Source: citizenportal.ai

• The Planning Commission voted 5-1 to deny a General Plan Amendment and rezone from R-5 to RS-10 for a 4.81-acre single-family PUD, despite staff recommending approval.

• Commissioners cited inconsistency with the city’s ongoing comprehensive General Plan update and noted the proposed mid-$500,000 homes failed to meet lower-income RHNA targets.

• The denial of the land-use changes de facto rejects the project’s conditional use permit and tentative tract map, leaving the developer 10 days to appeal to the City Council.

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AI-Driven Mobile Robotic Factories Target SoCal Fire Rebuilds

Source: cbsnews.com

• Cosmic Buildings is deploying on-site ‘mobile robotic factories’ to construct panelized framing and roof systems, reducing project timelines from years to approximately six months.

• The startup is currently scaling operations in Southern California with 20 to 25 homes underway in high-risk areas, including the Palisades and Eaton wildfire zones.

• The automated construction method targets the persistent industry labor shortage and aims to reduce total project costs by several hundred thousand dollars per unit.

SoCal Housing Crisis: Orange, LA, and San Diego Counties Lead Nation in Unaffordability

Source: worldpropertyjournal.com

• Orange County ranks as the most cost-burdened market in the U.S., with homeownership costs consuming 90.3% of local wages, followed closely by Los Angeles (67.5%) and San Diego (67.4%).

• While affordability remains near historic lows, Los Angeles and San Diego counties saw wage growth exceed home price growth in Q4 2025, bucking the national trend seen in 43% of other markets.

• A decline in 30-year fixed mortgage rates to 6.15% triggered a modest quarter-over-quarter affordability improvement in 86% of counties, even as national home prices remain 54% higher than five years ago.

Riverside Clears CEQA Hurdle for Major Convention Center Mixed-use Project

Source: raincrossgazette.com

• The City Council certified an EIR for a ‘maximum development envelope,’ allowing up to 168 residential units, 376 hotel rooms, and 220,000 square feet of office space to proceed without further CEQA review.

• The unanimous vote denied appeals from hospitality unions and environmental groups who argued the review was premature and failed to properly analyze vehicle miles traveled (VMT) and air quality risks.

• This certification concludes a seven-year process to entitle a downtown parking lot for a 189,000-square-foot convention center expansion alongside high-density mixed-use components.

Mid County Parkway Expansion in Riverside County Receives Funding

Source: highlandernews.org

• The project will widen an eight-mile segment of the Ramona Expressway between Perris and San Jacinto, including a new bridge over the San Jacinto River and a raised median.

• Construction is slated to begin in February 2026 and conclude by June 2028, expanding the current two-lane road into a higher-capacity corridor connecting to the 215 Freeway.

• The $107 million RCTC contract involves critical infrastructure improvements and dedicated wildlife crossings, despite long-standing local opposition regarding eminent domain.

Trump Proposes Federal Ban on Institutional Investors Buying SFRs

Source: presstelegram.com

• The administration plans to call on Congress to codify a ban on large institutional investors purchasing single-family homes to address rising housing costs.

• Market data shows institutional investors accounted for only 1% of 2024 home purchases, with some of the fastest-growing markets having virtually no institutional presence.

• Industry analysts maintain that housing affordability is driven by supply scarcity from restrictive zoning and permitting rather than corporate investment.

Corona Advances North Mall Mixed-Use Project

Source: riversiderecord.org

• The proposed redevelopment includes 100,000 square feet of retail and entertainment space, a hotel, and at least 300 housing units with a 25% affordable component.

• The City Council is pursuing a Surplus Land Act (SLA) exemption to maintain control over design and developer selection, citing risks of losing site control under standard SLA procedures.

• Entitlement efforts are moving forward despite resident concerns regarding traffic infrastructure and local opposition to prioritizing residential units over community amenities.

Newport Beach Ballot Measure Seeks to Slash Housing Pipeline from 8,174 to 2,900 Units

Source: latimes.com

• Voters will decide in November 2026 whether to reject the city’s state-mandated housing element and cap total development at 2,900 units, including projects already in the pipeline.

• The ballot initiative was funded by a $150,000 contribution from Ken Picerne, CEO of the Picerne Group, who currently has multiple large-scale luxury projects under construction or approved near John Wayne Airport.

• City officials have characterized the measure as potentially self-serving, noting it could limit future competition for existing developers while aligning with resident demands for fewer market-rate units.

KB Home Launches Two New Communities at Ontario’s Compass Pointe Starting From $760k

Source: prnewswire.com

• The Meridian and Solstice developments offer two-story floor plans with up to five bedrooms and 3.5 baths, targeting the Inland Empire’s demand for spacious, move-in ready residential product.

• Located at the intersection of Haven Avenue and East Parkview Street, the site provides strategic access to major regional transit corridors including Highway 91, Highway 60, and Interstates 15 and 10.

• The communities are adjacent to the future 340-acre Ontario Grand Park and feature ENERGY STAR certified construction along with planned amenities such as a pool, cabana, and playground.

Oceanside Pivots to Corridor Infill, Drops Clustered Housing

Source: sandiegouniontribune.com

• The city has removed ‘clustered housing’ provisions for the 3,500-acre South Morro Hills agricultural region, opting to maintain 2.5-acre minimum lot sizes rather than allowing higher-density residential pockets among farms.

• Revised General Plan guidelines now prioritize high-density development along ‘smart and sustainable corridors’ including Mission Avenue, Oceanside Boulevard, and Vista Way to leverage existing transit infrastructure.

• A 45-day public comment period ending Feb. 1 is open for the updated General Plan draft, Climate Action Plan, and Environmental Impact Report (EIR), which reflect the shift toward transit-oriented infill development.

Coachella Valley Cities Cooperate on Power to Unlock Development

Source: riversiderecord.org

• The $42.6 million project utilizes a cost-sharing model between municipalities and private developers to replace the previous cost-prohibitive ‘single-developer’ funding requirement.

• Agreement participants are guaranteed ‘will-serve’ letters, enabling property owners to immediately begin the city’s planning and entitlement process for new developments.

• Scheduled for completion in 2028, the substation will provide 30 MVA of capacity to the region, supporting an estimated 8,000 new residential and commercial customers.

Home Price Growth Hits 14-Year Low as Market Eyes 2026 Spring Momentum

Source: businesswire.com

• National home price growth slowed to a 14-year low of 1% year-over-year in November 2025, signaling a significant period of market stabilization.

• Economists forecast a re-acceleration of price gains in spring 2026, contingent on declining mortgage rates releasing pent-up demand in inventory-constrained markets.

• While 2026 appreciation is expected to remain below the long-term 4-5% average, supply shortages in desirable metros are likely to maintain competitive conditions for buyers.

