Some US firms are choosing Mexico over China for manufacturing and assembly production, particularly Northern Baja, and we’ve assembled corporate and real estate experts, government and EDC officials to share their insight at Bisnow‘s first Future of the Cali-Baja Megaregion event April 7 at the Sheraton Hotel & Marina in Downtown San Diego.
Northern Baja is particularly attractive since it is adjacent to its largest trading partner and conveniently located near large US distribution centers and the Ports of Long Beach and Los Angeles. The area offers a highly skilled labor force, with wages on average $2.50/hour in Mexico vs. $2.30/hour in China—one-fourth the minimum wage this side of the border, Synergy Real Estate Group Corporate Advisory president/CEO John Galaxidas tells us. John, one of our event speakers, specializes in corporate tenant representation on both sides of the border. His firm has five California offices and one in Tijuana.
China has long championed its position as the world’s lowest-cost manufacturing location, but in recent years has lagged behind other countries, particularly Mexico, he says. A survey by AlixPartners of 142 senior manufacturing and distribution executives found 86% plan to increase their foreign manufacturing presence closer to the US over the next two to three years. Data from Boston Consulting Group revealed manufacturing in Mexico is now 4% cheaper than in China.
Another of our speakers, USD Burnham-Moores Center for Real Estate director Stath Karras, tells us the Cali-Baja Megaregion, which encompasses Tijuana, Tecate, Mexicali and Imperial and San Diego counties, is particularly attractive because of its intellectual resources. Stath is snapped here with his son James.
Stath says Tijuana’s CETYS Universidad is producing highly trained engineers and other professionals attractive to engineering and software development firms. “So we may be seeing more engineering needs filled in Mexico, like software engineers.”
Among advantages provided by NAFTA is speedy, cost-efficient movement of products from Latin America to US markets, John says. Comparatively, the cost to ship goods to US East Coast markets from Mexico is less than half of products coming from China. Due to distance, customs and importation the difference in transit time from Mexico vs. China is as much as three weeks.
Stath tells us Northern Baja is attracting firms engaged in medical device assembly, which requires clean-room facilities, the most expensive type of assembly facility to build. John says locating in the Cali-Baja Megaregion provides US firms greater control over production and access to highly skilled labor, which is why Rochester, NH-based Phase 2 Medical Device Manufacturing chose to build a 30k SF manufacturing facility in Tijuana, rather than in China or Costa Rica.
He says electronic manufacturers like Mexico. There’s also a strong presence of military contractors, including Boeing, manufacturing military equipment there.
Cross-border economic activity is having a positive impact on the economy and real estate on both sides of the Cali-Baja Megaregion. The benefits of bi-national economic activity has opened dialogue between the mayors of San Diego and Tijuana, as well as the business communities on both sides of the border.
Speaking at a NAIOP event, SD Mayor Kevin Faulconer, above, said strengthening San Diego’s vital relationship with Tijuana is among his highest priorities. “Organizations on both sides of the international border are collectively working to ensure country lines don’t act as economic barriers,” he said.
A major milestone in this direction was the opening of the Cross Border Xpress (CBX) terminal at Tijuana International Airport in December 2015. The terminal, and its 390-foot Sky Bridge, provides a gateway to destinations in the Caribbean and Central and South America.
Major US business operations in the Cali-Baja MegaRegion include Sempra Energy (above), which is developing energy infrastructure in Mexicali and plans to supply all of Mexico with natural gas. As a result, new homes are rising alongside a huge natural gas plant under construction between Ensenada and San Diego.
Kyocera has established a solar module manufacturing plant in Tijuana, and Trimco, a former LA-based company that manufacturers brass moldings for medical equipment, recently moved its production facility, Builders Brass de Mexico—the firm’s Mexican counterpart—to Tijuana. Trimco purchased a building in Oceanside for the firm’s HQ, which employs 250 people.
LA-based Millennium Partners is under way on a 210-acre mixed-use development in the Otay Ranch area which was master planned by Stratford Land. Called Millenia (pictured is a rendering of the town center), it includes 3,000 residential units and 3.5M SF of commercial space (hospitality, retail, office and civic uses).
