally, DDG always has space available to accommodate growth or for tenants to use as storage if an unexpected shipment comes in.

Audino, the broker, is confident that the new space will fill up quickly. “It will likely be leased well before it’s finished.”

Eager, the EDC president, has been waiting three years for a project of this size and design. She is excited to present it to companies looking for new space.

“I can go around the country,” Eager says, “and say, ‘I already have a place for you.’”

Fun construction facts

  • More than 22,000 yards of concrete will be used, delivered by more than 2,400 concrete trucks.
  • More than 17,281 sheets of plywood will be used on the roof alone.
  • The roofs will total more than 550,000 square feet, or the size of 12 football fields.
  • About 1.3 million nails will be used to secure the plywood to the roof.
  • More than 11.8 miles of pipe will be used for the Early Suppression Fire Response system in the buildings.
  • The pipes will hold 19,729 gallons of water.
  • The sprinkler system, supported from the roof, will weigh 284.7 tons.
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