US Housing Turnover Hits 30-Year Low; LA Sales Fall to Fewer Than 15 Per 1,000

Source: msn.com

• National housing turnover reached its lowest level in at least 30 years, with Los Angeles ranking among the slowest markets at fewer than 15 sales per 1,000 homes year-to-date.

• A persistent ‘rate-lock’ effect continues to stifle inventory as over 70% of U.S. mortgage borrowers hold rates below 5%, significantly lower than current market rates of 6% to 7%.

• Market analysts from Redfin and Zillow forecast that mortgage rates will remain elevated through 2025, indicating a prolonged period of stagnation for the existing home market.

Reeder Land Company represented the Buyer in the purchase of +/-48 acres of land located in the North Apple Valley Industrial Specific Plan. The property is located south of Apple Valley airport and is served by an existing Liberty Utilities water line, while the Town of Apple Valley has sewer within 1400 feet.

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The Buyer is a well known land investment group with dozens of projects throughout the High Desert. Their initial plans are to position the property to attract a big box user.

The NAVISP has seen hundreds of acres of land trade at prices in the $3-$6/sf range depending on location and utility availability. The Subject Site should compare favorably versus these past sales, due to low offsite infrastructure costs for the Subject Site.

As mentioned in a previous update, land use trends are undergoing a sea change in the desert with the emergence of massive projects from Amazon and others.

Reeder Land Company can announce the closing of +/-15.6 acres of land located on Main Street in Hesperia. The property has split zoning between commercial on the south side of the property, and medium density residential on the north side of the property.

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The property is located northeast of the existing Walmart. On the west side of I-15 there is an existing Target, along with a planned Sam’s Club.

The heavyweights of international trade have come to Hesperia, with the addition of millions of square feet of industrial space to be occupied by e-commerce retailer Amazon, as well as the building already leased by shipping giant Maersk.

If this trend continues it will completely change the market for other land types in the desert.

In addition to the industrial activity, Hesperia has also recently seen the opening of the Silverwood Masterplan.

Even investors with holdings in the desert might not get to the region often enough to notice the changes and might be interested in this very short no frills video showing a few of the developments.

Reeder Land Company can announce the closing of 18.5 acres of land located in the North Apple Valley Industrial Specific Plan.

The NAVISP is the next logical place for logistics development in the High Desert, as land has become increasingly scarce elsewhere.

The state of the region’s land market is best understood by looking at the Amazon transaction in Hesperia, which was for a per square foot price previously unheard of in the desert. Purchases of land by logistics users in Apple Valley have also reached prices that would have raised eyebrows a few years earlier.

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There are also large potential changes that could affect the region in the future, such as BNSF’s massive planned project in Barstow.

Industrial projects in the lower Inland Empire have also run into the buzz saw of public opposition recently.

It’s not well understood that much of the desert cannot effectively be developed as it’s hindered by extremely splintered ownership, severe infrastructure problems, or natural drainage issues.

In fact, much of the NAVISP is affected by the splintered land ownership issue. Perhaps as much as 35% of the total land area consists of parcels five acres or smaller - making them nightmares to assemble into anything of development scale.

There are other potential catalysts on the horizon as well, including the increasing interest in Sacramento to address the broken CEQA process.

However, the future for the subject parcel, and others like it, will be primarily driven by the supply/demand balance for real developable properties.

1. 152 Lots - Final Map Ready to Record - La Mesa, Victorville. Substantial value engineering has been completed to reduce the project’s development costs.

2. 16.5 Acres (Asking Price $700,000) - Entitlement Opportunity - La Mesa, Victorville. Seller may be willing to give a qualified Buyer time to obtain a TTM.

3. 157 Lots - Recorded Final Map - Tawney Ridge, Victorville. One of only a few recorded FMs in the market.

These projects are offered individually.

This is an exciting time in the High Desert, as a transformation is underway in the region’s real estate market.

Industrial warehouse users like Amazon and Maersk are absorbing space equal to hundreds of acres of land per year.

The Silverwood MPC in Hesperia is open and actively selling, which also brings new builders to the desert.

These trends are playing out as the region’s land supply continues to dwindle. In fact, once you account for land that can’t be developed due to severe infrastructure challenges, and also land that is already being developed, what’s left represents scarcity.

For additional information about these projects contact John Reeder (951-847-6928).

Riverside County Faces Lawsuit Over Proposed Warehouse Project

(Source)

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- Environmental groups have sued Riverside County over a 1.2 million-square-foot warehouse project, citing concerns about increased air pollution and disruption to local habitats.

Related:

Environmental Groups Challenge Riverside County Warehouse Approval (Source)

Councilmembers Unanimously Oppose Vineyard Avenue Warehouse Project (Source)

California Legislators Clash Over Environmental Exemption in New Housing Bill

(Source)

- A new bill proposed by Assemblymember Buffy Wicks aims to exempt most urban housing developments from the California Environmental Quality Act, potentially reducing litigation and legislative debates over housing projects.

- If passed, this could mark one of the most significant changes to the 55-year-old law, altering how environmental and development issues intersect in California's housing policies.

High Desert Symposium Highlights Key Developments in Barstow and Hesperia

(Source)

- The 12th annual High Desert Economic and Real Estate Symposium & Forecast featured discussions on major project developments, drawing significant audience interest.

- A major highlight was the upcoming construction of a Sam's Club in Hesperia, which is currently under entitlement review, as shared by Hesperia City Manager Rachel Molina.

Related:

High Desert Symposium Highlights Major Regional Developments (Source)

Brightline West Secures Funding for High-Speed Rail Project

(Source)

- Brightline West is finalizing $6 billion in bank loans and construction contracts for its $12 billion high-speed rail project between Las Vegas and Southern California, having successfully sold over $2.5 billion in private activity bonds.

- The bond sale exceeded expectations by $1 billion due to favorable interest rates, with additional financial support coming from state bond sales and a $3 billion Federal Railroad Administration grant, ensuring the project's sustainability through four years of construction.

Related:

Brightline West's Private Activity Bonds Sale Exceeds Expectations with High Demand (Source)

New Logistics Facility Defies Construction Slowdown in Inland Empire

(Source)

- Newcastle Partners is developing the Mesa Linda Logistics Center in Hesperia, adding significant warehouse and distribution capabilities to San Bernardino County by early 2026.

- JLL Capital Markets has secured $27.5 million in construction financing, facilitating the project's advancement amid a regional trend of slowing construction.

Related:

Newcastle Partners Secures $27.5 Million for Hesperia Logistics Center (Source)

Hesperia's Challenges with Developing Housing on Fragmented Land (Source)

ARCO Breaks Ground on $96M Logistics Facility in Apple Valley

(Source)

- ARCO has started building a $96 million logistics facility for Lecangs, aimed at boosting its third-party logistics operations.