This Cali-Baja gateway project will focus on attracting tenants that work on both sides of the border, work for companies with headquarters in San Diego County and manufacturing facilities in Mexico, or are involved in the logistics of moving products to market. Construction on Phase 1 began in August 2013.
“Tijuana’s economy is booming, and there is very little industrial space available,” John continues, noting vacancy, which was 15% a couple of years ago, is now just 3%. As a result, lots of new industrial REITs are being formed in Mexico to build new product to keep up with demand for additional warehouse space in the region.
That includes a partnership of Deutsche Bank and FIBRA Macquarie-Mexico (FIBRAMQ), a major Mexico-based commercial real estate developer of 274 industrial properties across that country.
JLL is putting together partnerships with US investors and Mexican REITs to build facilities all over Mexico, John says. Irvine-based SENTRE Partners has formed a partnership with Mexican industrial developer VESTA.
There is lots of inexpensive land available in Baja (above is an industrial site for sale in Tijuana), John says. “The overall lower cost and efficiency of locating industrial facilities close to where labor lives makes perfect sense,“ he adds, citing the economics of warehousing goods in Tijuana vs. Otay Mesa, which offers the most competitive industrial rates in the region. While Otay Mesa industrial space rents for 60 to 70 cents/SF Gross, it is substantially less on the other side of the border at 40 to 50 cents.
Hear more from John and Stath at Bisnow’s The Future of the Cali-Baja Megaregion event on April 7, beginning at 7am with breakfast and networking at the Sheraton Hotel & Marina, 590 Harbor Island Dr, in Downtown San Diego.
If you have not already, you will likely receive an operating and tax expense pass-through invoice soon from your landlord. This could increase your occupancy cost, but that is not to say that you should just pay the invoice without actually checking its veracity.
There are eight things that you should be aware of to look for to make sure that you are not overpaying for these operating expenses. If you are a client or prospective client and would like an expert second opinion, send the invoice you receive to us. We’ll check it and compare it to the provisions of your lease, helping to find any excess charges or looming increase, all at no cost to you.
- Check the base year for accuracy and proper credit for any updates to the base year
- Double check the size of the building, to make sure a larger area isn’t being listed. Also, be sure that the size used only includes the square footage that is being used for office space.
- Make sure the percentage of the building that is being leased is correct, and see if there is a decrease to the square footage which can lead to an applicable reduction for you.
- If you have made any estimated payments, ensure that they are being properly credited to your account.
- The operating expenses should be reasonable as compared to the competitive market.
- If you have a cap on expenses that you have negotiated in the lease, be sure that you are not being charged anything more than that cap.
- The real estate taxes should also be in line with the competitive marketplace. If you find these to be too low, then we can help protect your company against an increase that is likely to be coming.
- If your building has been sold, then you need to assess the impact this may have. The selling could spur a reassessment, which can result in higher real estate taxes. In the event that this happens, contact us to help you protect your company against these real estate pass-throughs, which can get very expensive.
Synergy Real Estate Group Corporate Advisory offers a complementary lease assessment, which helps figure out if you are paying too much in operating pass-throughs and tax expenses.
Contact us today for a free lease review. We can be reached by telephone at 888-979-7787, or email us at firstname.lastname@example.org.
It doesn’t matter if you’re looking for your first office space or you’re experienced in finding the perfect spot for your company, using a tenant representative broker is a must when searching for your next office space. A tenant rep will work on your behalf to find the perfect spot for your clients, finding spots in great locations and at prices you can afford.
There are several reasons it makes sense to use a tenant representative, the first being that they will be fully versed in city codes and regulations. There are many examples of business owners thinking they were ready to move into their space, only to find that the building was out of compliance with city code. For example, specific city codes reference things such as wheelchair ramps or accessible bathrooms (among other things), and those things can be tricky to navigate if you are not familiar with them. A tenant rep will be able to advise you on issues like this.
You don’t want to end up in a scenario where you are paying rent costs on a new place, while then needing to rent out a temporary location while your new building is updated in order to meet city code. The tenant rep will be able to watch out for your financial interests in any deal that you might do.
