Newport Beach-based Phelan Development Company has opened a new regional office in Oakland from which it will manage its Northern California operations. The leadership of this office will be comprised of two people who have previously been involved in the Northern California region for Denver-based DCT Industrial Trust.
Dave Haugen was a market leader for DCT and ran its office in the region, which was based in Emeryville. He has been hired by Phelan as a regional partner. Mark Eshelman was a vice president with DCT and managed leasing and target acquisitions in Northern California for the company. He has been hired by Phelan as a partner.
“I’m very excited about this new opportunity for me with Phelan. It will give me a chance to be more flexible in the kinds of deals that we go after when I worked at DCT. This could involve some projects that are not just industrial but would include other property types that we would sell off to other developers,” says Haugen.
DCT will continue to be a force in the investing and ownership of industrial assets in Northern California. “The change with our personnel in Northern California will not alter our business plan going forward. We have some development deals in our pipeline that we hope to be able to talk about in the near future. We also hope to have some future information on our leasing efforts on our large project in Tracy,” says Bud Pharris, managing director of the western region for DCT. His region of coverage includes Northern and Southern California, Seattle, Denver and Phoenix.
It’s not clear how many people DCT will be hiring for its Northern California operation. “Our initial idea is to hire one person for the market leader position that Haugen had. Another person also might be hired in the future,” said Pharris. The public REIT has a total portfolio in Northern California either under development or ownership of 4.3 million square feet, as of the end of 2017.
The long-range strategy for Phelan is to be more of a merchant developer than a long-term owner of assets. “Being a merchant developer would mean that we would develop a project, get it stabilized and then sell to a capital source. We think that this strategy is a good fit, as there will be many capital sources that are looking for assets to buy in our region where many of the properties are owned by long-term holders,” said Haugen. “But there is an unmet demand for users to own their own buildings and we see this as an opportunity.”
Phelan has three Northern California projects either under construction or in the planning stages. The 162,350 square foot Performance Drive project in Stockton is now under construction and is about 80 percent completed. The other two projects are in Tracy and Lathrop, and the company has not started construction on either one of them.
Phelan is planning to be a developer or value-add buyer of existing assets for industrial properties. The company will be looking at assets in the East Bay, the Peninsula or in San Joaquin County.