- The 1,207,135ft² facility, featuring a 40ft clear height and over 200 dock doors, marks the most significant industrial development in the area since 2018 and includes extensive infrastructure improvements.

Related:

ARCO Begins Construction on $96M Logistics Facility for Lecangs in California (Source)

Apple Valley's Largest Industrial Development Since 2018 Reinforces Its Role as a Logistics Hub (Source)

Homebuilders Face Increased Costs Due to Tariffs

(Source)

- The National Association of Home Builders/Wells Fargo Housing Market Index dropped to its lowest level since last August at 39, reflecting decreased homebuilder sentiment mainly due to concerns over rising construction costs.

- Builders are adjusting to President Donald Trump's tariff policies, which include a 25% levy on steel and aluminum imports, by adding approximately $9,200 in additional costs per home in response to increased building material costs and other supply-side challenges.

Related:

Trump's Tariff Policies Impact on Home Building Costs (Source)

Homebuilder Stocks Face Challenges as Market Conditions Deteriorate (Source)

Newsom Suspends Environmental Laws to Expedite Rebuilding in Fire-affected Areas

(Source)

- Governor Gavin Newsom has temporarily suspended California environmental laws, including CEQA and the California Coastal Act, to accelerate the reconstruction of critical utility infrastructure in fire-affected zones.

- Newsom advocates for the underground installation of utility equipment where possible to reduce the risk of future fires and aims to rebuild impacted communities like Altadena and Malibu to be stronger and more resilient.

Southern California Industrial Real Estate Market Faces Challenges Amid Signs of Stabilization

(Source)

- Asking rental rates in Southern California's industrial market remain below historical highs as vacancy rates rise, with increased import volumes and new legislation potentially boosting market fundamentals despite slowed leasing activities.

- Los Angeles County's availability rate suggests future vacancy increases, while similar trends in Orange County and the Inland Empire reflect a broader market shift, leading to decreased asking rental rates yet highlighting a stabilizing market environment.

Caltrans Announces $48.1 Million I-40 Roadway Improvement Project in San Bernardino County

(Source)

- The resurfacing project on Interstate 40, funded by Senate Bill 1, will cost $48.1 million and aims to improve ride quality and enhance traffic safety by upgrading road surfaces, signs, lighting, and curb ramps.

- Scheduled to start on March 24, 2023, the project is expected to be completed by spring 2026, according to Caltrans.

Related:

Interstate 40 Resurfacing Project Set to Commence in San Bernardino County (Source)

Transformation of California Malls with Mixed-Use Development Strategies

(Source)

- Brea Mall in Orange County has received approval for a redevelopment plan that includes a five-story apartment complex with 380 units and a 90,000-square-foot luxury fitness center.

- The Shops at Palm Desert and Brea Mall are embracing mixed-use developments to adapt to changing consumer preferences and better serve their communities.

Related:

Disney's First Master-Planned Community, Cotino, to Open in Rancho Mirage (Source)

Amazon Expands in Inland Empire with Over 2000 New Jobs

(Source)

- Amazon is opening two new inbound cross dock (IXD) facilities in Fontana and Jurupa Valley, creating more than 2000 full-time and part-time jobs with competitive starting pay and comprehensive benefits.

- The facilities aim to enhance supply chain efficiency by quickly moving goods through Amazon's logistics network, reflecting the company's commitment to growth and economic investment in the Inland Empire.

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National Strategies to Tackle Housing Inflation

(Source)

- Federal influence on housing prices is limited but can address issues such as construction material costs and efficient use of federal grants to help reduce prices.

- Proposed strategies include modernizing building codes with cost-decreasing innovations and supporting states experimenting with mid-rise building techniques to increase housing supply.

California's Housing Market Shows Improvement Amid Challenges

(Source)

- Vacancy rates are improving across California, especially in San Francisco, highlighting the state's ongoing housing shortage despite strong demand and growing supply.

- Rising development costs, hybrid work models, and the aftermath of wildfires are influencing the multifamily housing sector, with high demand for both rental and for-sale units across major cities.

Related:

California Commercial Real Estate Outlook Remains Optimistic Despite Challenges (Source)

2025: A Transformative Year for the Housing Market (Source)

San Jacinto Commerce Center Among Top California Warehouse Projects

(Source)

* The San Jacinto Commerce Center is listed among the top ten largest warehouse developments currently under review in California.

* This project signifies substantial growth in the state's logistics and supply chain infrastructure.

California Homebuilders Face Tariff Challenges with Canadian Lumber

(Source)

- California homebuilders continue to rely on Canadian lumber, despite 25% tariffs, as they reconstruct homes destroyed by wildfires, due to the lack of local alternatives.

- The state’s dependency on Canadian lumber stems from limited logging options on government-owned land and insufficient local milling facilities and supply chains, which would take years to develop.

Construction Workforce Nears Peak in Southern California Despite Skills Gap

(Source)

- Southern California's construction workforce reached 98% of its peak in December, employing 479,900 workers across six counties, though concerns about a skills gap remain.

- The number of construction jobs is just 2% below the recent high of 491,800 workers, indicating a fluid industry where crews are frequently moved to different sites to maintain employment.

Joann Fabric Retailer to Close Over 500 Stores Amid Bankruptcy

(Source)

- Joann announced plans to shut down over 500 stores in the upcoming months as it navigates Chapter 11 Bankruptcy, aiming to facilitate a sale and maximize business value.

- The closures signify challenges faced in a market dominated by e-commerce, with California facing the highest potential impact with 61 locations listed for possible closure among 532 stores across the U.S.

Mysterious Firm Acquires Land in Joshua Tree National Park

(Source)

- Darkhorse Tactical Investments, a Connecticut-based firm, has acquired over 100 acres of land in and around Whispering Pines, raising questions about future developments in the area.

- Public records indicate that individuals connected to the land purchases have ties to the hotel and hospitality industry, sparking speculation about potential lodging developments.

CARB Suspends Emission Rule Threatening BNSF's $1.5 Billion Project

(Source)

- The California Air Resources Board halted a rule requiring zero-emissions locomotives by 2030, which endangered BNSF's Barstow International Gateway project.

- BNSF argued the rule would make the project financially unfeasible and highlighted the current impracticality of electric locomotive technology.

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ZO Motors Expands with New Manufacturing Plant in California

(Source)

- ZO Motors announces the establishment of a manufacturing plant and regional headquarters in Fontana, California, marking its commitment to sustainable transportation in the U.S.

- The facility will support production of zero-emission vehicles including electric commercial trucks and airport ground service equipment, with operations set to begin in the first half of 2025.