Another benefit is that tenant reps will know the worth of commercial real estate in the area. If you are not familiar with the local market, especially if you are just moving in, you may waste valuable time and energy looking for spaces that are unrealistic for your budget. A tenant rep will help narrow your search down and find great spaces so that you can spend your time growing your business. Tenant reps also generally have the most updated listings of what is on the market (or even of things that haven’t hit the market yet), allowing them to more efficiently find properties that will match your criteria.
Last, a tenant rep will know the ins and outs of leases, including the things that are negotiable. In a typical lease agreement, there are often many clauses and intricacies that can be a bit overwhelming if you are not familiar with the contract language. A tenant rep will have navigated that contract to make sure you aren’t hit with any surprises down the road.
There are many examples where a smart tenant rep broker can help you negotiate favorable lease terms. For example, a termination option will give you the ability to ask for a grace period on terminating a lease to help cause minimal impact your financials. A right of first refusal could give you the first look at any available space in your building before it gets put on the market, which can be especially valuable if you are a growing company. Another example is in a renewal option, which may allow you to renew your lease at a cheaper rate.
If you are looking or are going to be looking for a new office space, consider a tenant rep broker and the benefits they can provide for your business. They will help save you time and money, all while helping you find the perfect office space for you while helping you get the best contract language and benefits possible.
Just as NASA has exacting standards for its spacecraft, vendors and support staff, it also has strict requirements for its office space. For example, the minimum criteria of GS-12 or higher pay grades requires separate offices for responsibilities and security.
That was one of the considerations San Diego-based Synergy Real Estate Group faced when tasked by NASA to find a building to lease for 400 to 500 such employees near the Goddard Space Center in Greenbelt, Maryland, a suburb of Washington, D.C.
“We knew NASA wanted a property in close proximity to Goddard in a relatively short timeframe, so we tapped our international alliance of tenant-rep brokers who specialize in rapid turnaround,” said John Galaxidas, CEO/president of San Diego-based Synergy Real Estate Group, Corporate Advisory LLC.
“With the assistance of Debra Stracke Anderson, president and CEO of Sloan Street Advisors, we co-brokered to represent NASA in the transaction, leasing 120,000 square feet of office space for 450 staff at 7700 Hubble Drive in Greenbelt.
“NASA was pleased and Debra was recently selected by the Mid Atlantic Real Estate Journal for one of The Best Deals of 2010 when the transaction was formally announced.”
The property is now headquarters of NASA’s Joint Polar Satellite System (JPSS) division. It also provides space for National Oceanic and Atmospheric Association (NOAA) and select U.S. Air Force staff involved with JPSS.
JPSS is the next-generation, multifunctional satellite system intended to replace current long-range weather satellites. In addition to its weather capabilities, JPSS will have advanced research and defense surveillance capabilities. The first of three satellites is anticipated to be launched in 2016 and JPSS, a major program within NASA, is expected to have a program life of 20-plus years following the launch.
The JPSS property is one of three that Synergy has delivered and negotiated for NASA in recent years.
“We identify space no other firm can find because we contact every property owner, landlord listing broker and corporation to find missed lease and sublease opportunities,” Galaxidas said. “Most tenant rep firms rely 100 percent on commercial listing services to identify space. At Synergy, we track every space in the local submarkets daily and to be sure that clients are made aware of all possibilities, as many are not marketed publicly.”
To differentiate itself from other Commercial Real Estate firm, Synergy never represents landlords, only tenants. There is no cost for its service.
– By Glenn Grant, The Daily Transcript
More than 2,800 employees work at six United States Mint facilities. One facility is a depository, one is Headquarters, and four produce coins, one of which is located in San Francisco, California.
Inventory Manager of the United States Mint’s San Francisco branch under the direction of Richard A. Peterson, Deputy Director, United States Mint contacted Synergy for assistance in locating potential warehouses to accommodate the Mint’s growing inventory storage needs.
Synergy worked closely with Mint staff to identify a short list of California properties that met the Mint’s requirements in the event it decides to relocate its 50,000 sf warehouse facility from its current location in San Francisco.
