By Carrie Rossenfeld | Orange County NEWPORT BEACH, CA—Increasing foreign direct investment in the Inland Empire has Guthrie Development Co. changing its marketing strategy at Airport Distribution Center, a class-A, multi-tenant, 221,171-square-foot industrial park in Ontario, CA. As reported in October, the property fit the firm’s strategy for selling individual units as condominiums to small industrial users, and now the firm’s president Rob Guthrie and CBRE’s first VP Jason Chao—who is part of the brokerage team working with Guthrie—tell they are expanding their target user market based on growing FDI occurring in the region. We spoke exclusively with the pair about FDI and the changing strategy, as well as how the firm is leveraging this trend in its marketing. And, you can hear Guthrie speak on the development panel at RealShare Inland Empire in Ontario, CA, on January 29. How is foreign direct investment impacting real estate investment?


Chao: According to CBRE, over the past couple of years, foreign direct investment in US commercial real estate has reached record levels. In particular, investors from China have been acquiring commercial and residential real estate at a rapid pace, emerging as the second-largest foreign investor in US commercial real estate, accounting for approximately 8% of activity in 2013 and more than 15% in 2014. Is this true for the Inland Empire?


Chao: “Over the last five years, there is an increasing interest from mainland China users who are looking to set up locally in Southern California.” Chao: This activity is well evidenced in the Inland Empire. Recent deals underscore China investment activity. Focus Technology, a B2B group from China, leased a 203,620-square-foot Ontario building for their e-commerce platform. Peng Cheng Aluminum, an aluminum manufacturer, purchased a 600,000-square-foot building in Riverside, bringing its total square-foot investment in the Inland Empire to about 2 million square feet. Will FDI also impact the smaller industrial space?


 Chao: According to CBRE, Asian money has been prevalent in the San Gabriel Valley and the Inland Empire for some time. A majority of these buyers have been importers bringing in goods from China and the Far East through the Southern California ports. However, over the last five years, there is an increasing interest from mainland China users who are looking to set up locally in Southern California. These manufacturers think, “I can cover my market better if I set up my shop here.” They are also anxious to move money out of China into stable environments such as the US. What is the target market for Guthrie’s Ontario acquisition?


Guthrie: At the end of 2014, we acquired a 221,171-square-foot industrial park located in Ontario called Airport Distribution Center. The park is composed of three buildings and 30 units, ideal for small industrial-building ownership. While the lower cost of ownership has long been a driver for this industrial segment in the Inland Empire, the growing number of foreign direct investment has emerged as a potential target market for these condo units. How are you leveraging this trend in your marketing?


Guthrie: There is a two-fold attack. There is a standard buyer pool of owner/users currently, but there are also a number of leases in place that we can take to private-capital investors. What is the long-term opportunity for foreign direct investment?


Guthrie: They view the US as a viable market outside of China for achieving steady growth and for further diversification and insulation from possible economic instability. The overarching trends of Chinese investment and increased occupier activity have only gained momentum and are rapidly gaining steam.