Southern California's Industrial Market Faces Rising Vacancy Rates

(Source)

- Southern California's industrial market experienced a boom during the COVID-19 pandemic due to increased e-commerce demand, but recent trends show rising vacancy rates and decreasing rents as supply surges and investment declines.

- The vacancy rate reached 5.1% by the end of 2024, marking 11 consecutive quarters of increase, while the availability rate rose to a 12-year high, and average asking rents dropped significantly.

Related:

Southern California's Tight Apartment Markets in 2024 (Source)

Los Angeles Wildfires Expected to Increase Construction Costs (Source)

Southern California Home Prices Experience Fifth Consecutive Monthly Decline (Source)

Goats Serve as Natural Firefighters on San Manuel Band Reservation

(Source)

- Herds of goats are used by the San Manuel Band of Mission Indians in Highland, California to manage dry, flammable brush and reduce fire risks on their reservation land.

- This method, long practiced by tribes, highlights a cost-effective and environmentally friendly approach to preventing fires, especially highlighted by recent fires in Los Angeles.

Luxury Boutique Hotel “Reset" to Elevate Joshua Tree Experience

(Source)

- Luxury boutique hotel Reset" will open this Spring in Twentynine Palms, featuring 65 modular rooms with modern minimalist designs and dramatic desert views.

- Located just outside Joshua Tree National Park, the hotel offers unique amenities such as outdoor soaking tubs and stargazing platforms, and is the first full-amenities hotel built in the area in over 15 years.

From the LVR (emphasis is mine):

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The bond offering notes the projected average cost of a standard class, one-way ticket on the Brightline West’s system will be $119 in 2031, the first stabilized year of service, after a two-year ramp-up period. It’s also noted that Brightline West plans to offer a premium cabin ticket, with an average projected one-way cost of $133 in 2031. Brightline projects will generate $1.1 billion in ticket revenue in 2031.

Stations are planned for Las Vegas in Nevada and Rancho Cucamonga, Hesperia and the Victor Valley in California. A vehicle maintenance facility is planned to be built in Sloan, with another maintenance facility slated to be built in Apple Valley, California.

Market News

Amazon Signs Leases for over 2 Million Sq. Ft of Space in Top U.S. Industrial Market

(Source)

- Amazon signs two new leases in Southern California's Inland Empire, totaling more than 2 million sq. ft.

- One lease is for a recently completed building near three other large-scale Amazon distribution and fulfillment centers, while the other is in a new industrial complex with five buildings and 4.4 million sq. ft. of rentable space.

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Brightline Achieves Investment-Grade Rating for Proposed Bonds (Barely… BBB- Rating from S&P)

(Source)

- Brightline, the first private US passenger railroad in over a century, has obtained an investment-grade rating for its proposed senior municipal bonds, highlighting the viability of private investment in public infrastructure.

- This achievement paves the way for the development of the anticipated high-speed rail station in Apple Valley California, expected to commence construction in 2025 and bring economic benefits to the areas it touches.

Related:

Brightline West Continues Field Investigation for High-Speed Rail System (Source)

Brightline West Project Aims to Connect LA and Las Vegas, Reduce Traffic and Impact (Source)

Atlas Technical Consultants chosen to manage geotechnical engineering and design for Brightline West high-speed rail system (Source)

Softening Market in Inland Empire Leads to Surge in Large Leasing Deals

(Source)

- Vacancy rate in Inland Empire reaches 5.9% in first quarter, seventh consecutive quarter of increased vacancy

- Surge in large leasing deals result from softening market in Southern California's Inland Empire

Brookfield Residential Nears Largest-Ever Land Deal in Orange County

(Source)

- Brookfield Residential is set to buy a 75-acre parcel of land in North Irvine for over $600m, which will be one of the largest residential land sales seen in Orange County in years.

- The Canadian homebuilder is partnering with the city of Irvine for the Gateway Village development, which will be one of the larger housing Irvine projects not overseen by either of the city's two big master-planned developers, the Irvine Co. or Five Point Holdings LLC.

Southern California's Spring Home Buying Season Struggles with High Prices and Low Listings

(Source)

- Busy open houses and bidding wars signal the start of the spring home buying season

- However, high mortgage rates and a lack of listings continue to limit home sales despite rising prices, with the February median price hitting $740,000, tied for the third-highest on record.

Related:

KB Home Opens Palmetto Community in Moreno Valley, California (Source)

California Snowpack Measurement Predicts Above-Average Year for Water Supply

(Source)

- Gov. Gavin Newsom and state officials conduct last snowpack measurement of season, expect above-average year for second year in a row

- Essential snowpack supplies water to 27 million people and 750,000 acres of farmland via State Water Project; 11 of California's 12 major reservoirs storing more than 100% of average.

Rent Differences Between California Cities are Shrinking

(Source)

- Study from Los Angeles Daily News shows the rent difference between high-cost and low-cost cities in California has shrunk 22% since 2017

- Rents in California's most expensive cities only grew 11% since 2017 while more affordable cities saw a 35% surge in rents

Calpines Nova Power Bank to store more electricity than all but one battery plant currently operating in the US (Source)

- Battery power land deals seem to have no end in sight.

The Pros and Cons of L.A.'s Mansion Tax: One Year Later

(Source)

- L.A.'s transfer tax has raised $215 million in its first year, funding affordable housing and homelessness initiatives

- The tax, which charges a 4% or 5.5% fee on property sales above $5 or $10 million, has polarized the real estate industry

Southern California Has Enough Empty Office Space to Fill a Landmark Tower 58 Times

(Source)

- Southern California had 81 million vacant offices out of 398 million square feet of supply, marking a 20% vacancy rate.

- Despite leasing 20 million square feet of space to new tenants in 2023, the region was still left with 7 million more square feet of office space added to the market due to companies abandoning offices amid the work-from-home trend brought about by COVID-19.

TPG Angelo Gordon Buys 41.3-Acre Land in Southern California's Inland Empire for $44.5 Million

(Source)

- The alternative investment firm purchased a 41.3-acre plot in Rialto, Calif. for $44.5 million on behalf of Lennar Homes

- The land is organized for the development of 429 attached and detached condominiums, expected to be completed by early 2028

Riverside County's Unemployment Rate Ends 2023 Slightly Higher Than Start of Year

(Source)

- Preliminary estimates from EDD show December unemployment rate in Riverside County at 5.2% compared to 5.1% in November

- Jobless rate in December 2023 was over a full percentage point higher than the year before, with 59,700 county residents out of work

Unions Look to Recruit Thousands for Las Vegas High-Speed Rail Construction

(Source)

- Department of Labor discusses possible recruitment of nearly 11,000 workers with trade unions from Nevada and California

- Southern Nevada Building Trades Unions anticipate hiring nearly 3,000 workers for a 50-mile portion of the project in the Las Vegas area.