When money talks, people listen. Especially when the money is in the hands of the U.S. Mint.
So Synergy Real Estate Group paid close attention when it was contacted by the inventory manager of the Mint’s San Francisco branch for assistance in locating potential warehouses to accommodate the Mint’s growing inventory storage needs.
The Mint employs more than 2,800 workers at its six U.S. facilities. One is a depository, one is Mint headquarters in Washington, D.C., and four produce coins, including the San Francisco division under the direction of Deputy Director Richard A. Peterson.
“In early 2012, the facility had outgrown its warehouse operation for limited-issue commemorative coinage,” said John Galaxidas, CEO/President of San Diego-based Synergy Real Estate Group. “So the inventory manager contacted Adam Sass, executive vice president in our Oakland office.
“Adam worked closely with Mint staff to identify properties in the South San Francisco, Millbrae and Brisbane areas in the 50,000- to 60,000-square-foot range. They narrowed it down to two or three that met the Mint’s requirements in the event it decides to relocate its 50,000-square-foot warehouse facility from its current location in San Francisco.”
When the decision is eventually made, Synergy will assist Mint headquarters with contract negotiations in its ongoing role as a corporate real estate adviser.
“The Mint relationship is a good example of our specialty,” Sass said. “What we’re really good at is representing tenants exclusively. They might know what they want but can’t always get a picture of what’s available for them in the market. We can help them track that down.
“It requires a lot of data crunching. We advise clients on what their best options are, and expose them to current inventories that could suit their needs. Once they decide on a location, we handle the negotiations and work to get them the best terms based on our knowledge of the market. We bring a lot of market knowledge to the table that lets us get a much better deal than the client would on their own.
“Clients come to us because they know the right property is out there but they don’t know how to find it. A lot of time, they’re dealing with the landlords, and as the owner’s representative, they’re giving a very limited picture of their own properties, not the full spectrum of what’s available.”
– By Glenn Grant, The Daily Transcript
Tesla Motors, Inc. is an American company that designs, manufactures and sells electric cars and electric vehicle powertrain components. The Tesla Factory is an automobile manufacturing plant in Freemont, California. Its current production facility is on a 370-acre site is mostly unused by its 5,500,000-square-foot main building that does the final assembly of vehicle.
At the request of Tesla Motors, which was reviewing options for expanding its R&D operations on the Tesla Factory site, Synergy conducted extensive research to identify properties near Tesla’s Fremont, California campus suitable for a new 120,000sf facility for development and testing of its electric vehicles. Synergy’s comprehensive report provided Tesla the market data it needed to evaluate its options for present and future expansion. Synergy’s work with Tesla Motors as a Corporate Real Estate Advisor for a future R&D Test facility is on-going.
A building for NASA with no support beams to house the largest solar sail spacecraft of its kind. An industrial space that can handle 1,600 amps of electricity Hitachi could house and assemble the components of an ion-beam accelerator. A downtown high-rise office with beaming views of San Diego Bay for a transportation consulting firm.
What all three spaces have in common – besides beams of some kind – is the fact they were quickly researched, negotiated and represented for their tenants by Synergy Real Estate Group, Corporate Advisory LLC. San Diego-based Synergy is an international alliance of tenant-rep brokers who specialize in rapid turnaround for their clients.
“We go beyond the call of duty when we look to identify a property for our clients,” said John Galaxidas, CEO/President. “We don’t just go into the commercial MLS databases and pull properties. We contact every listing broker and property owner we can to identify a suitable property. Our marketing on behalf of our clients often helps us find properties that aren’t even listed.”
“Most brokers won’t go to that extent. They typically just go down their own database. We track every space in the local submarkets daily and make our clients aware of all the possibilities, because many are not marketed publicly.”
While many tenant-rep brokers have an online presence, not all of them use it as effi ciently as Synergy to connect tenants and landlords, Galaxidas said.
Galaxidas is as adept at navigating virtual real estate as he is the real thing. He is from a Sacramento family that specializes in developing farmland into residential housing. He attended the University of the Pacific, U.C. Berkeley and Stanford, graduating as a business major with a focus on finance and real estate.
