There is perhaps no name more closely associated with development in the San Fernando Valley than Voit. It was Voit Development Co. that took a vast expanse of land in what was, at the time, a remote burg and built a 2.9 million square foot business park that has become a major commercial hub. The Warner Center Business Park remains the core of a West Valley business district that has drawn businesses of all sizes including members of the Fortune 1,000 to the region. Since its inception in 1971, the face of Voit has been its founder, Bob Voit, an entrepreneur with a reputation for pioneering new markets as he did at Warner Center. But in recent years, a second generation has taken the lead in guiding the company’s Valley efforts. Since joining the company in the late 1990s, Timothy F. Regan, Voit’s vice president for development and acquisitions, has presided over the development of the $41.5 million Marvin Braude San Fernando Valley Constituent Service Center and the $55-million Burbank Airport Commerce Center in Sun Valley, a development that so tapped into the demand for small industrial space that it has been fully sold even before construction is complete. More recently, Voit has acquired Wheatland Commerce Center with plans to build a $14-million industrial condominium complex and a 10.5 acre site in Sylmar where the company will develop a $32-million industrial park. At the same time, the company, along with Selleck Development Group, is completing the final leg of its Van Nuys Center at the Plant development, an 800,000-square-foot industrial park in Panorama City. The final phase is a $57-million development that will include two build-to-suit facilities for existing tenants along with two additional speculative buildings. Regan joined Voit nine years ago, working out of the firm’s Phoenix office and moved to the company’s Woodland Hills offices about six years ago. These days, Regan is dealing with development issues that are a far cry from those that occupied his mentor, who remains the company’s president. With a virtually built-out Valley, the focus of the company has changed from the development of suburban business parks to rehabilitating urban infill sites to meet the demands of businesses. Question: Until the Burbank Airport Commerce Center came along, it seemed as if Voit had pulled back from development in the Valley. Why was that? Answer: The market was changing so much. I think we’re in the ninth year of the real estate cycle, the longest cycle that many have seen, (so developers are wondering) when does the party stop. I think there are several developers that have been around for 30 years thinking it would have stopped a couple of years ago, and you don’t want to be the last guy in at that high land basis holding all the chips when the music stops. I know that when we were working on the GM project we had looked at industrial land that was $8 a foot and we said, how would we ever make that pencil out. Those are Antelope Valley prices now. Then the next piece of land we looked at was $16 a foot. Then we see land that’s $18 a foot and $20 a foot. In Orange County industrial land is going for $30 and $35 a foot. It’s just crazy. We did a great job on the Airport Center. But timing is everything and thank goodness prices continued to rise as all these construction costs were rising and squeezing us. Q: The Burbank Airport project is among the first to include industrial condominiums. What role will industrial condos play going forward? A: This was first industrial condo project we did. There were some done out in the Valley many years ago. I think it’s all a function of interest rates. If an owner can go get an SBA loan at today’s low rates, their monthly mortgage payment on one of these buildings is lower than what they would be paying in rent. So their occupancy costs are lower. As soon as interest rates get to the point so that their occupancy costs would be lower to rent, then it changes the whole game. When those interest rates go up, I think that’s also going to trigger increased rents throughout the Valley. Q: How much higher do interest rates have to climb before we start to see that shift? A: Prices have gone through the roof. On this (Burbank Airport) project we started off at $105 a foot and ended at $160 a foot (for condos). That’s over two or two-and a-half years, and I’m still getting calls from people who want to be out here. When is it going to stop? I don’t know. What’s interesting here is we had two or three buyers that bought in the first phase and came back and bought a second building in subsequent phases. Q: So are they speculating? A: One is. One has already got theirs back on the market. Other guys bought a property and they are leasing it. Bob Voit will tell you he was developing when interest rates were 20 percent. So when people get excited about interest rates going from 7percent to 8 percent, he still thinks that’s a very healthy environment. Q: Industrial vacancy rates have been tight for years now and rents have not changed much. Why do you think rents will go up for industrial properties? A: They don’t have options. They can’t run out to Santa Clarita anymore to get a lower rent. You’re either going to be pushed farther out to Antelope Valley or stay here and pay the rents. Q: As a developer, do you think that the city entitlement and permitting process has improved over the past few years? A: I think the city is working on it. But they’re overwhelmed. There is a tremendous backlog in the city of Los Angeles because there’s so much going on, so much rezoning, parcel-ization, entitlements, so the city is busier than ever. When we completed the Marvin Braude project, the whole idea was to make it a one-stop shop. They have more business than they ever expected. People are going to Van Nuys now instead of downtown, and I think the city was surprised at the volume of work that came through that building. I think the city is recognizing, I know they are, that for them to be able to create jobs there needs to be development and they need to make it easier for developers to get through that process. Q: How do you think you and your generation differ from the Bob Voits and Jerry Katells who were pioneers in commercial development in the Valley? A: What I have to do is focus on infill. As opposed to seeing land as far as you can see and having this vision that this is where the next frontier is, we have to look at it a little differently and be more creative and look at properties and buildings that we wouldn’t have looked at before. I also think this new younger generation of developers is spoiled. We think everything works. The Bob Voits and Jerry Katells and Jerry Snyders have seen the cycles. I was lucky to experience a down market, but I think there are a lot of guys that have yet to experience a down market and realize how bad things can get. But I’ll do it myself. I will look at a deal and I’ll convince myself we will get $250 a foot or $300 a foot for an office condo. And I’ll convince myself we can work through difficult site issues because I’ve had such a good run. I’ll convince myself, sure it’s going to work out. And I can spend a couple of weeks going through that analysis and Bob Voit will come in and in 10 minutes tell me all the things that can go wrong. And as frustrating as that can be, two or three weeks later I sit back and I say he’s right, he’s so right. Q: How did you get involved in the real estate business? A: I majored in corporate finance and real estate at Arizona State University when Phoenix was going through its real estate boom and the savings and loans were loaning all sorts of money. I graduated in 1985 and I started in development in ’89 with this developer in Phoenix. We had this beautiful little two story garden office, and I remember one of the partners saying we’re going to move to one of the spaces in our shopping center on the other side of town. And I said, this is such a beautiful office, why should we move? And he said because the bank is taking it back. Q: What is it that has kept you in the real estate business? A: It’s different every day. Challenges come up all the time and it’s just a matter of solving them. And at the end of the day, getting a piece of land, creating an industrial complex or an office complex that adds to the community, that makes it better, you see your efforts come alive. Timothy F. Regan Title: Vice President, Development/Acquisitions Born: Feb. 4, 1962, Phoenix Education: Business degree from Arizona State University, Phoenix, 1985 Career Turning Point: Seeing all the development underway in Phoenix when I was in school. Personal: Married. One son and a baby due in June. Most Admired People: My parents and my wife.