Southern California Association of Governments Grants $25 Million for Infrastructure Projects Supporting Homebuilding in San Bernardino and Riverside Counties

(Source)

- $24.9 million in grants approved for infrastructure projects to support infill housing projects in San Bernardino and Riverside counties.

- The Desert Hot Springs Downtown and Palm Drive Corridor will receive $500,000 for a sewer study to support infill affordable housing including the Green Day Village project, which includes a 608-unit multifamily housing development.

Related:

Victorville's Green Tree Extension Project Named 2023 Building Excellence Shaping Tomorrow Award Project of the Year (Source)

Housing market growth slows as mortgage rates rise and freezing weather hits (Source)

US Homebuilder Stocks Plunge After Analyst's Neutral Rating (Source)

Tech Billionaires Plan to Build a New City from Scratch (Source)

US Existing Home Sales Sink to 30-Year Low in 2023 amid Rising Rates and Prices (Source)

California Man Pleads Guilty to $24 Million Real Estate Ponzi Scheme

(Source)

- Paul Horton Smith Sr. scammed over 200 investors through his companies, targeting elderly or retired people, between July 2000 and May 2020

- Smith convinced investors to put money into his Northstar scheme, misrepresenting it as a secure real estate investment or annuity, and pleaded guilty to one count of wire fraud

California's hotel supply issues expected to continue through 2024, survey says

(Source)

- Only 53 new hotels opened in California last year, representing a 10% decline from 2019 and the lowest number of rooms open since 2016

- Lenders that were in the hotel construction business have pulled back, limiting the development of new hotels and resulting in a shrinking supply in the state

Logistics Industry Under Fire?

(Source)

- Half-century focus on logistics industry centered on Los Angeles and Long Beach may have been a mistake

- Factors such as enlargement of Panama Canal, emergence of India as supplier of goods, and labor conflicts pose potentially existential threats.

Doheny Desalination Plant Could Increase California's Drinkable Ocean Water Supply by 10% in Five Years"

(Source)

- California has a small fraction of its tap water coming from seawater, despite its long coastline and size comparable to Saudi Arabia.

- The construction of the Doheny Desalination Plant could increase the state's drinkable ocean water supply from 55 million to 60 million gallons per day over the next five years.

Apple Valley Town Council to Decide Fate of Proposed Gated Community

(Source)

- The planning commission has approved the Deep Creek Estates project with a 3-1 vote

- The project involves a zone change and development plan amendments on a 120-acre parcel currently zoned residential agriculture for a single-family residential unit community.

Brightline Plans to Build America’s First True Bullet Train Between Las Vegas and Southern California

(Source)

- Brightline, the company behind the project, plans to begin construction on a bullet train between Las Vegas and Southern California by the end of the year.

- The 218 mile-long train will run along Interstate 15, completing a trip from Las Vegas to Rancho Cucamonga in just 2 hours and 10 minutes at speeds of nearly 200 miles per hour.

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Southern California's Homebuying Frenzy Not Reflected in Real Estate Valuation Metrics

(Source)

- Bidding wars are rampant in Southern California's housing market this summer.

- However, current real estate valuation metrics do not seem to reflect such a frenzy, which may be due to the use of median selling prices as a benchmark.

California legislature passes pro-housing laws to close legal loopholes

(Source)

- Two major pro-housing bills were sent to Gov. Gavin Newsom last week

- Assembly Bill 1307 addresses a bizarre appellate court ruling that allowed anti-housing interests to misuse the California Environmental Quality Act, while Assembly Bill 1114 closes a unique anti-housing loophole in San Francisco.

California's Housing Affordability Crisis Spreads Beyond Coastal Cities

(Source)

- Inland areas such as Modesto, Bakersfield, and Stockton are significantly less affordable compared with the national average

- Rising prices have put housing out of reach for those with limited means in most parts of the Golden State, fueled by coastal residents seeking more affordable options further inland.

Related:

San Bernardino Agrees to Update Housing Plan Following State Legal Threat (Source)

California's popular grant program for low- and moderate-income homeowners to build accessory dwelling units (ADUs) may receive $25 million in new funding. (Source)

Biden Administration plans to use infrastructure funding for high-speed rail lines (Source)

Federal Reserve Anticipates Moderating Housing Costs May Drive Disinflation, but National Housing Shortage Could Spoil Expectations (Source)

California Senate Passes Bill to Accelerate Approval of Energy Transmission Projects (So

CA Lawmakers Vote to Rezone Land for Affordable Housing Amid Homeless Crisis

(Source)

- Legislation would allow religious institutions and nonprofit colleges in California to convert their properties into affordable housing.

- The move aims to address the state's homeless crisis, which has left around 171,000 people homeless in California, accounting for 30% of all homeless people in the US.

California officials introduce new framework for urban water use

(Source)

- New framework may require some suppliers to make cuts of 20% or more as soon as 2025

- Many suppliers located in historically struggled to meet conservation targets in rural areas

• industrial land priced as if millions of square feet of space will be developed in the High Desert in the very near future. Specifically I mean well located industrial land selling for $7/sf and very speculative1 industrial land selling for $1.50/sf.

• Land for other space types priced as if it is completely unaffected by the first point.

I have a hard time reconciling these pricing realities. It seems to me that the industrial boom, implied by current land prices2, will probably bring need for other space types. Housing for warehouse/construction workers, which would generate retail demand, etc.

You can download the marketing package for the 80 acres, which offers an opportunity to take advantage of this apparent pricing discrepancy.

I’ll be writing about this trend more in the future with some concrete examples to illustrate the idea. Until then here’s the latest news:

Market News

High-Speed Rail Stations to Connect Las Vegas and Rancho Cucamonga Metrolink Station in Hesperia and Apple Valley

(Source)

- San Bernardino County Transportation Authority and Brightline West receive $25 million federal grant to build High Desert high-speed train stations.

- The project has potential to reduce commute times, increase job opportunities, and improve the quality of life for residents in the region.

Related:

Southern California Allocates $80 Million in State Grants for Transportation and Land-Use Projects (Source)

$25 Million Grant Awarded for California Passenger Rail Station Construction to Connect Las Vegas and Los Angeles (Source)

Brightline West awarded $25 million grant for two new intercity passenger rail stations in California's High Desert (Source)

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California State Senator Scott Wilk Supports Reform of Environmental Quality Act, Benefits Local Infrastructure

(Source)

- Senator Wilk voted in favor of several bills to reform the California Environmental Quality Act, making it easier to build key infrastructure projects in the state.