He next worked for then-Gov. Pete Wilson’s constituent affairs office, summarizing and reviewing pending bills and other legislation, and fielding constituents’ phone calls. Wilson later appointed him assistant deputy director at the Department of General Services, Real Estate Services Division, based in part on his experience with the family business. He served throughout Wilson’s two terms, focusing on converting leases on state-owned properties into private ownership. One example is the former Agnews State Hospital in San Jose, now the Sun Microsystems/Agnews Developmental Center. In 1997, Galaxidas negotiated the sale of 8.25 acres of the approximately 90-acre site to Sun as its national headquarters.
Galaxidas struck out on his own in 2004, founding Synergy in Sacramento from scratch as a tenant-rep broker. His experience quickly paid off, landing clients throughout the state and affiliations with other brokers around the nation. The firm now has California offices with its own staff in San Francisco, San Jose, Los Angeles, Rancho Cucamonga and Irvine. In 2009, Galaxidas moved the company’s headquarters and his family from Sacramento to San Diego, where Synergy has about 250 of its 1,000-plus clients, who include Dell, DHL, HP, Sony and Cisco Systems.
What sets Synergy apart from other brokers? Galaxidas cites several factors:
“We only work for tenants, never landlords. Because we are 100 percent tenant-focused, we can do what no other tenant representative firm does: inventory the market on a daily basis; contact every property owner/listing broker on your behalf to uncover ‘off -market’ lease opportunities; and when it’s time to negotiate the transaction, we draft and send out proposals on your behalf, leveraging one landlord against the other to secure the best lease terms and rate on the space.
“There are so many more aspects of a lease negotiation other than just the economic terms. That is why having a tenant representative on your side is so valuable. There is no savings to you for not having someone on your side. In fact, not having professional representation will typically cost you money in the long run, whether in economics or in lack of lease options, terms and flexibility that we would have negotiated for you.”
– By Glenn Grant, The Daily Transcript
John Galaxidas, President/CEO of Synergy announced it completed its 3rd commercial real estate requirement for NASA.
NASA recently retained the services of Synergy Real Estate Group, Corporate Advisory (www.synreg.com) headquartered in San Diego, California to help them identify a hard to find space.
The facility had to be a specific depth, width, height and triangular in shape. NASA’s contractor L’Garde (www.LGarde.com), who is building the largest solar sail space craft of its kind in Tustin, California, originally hired a local tenant representation firm to help them find the space.
After spending Six (6) months with another tenant rep firm, NASA – L’Garde switched to Synergy which took only two (2) weeks to identify the property.
Why does NASA use Synergy over any other Tenant Representation firm?
“We identify space no other firm can find because we contact every Property Owner, Landlord Listing Broker and Corporation to find missed lease and sublease opportunities. Most Tenant Rep firms rely 100% on commercial listing services to identify space. At Synergy, we track every space in the local submarkets daily and will be sure that you are made aware of all possibilities, as many are not marketed publicly,” said John Galaxidas.
At Synergy Real Estate Group, Corporate Advisory (www.synreg.com), we only represent Tenants and are dedicated to our role as the Tenant Advocate. “Synergy is made up of principal-level professionals, so all work is handled by top negotiators in the industry,” said Galaxidas.
Synergy’s most prestigious clients include NASA, Hitachi, Farmers Insurance, HP, DELL, Cisco Systems and Charles Schwab. Synergy does not charge for its service. “Since all leasing fees associated with a building are budgeted for and paid by the landlords, you will incur no costs while having expert representation to insure that you achieve the best lease terms possible,” said Galaxidas.
How Synergy differentiates itself from other firms:
- We only work for Tenants, never Landlords: 100% Tenant Focused
- Tremendous leverage and clout with Landlords
- Value our client’s trust & confidence in our work
- No Cost for our Service. Listing Agent splits their fee to represent your interests in the transaction
- We guarantee we will secure the lowest cost on space
“We remove the conflict of interest inherent when a listing broker tries to represent both the tenant and landlord, whereby we never represent Landlords, only Tenants to secure you the best location and deal on space,” said Galaxidas.