- Antelope Valley groundwater recharge project and rail line connecting High Desert to Inland Empire and Las Vegas are among the local beneficiaries of these bills, supporting constituents and the state's climate goals.

Related:

Inland Empire's Logistics Industry Drives Post-COVID19 Job Recovery with Second Highest Job Recovery Rate among 10 Largest California MSAs in January 2023 (Source)

California lawmakers set to speed up lawsuits for large projects, relax protection for wildlife species (Source)

California Governor Rejects Idea of Mass Exodus from the State

(Source)

- Governor Newsom says California's performance is better than states like Mississippi, West Virginia, and Louisiana

- Despite desirable benefits, more Californians are moving out than moving in, with the state losing 343,000 net domestic migrants in 2022

Newly-built homes in high demand as resale market offers few options

(Source)

- Mortgage applications for new homes increased 16% from last year and 8% from April to May

- Sales of newly-built homes jumped by 12.2% in May and are 20% above year-ago levels, as more homebuyers turn to new homes due to the shrinking inventory of previously-owned homes.

US Housing Inventory Drops Below 2022 Levels Before July 4th

(Source)

- Active listings grow by 5,848 compared to 30,940 in the same week last year

- Despite rising mortgage rates, third week of positive purchase application data

$11.5 Million Awarded to Transportation Projects in Riverside County

(Source)

- Five transportation projects in Riverside County to receive $11.5 million in state funds for further development

- Funds made available under a $237 million Caltrans Housing & Development award, with the largest allocation being $3 million for the Riverside County Transportation Commission's transit study.

American Renters' High Rental Payments Could Spell Trouble for Real Estate Investors

(Source)

- American renters are paying an average of 30% or more of their income for rent, putting them at risk of being rent burdened.

- This trend could potentially harm the profits of real estate investment trusts (REITs), as their main strategy is to raise rents and increase the value of their assets through appreciation.

Thriving industrial real estate market creates challenges for tenants and buyers

(Source)

- High demand and low vacancy rates drive up rental rates and purchase prices

- Northeast Ohio region also impacted with difficulties in finding suitable space for growth

Blackstone sells $3.1 billion industrial real estate portfolio to Prologis

(Source)

- Blackstone's opportunistic funds sell $3.1 billion worth of its industrial real estate portfolio to Prologis Inc.

- The move suggests continued resilience in the industrial/warehouse sector, which has seen year-on-year growth, even as many commercial sectors suffer in the current environment.

US construction spending rises in May driven by rebound in housing market

(Source)

- Spending on construction projects rose 0.9% in May, beating analyst expectations.

- Private construction projects, led by residential construction, saw the highest spending increase of 11%.

New all-electric homes in Menifee offer glimpse of zero-emission future

(Source)

- Durango and Oak Shade at Shadow Mountain communities offer all-electric homes without natural gas hookups or appliances

- Homes feature rooftop solar panels, heat pumps, induction cooktops, smart electrical panel, battery storage system, and will soon be connected to a shared community battery storage facility. These homes start around $520,000.

National CORE Begins Construction on Affordable Housing Project, Oak View Ranch, in Murrieta

(Source)

- 200 apartments to be built for families and seniors earning less than 60% of the area's median income

- Phase one includes 119 homes, with an estimated completion in spring 2025, while phase two consists of 81 senior homes with a completion in fall 2025, supply chain and labor issues may affect the timeline.

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LRE unveils first standalone battery energy storage system in California

(Source)

- LRE has launched its first standalone battery energy storage system (BESS) in California, capable of storing over 500 MWhs of clean power

- The Antelope Valley BESS is located adjacent to LRES's solar and storage Rabbitbrush and Chapparal Springs projects, and is designed to enhance grid reliability and meet stringent safety requirements while creating approximately 70 union jobs during peak construction

Related:

Ormat Technologies to Build Solar and Storage Project for San Diego Community Power in California (Source)

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“The train” has gone by various names over the years but is now known as Brightline West.

Usually I just tell people that I only know what’s in the newspaper, although that’s not always the case. Recently I noticed through recorded sales data that Brightline had acquired 10.9 acres in Hesperia. The land is located on Mariposa Road, which fronts I-15.

Here’s a screenshot from the Grant Deed.

If you look at Brightline’s filings with the Federal Railroad Administration then you will see that they have been planning for a Hesperia station, along with a power station which is generally located in the area of this recent land purchase.

The Brightline West Hesperia Station would be located at Joshua Street and I-15. As shown here:

Brightline has also filed an Operating Assumptions Plan with the FRA, which gives some clue as to the travel times that they are expecting for services. For the first 10 years of operation they expect to depart from Rancho Cucamonga every 45 minutes, and then total time to Las Vegas would be two hours and twenty minutes.

The southbound times shown in the plan are similar.

The most interesting thing from the schedule is the 23 minute Hesperia to Rancho Cucamonga leg. You could imagine that leg being attractive to some commuters. I have no idea if the cost, or the other realities of travel upon arriving in Cucamonga, will support a lot of commuter usage of the train.

There’s another issue that’s hard to ignore when you look at the schedule, and look at the fact that Brightline seems to have acquired the land to support the Hesperia power station1. That is: what about the Apple Valley station?

A few years ago Brightline acquired about 300 acres of land at Dale Evans Parkway in Apple Valley. It was supposed to be part of Brightline’s plan to build transit-oriented development around their project.

Let me detail some issues that I think investors buying land around that proposed Apple Valley station should consider before they buy:

• Most of the land surrounding the location is vacant today. In the future it is zoned for a mix of commercial, industrial, and low-density residential. So who would the station serve? It seems like it’s competitive with the Hesperia station, and the Hesperia station easily serves more potential customers.

• Even if you assume that Brightline’s land could support some kind of development around the station, 300 acres isn’t really a master-planned community. It doesn’t seem like enough critical mass.

• The station will cost something to build, and will add to the total travel time to Las Vegas. If you were running the project wouldn’t you just remove that station from the plan?

• Brightline does own the land surrounding the proposed Apple Valley station location, but they are also probably ahead on that bet today. They could probably sell the land at a profit.

Part of the problem with the project over the years is that it didn’t seem to make a lot of sense. Who wanted to drive to Victorville, and then get on a train and end up in Las Vegas? To shave 30 minutes or an hour off of the travel time? Who cares?

However, the project looks very different today. It could serve a real market - people who want to travel from Rancho Cucamonga to Las Vegas2. Also, Las Vegas has become something of a powerhouse. They’ve come out of the pandemic and gone back to all time highs in visitors. Also, they did it without much convention business and without a lot of international travelers. The Raiders move has been a huge success and the city will probably get more sports teams.