“We do this through a proven process of first identifying all possible opportunities, and then negotiate exclusively for our client’s needs which allows us to get landlords to align themselves closer to our client’s interests,” said Galaxidas.
We do what no other Tenant Representation firm does:
- We inventory the market on a daily basis.
- We specialize in identifying hard to find “under-marketed” and “un-listed” opportunities.
- We contact every property owner/listing broker on your behalf to uncover “off-market” lease opportunities.
- When it comes time to negotiating the transaction, we draft and send out proposals on your behalf, leveraging one Landlord against the other to secure the best lease terms and rate on the space.
“At the end of the day, you receive a complete value added service which helps you avoid missed opportunities + saves you time and money since we do all the leg work for you,” said Galaxidas.
Synergy Real Estate Group Assists Hitachi Subsidiary AccSys Technology in Leasing Space for Its New Ion Accelerator Test Facility
Fremont, CA January 28, 2013
John Galaxidas, President and CEO of Synergy Real Estate Group, Corporate Advisory, announced that the company had assisted Hitachi subsidiary AccSys Technology, Inc. in leasing a 12,000 square foot industrial property to be used as a testing facility for its ion linear accelerators. The deal continues Synergy’s prominent role representing high-technology clients in Silicon Valley and the San Francisco Bay Area.
Adam Sass, Synergy’s Vice President for the San Francisco Bay Area, led the search for a property that met the specialized operational needs of AccSys’s advanced linear accelerator technology.
“AccSys was planning a test facility for our ion linear accelerators, which are widely used in such medical applications as PET scans and Proton Beam Therapy for cancer,” said Marjan Zand, Quality Assurance Manager at AccSys. “As you can imagine, particle accelerators require a lot of power, and Adam Sass of Synergy was able to quickly and accurately identify the industrial properties in our target geographic area that offered the combination of electrical service, sufficient space, secure location and other facility requirement for our test operations,” she added.
“It’s a rare opportunity and a real privilege to work with a company whose technology does so much good, and finding them the right location for their test operations was incredibly satisfying,” said Sass.
After multiple property tours coordinated by Synergy, AccSys found the right location for its test facility at 47730 Westinghouse Drive, Fremont, California, at the eastern edge of Silicon Valley. Boasting 1600 amps of 3 phase industrial power and 100% HVAC, temperature-controlled facilities, it was the ideal environment for testing AccSys’s linear accelerators. An added benefit was the easy commute from AccSys headquarters in Pleasanton, California.
To differentiate itself from other commercial real estate firms, Synergy never represents landlords, only tenants. There is no cost to clients for its services. “The heart of our business is providing in-depth market knowledge, expert property search services, and skilled negotiation to our clients,” said Galaxidas. “Since landlords pay our brokerage fees, our clients receive professional representation by our tenant representatives at no added cost to themselves.”
For AccSys Technology, choosing Synergy’s services resulted in the right property at the right price. “Synergy’s team proved efficient and reliable in managing the leasing process from start to finish. We would highly recommend their services to other technology companies seeking commercial space in the Bay Area,” said Zand.
AccSys Technology is the world’s leading commercial producer of rf ion linacs (radio frequency ion linear accelerators) for medical, industrial and research applications. Founded in 1985 as a design and manufacturing company, AccSys specializes in the development, production, installation and servicing of compact ion linacs using its patented linac technology. AccSys is dedicated to providing the highest quality and most reliable commercial ion linac systems to meet the needs of its customers. For more information on AccSys Technology, Inc., please visit the AccSys web site at http://www.accsys.com. AccSys has been an affiliate of Hitachi, Ltd. since 2002 and now wholly owned.
Synergy Real Estate Group, Corporate Advisory is the largest group of independent commercial real estate tenant representation brokers in North America. Headquartered in San Diego, California, Synergy has over 120 associate offices throughout the US, Canada, Mexico, UK, India and China. For more information about Synergy Real Estate Group, Corporate Advisory, please visit their web site: http://www.synreg.com or call: (888) 979-7787.