The combination of the land purchases, and the overall project seeming more sensible, offer some good reasons to be optimistic that eventually we’ll see this train become a reality. However, I do think it’s worth paying attention to what happens related to that proposed Apple Valley station location.

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(Source)

- Adelanto, California was facing economic collapse with a third of its residents living below the poverty line due to lack of tax revenue

- Cannabis cultivation brought economic change to the city thanks to the efforts of Johnny Bug Woodward Jr.

- The City is the subject of a new podcast.

California Governor Proposes Sweeping Reforms to Streamline Environmental Review Law

(Source)

- Governor Gavin Newsom proposes a set of reforms to reform the California Environmental Quality Act (CEQA) as part of the state's upcoming fiscal year budget

- Business groups support reforms, arguing they can speed up construction, permitting, and court review, while environmental leaders raise concerns that changes could pose risks to residents and wildlife

North Palisade Partners to Replace Southern California Water Park with Industrial Warehouse

(Source)

- Development and investment firm purchases 17-acre site of defunct Splash Kingdom for $44.5 million

- Plans to transform the Redlands, CA property into Class A industrial warehouse to meet strong demand for functional industrial space in the Inland Empire with a 1.7 percent vacancy rate.

Related:

North Palisade Partners acquires 17-acre site in Redlands for $44.5 million (Source)

Landsea Homes and KB Home Building 668 New Homes in Inland Empire

(Source)

- Landsea Homes and KB Home are constructing 668 new homes in Ontario and Fontana in Inland Empire.

- Landsea Homes expects to begin courtyard-style townhome sales at Eave II, part of the Neuhouse community, by the end of the year.

Disney faces criticism over proposed development in Rancho Mirage

(Source)

- Disney's 1-square mile Storyliving development faces city board review

- Critics argue water usage for proposed lagoon is inappropriate given persistent drought in Southern California, while supporters argue it will use less water than an 18-hole golf course.

Federal Reserve Views Commercial Real Estate as Potential Risk to U.S. Economy

(Source)

- Federal Reserve survey identifies commercial real estate as one of the top five potential risks to U.S. financial stability in the next 12-18 months

- Concerns are growing due to the impact of the pandemic on the sector's ability to generate income and repay loans, as well as potential oversupply in certain markets

Related:

Sharp Downturn in Commercial Real Estate Could Affect Banking Sector but Not Destabilize Financial System, Says Economist (Source)

Consumer Prices in Southern California Rise at Slowest Pace in 26 Months: Is Inflation Nearly Over?"

(Source)

- Southern California sees slowest consumer price increase in 26 months

- Question arises on whether the Federal Reserve should end campaign of high-interest rates to control overheated economy

San Manuel Band of Mission Indians buys 40% stake in Waldorf Astoria Monarch Beach Resort & Club

(Source)

- The San Manuel tribe has bought a 40% stake in the luxury Orange County resort owned by Ohana Real Estate Investors

- The Waldorf Astoria Monarch Beach Resort & Club is a 400-room five-diamond hotel campus on 162 acres, including a six-acre private beach club, three swimming pools and its own 18-hole golf course.

John Wayne's Former California Ranch Sells for $11.25 Million

(Source)

- The California ranch owned by actor John Wayne during his most famous western film era has sold for $11.25 million.

- The a sprawling property known as Rancho Pavoreal and was a scenic getaway for Wayne, featuring flat land for horse riding and is considered one-of-a-kind in Riverside County.

Report identifies five trends to revitalize shopping centers and adapt to changing consumer preferences

(Source)

- Near Intelligence Inc. released a report on commercial real estate trends to revitalize shopping centers

- The report identifies five top trends to help shopping centers draw in more visitors and adapt to changing consumer preferences, emphasizing the importance of offering unique experiences to shoppers.

Homebuilding Stocks Outperform S&P 500 Despite Cooling Housing Market

(Source)

- Lennar (NYSE: LEN) and KB Homes (NYSE: KBH) are outperforming the S&P 500 despite rising mortgage rates and a cooling housing market.

- Positive earnings results from Redfin (NASDAQ: RDFN), Toll Brothers (NYSE: TOL) and D.R. Horton (NYSE: DHI) and modest improvements in housing market conditions have buoyed the sector, with investors expecting strong reports from Lennar and KB Homes in June.

Purchase Credit Scores Reach Highest Level Since 2000 While Lock Volumes Decrease

(Source)

- Purchase locks dropped 11% between late March and mid May, during prime spring buying season, indicating persistent affordability and inventory pressures.

- Higher credit scores for purchases suggest tightening standards that may leave some hopeful buyers unable to enter a gridlocked housing market.

Southern California Home Sales Decline in April Due to High Mortgage Rates

(Source)

- House and condominium sales in Riverside and San Bernardino counties declined by 12% from the previous month and 41% for the year, with only 4594 properties sold.

- High mortgage rates that have reduced purchasing power by 14% and economic uncertainty are to blame for the poor sales, with a 30-year mortgage averaging 6.34% in April compared to 4.98% a year earlier.

Related:

US Residential Property Mortgage Origination Hits Lowest Point Since 2000 (Source)

Homebuilders use incentives as mortgage rates spike, but new home sales rebound (Source)

Cities Show Signs of Recovery as Residents Flock to Walkable Neighborhoods (Source)

Schneider National Opens Large-Scale Electric Charging Depot in California for Nearly 100 Battery-Powered Trucks

(Source)

- Schneider National has opened a charging depot in Southern California designed to power its fleet of nearly 100 Freightliner eCascadia battery electric trucks, which will be one of North America's largest zero-emission fleets.

- The charging site features 16 dual-corded dispensers, allowing the carrier to charge 32 trucks simultaneously, with each eCascadia able to achieve an 80% charge of its 220-mile range within 90 minutes.

Goldman Sachs Analyst Softens Home Price Decline Call As Shortage Supports Market

(Source)

- Analyst now predicts a 2.2% decline in home prices for 2023, down from previous estimate of 6.1%

- Shortage of homes for sale expected to help keep a floor under prices, but poor affordability may push prices down in 2023

Southern California's Inland Empire Counties Among Fastest-Growing Places Since Covid-19

(Source)

- Riverside County placed ninth among top U.S. counties with at least 1 million residents with 2.11% population growth to 2.47 million people between 2020 and 2022.

- California's other major counties, including Los Angeles, Orange, and San Francisco, all saw population declines during the same time period.

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US Industrial Real Estate Market Sees Record Increase in Vacant Supply

(Source)

- The US industrial real estate market added 89 million square feet of vacant supply in Q1 2021, the largest quarter-over-quarter increase on record, as speculative construction delivered.

- This led to an overall vacancy rate increase for the first time since Q2 2009, with the rate reaching 3.5%, still below the 10-year average of 5.0%.

Related:

Commercial Real Estate Lending Drops 56% in Q1 2023 Amid Financial Market Uncertainty (Source)

Southern California's Best Development Opportunities May Be Hidden in Plain Sight, Says Expert Panel"

(Source)

- An expert panel of executives from Los Angeles development companies and brokerages have identified the best development opportunities in Southern California

- California's LA County offers the best opportunities, with residential, retail and office projects at the forefront, according to Skanska USA's EVP Clare De Briere, who also advised focusing on buildings that provide the best environment for people who will occupy them.

Analysts at Berenberg boost homebuilder optimism, predict industry improvements

(Source)

- Sales rates have improved, supporting pricing and forecasting modest build cost deflation for 2024

- Affordability has risen, with mortgage payments at approximately 40% of new homebuyers' earnings, while lower land prices and government support measures for new-build housing are expected to drive industry growth over time.

Related:

Lumber Prices at Record Low - Possible Signal of Housing Market Decline (Source)

California lifts some drought restrictions, but experts urge continued conservation

(Source)

- Governor Newsom rolls back some drought restrictions following wet winter season

- Water agencies in Coachella Valley lift 15% voluntary water conservation target, but officials warn that conservation should remain a way of life given California's history of drought.

Studies show significant declines in methane emissions near Los Angeles

(Source)

- Two studies conducted by NASAs Jet Propulsion Laboratory in Southern California measured drops in human-caused emissions of methane in the Los Angeles region

- Ground-based sensors and airborne instruments were used to measure a 7% reduction in emissions from four Southern California counties and a 73% drop in emissions from a belt of oil refineries in the South Bay area of Los Angeles during the first summer of the COVID-19 pandemic.

Last week I wrote about the supply/demand shift which is being overlooked by many investors. I want to offer some additional proof for this claim in the way of planning commission agenda items - which show a sea change taking place in the High Desert.

In the past, if you took the time to review PC meeting agendas, then you might remember something like: a 67 lot TTM, a cell tower, and maybe a carwash / gas station.

Today the proposals are very different. And this matters because if land prices are driven by the rough formula:

Price = Remaining amount of land / demand for land

Then proposals which chew up 50 to 150 acres hit both the numerator and the denominator.

Here are some projects which have been on meeting agendas this year.

(For ease of reference all of the projects are shown on this interactive map.)

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Mojave & Mesa Linda 1.1M S.F. Warehouse - Victorville - 04-12-23 PC Meeting (EIR Scoping Only)

Map: https://map.reederlandco.com/?uid=uypeopw

Site Plan:

Rancho & Emerald 680k S.F. Warehouse - Adelanto - 05-03-23 PC Meeting

Map: https://map.reederlandco.com/?uid=rxqciix

Building Elevations:

Stoddard Wells Industrial 2.8M S.F. - Apple Valley - EIR Notice of Preparation

Map: https://map.reederlandco.com/?uid=bzgyxlh

Site Plan:

Stoddard Wells Industrial 800k S.F. - Victorville - 01-11-23 PC Meeting

Map: http://map.reederlandco.com/?uid=vmglvui

Site Plan:

HWY 395 750k S.F. Warehouse - Hesperia - 01-26-23 PC Meeting

Map: http://map.reederlandco.com/?uid=mxuctot

Site Plan:

Poplar 400k S.F. Warehouse - Hesperia - 03-09-23 PC Meeting

Map: http://map.reederlandco.com/?uid=eculoag

Elevations:

Rancho Road 660k S.F. Warehouse - Adelanto - 12-07-22 PC Meeting

Map: http://map.reederlandco.com/?uid=sczwwwi

Elevations:

Cannabis 300k S.F. - Adelanto - 01-18-23 PC Meeting

Map: http://map.reederlandco.com/?uid=bgglhxd

Site Plan:

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Last year I represented a large renewable energy developer in the acquisition of more than 1,500 acres of land located in Adelanto. The project, known as Baldy Mesa Solar and Storage, will supply power to Amazon.

This was a great project to be a part of, for a lot of reasons.

The developer is a leading renewable energy company. The majority seller of the land is a household name in California real estate. And the ultimate buyer of the energy is one of the greatest businesses the world has ever seen.

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My role in the project was very small. I just figured out where to find 1,500 acres. People smarter than me figured out the rest.

But I’m still pretty excited about the development.

To help you understand why, here’s a map of the project. If it seems like the land is at the end of the world, it’s not. Within a couple of miles of the site you can find millions of square feet of leased distribution space. Including by Amazon (unrelated to the solar project as far as I know).

Also, I should say that the solar project is under construction right now. This wasn’t a pipe dream land spec deal. You can drive to the site and see panels being installed.

A 1,500 acre project should be considered very large in any location. But this one will be developed in a market where supply/demand has been steadily shifting toward scarcity - a point that I think is escaping most investors.

To illustrate the shift from abundance to scarcity, I could point out that most of the developable lots in the market are already owned by homebuilders. I could also point to the sea-change that’s taken place in the industrial market. For instance, in south Hesperia a few million square feet of distribution center space are currently under construction.

That same story is playing out throughout the market, where substantial pieces of land are increasingly being occupied by users, rather than speculators.

So if you remove 1,500 acres of land from the inventory of a market where supply has been getting tighter every year, I think that’s a big deal.

I will concede that when framed as a 1,500 acre solar project the scale actually becomes hard to understand. But that’s roughly the same amount of land that would be needed to build:

• 5,000 homes

• Or, 25 million square of industrial space

• Or, 10 regional malls the size of Victoria Gardens

The Baldy Mesa solar project is just one data point in the supply trend, so in future installments of this newsletter I’ll be offering additional evidence to support the point I’m making.

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I’m reaching out to let you know that I am leaving Mimi Song Company. Going forward, if you need to get in touch with me please send email to john@reederlandco.com or you can always reach me on my cell phone (951-847-6928).

My time at Mimi Song Company - almost exactly 15 years - has been tremendously valuable and I’ll always appreciate the amount that I learned about brokerage there.

I consider Mimi to be a living legend in the land business, as well as the prototypical American success story. A true testament to what can be accomplished with a lot of grit, and a good amount of charm.

I have some ideas for the next 10 years, that make more sense to pursue individually. So this seemed like as good of a time as any to get to work. I’ll have some more information about Reeder Land Company over the coming weeks.

I am always available to discuss all of my open Mimi Song Company business, to ensure a smooth transition. Client needs will continue to be a priority through this change. If you need to discuss any open or past escrow please do not hesitate to reach out. For emails regarding current or past escrows through Mimi Song Company please also cc to Nicole Park (npark@mimisongcompany.com) as well.

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