Bill Crow: Yes. Lastly, for me, we’ve talked about lease economics quite a bit but you mentioned increasing concession activity, of course, market rents under pressure in some markets. No discussion about any change in annual rent bumps. Is that becoming more of a negotiating point with tenant reps?
Peter Baccile: Chris, you want to take that?
Chris Schneider: Yes, it certainly is becoming a little bit more of a negotiating point. But so far, what we’ve signed in 2024, our rev bumps were at 3.5%. And if you take out one large renewal that was negotiated back in 2019, we’re actually at 3.7%. So there’s still — there’s some discussion, but they’re still holding relatively strong.
Bill Crow: Okay. That’s it for me. Thank you.
Operator: The next question comes from Nikita Bely with JPMorgan. Please go ahead.
Nikita Bely: Hi, good morning, guys. Good afternoon rather. I wanted to dig a little deeper on the demand side. I know it’s been asked. At NAREIT, I think you talked about that you had already some activity. You were having some discussions on the Stockton building and now that you’ve leased it. I was curious, was it the same exact person that you were or the company that you were having discussions with at that time or was it someone else that knew, came in and took the building indicating maybe a deeper pool of potential applicants in demand?
Peter Baccile: We had a bit of a horse race for that property and one of those horses won.
Nikita Bely: So how many people curious, were in the running?
Peter Baccile: Multiple players. We’re not going to get into how many. Thanks for that, though. It was a very hotly contested property. Great for us. One particular group was able to move more quickly, and so they won the day. The terms were very similar in each of the deals that came down to the wire.
Nikita Bely: Got it. Okay. Thank you.
Operator: The next question comes from Jon Petersen with Jefferies. Please go ahead.
Jon Petersen: Great. Thanks. I think one of the leases you guys signed in Phoenix, if I’m correlating with press reports correctly was Steelcase moving from California to Phoenix, which seemed like it was a relocation for them. Are you seeing any of that kind of activity of people leaving Southern California and deciding they can do distribution from Phoenix?
Peter Baccile: Jojo, first…
Jojo Yap: Thank you, Rob. I wouldn’t say, since you already named the name, we’re not disclosing anything new and we’ll confirm it, but it’s an expansion of footprint, and they are growing and they are serving — Steelcase is serving more parts of the U.S. In terms of movement, we see — we do see proposals, very few proposals that have SoCal in Phoenix as a provider space for a particular assignment. At the end of the day, the prospect really needs — makes the decision whether lower cost or drayage is important. If they have a drayage kind of company that has transportation costs that involves the core of LA and Long Beach almost certain that they end up in SoCal because of the significant transportation costs. If they can — actually if they don’t ship as much as a particular company and they could benefit from lower rental costs then they potentially could end in.
So two distinct customers. So I haven’t seen a customer where we really — Phoenix is replaceable to La or SoCal. Or SoCal is replaceable to Phoenix.
Jon Petersen: Got it. Okay. That’s really helpful color. Maybe just sticking with Phoenix. I know in the past you guys have, I think you sold one plot of land to a data center developer. Obviously, data center demand remains pretty hot. Well, it seems like warehouse demand is, let’s just say, less hot than it was a couple of years ago, like, I guess, what are you seeing in terms of how land is being used in a market like Phoenix? Like, are you seeing more projects that or more land parcels that you thought would go warehouse or actually going data center? And kind of how’s that impacting the development market
Peter Baccile: Jojo?
Jojo Yap: Yes, certainly Phoenix benefits from a lot of things. Population growth, consumption growth. And that’s why we’ve been able to successfully lease our buildings there that we built in JV although we still have one that where we need to complete and lease. Also in addition to that, that’s been a hotbed of a lot of semiconductor manufacturing. So that helps the economy there, too. That’s been a hotbed for data center because of the amount of power. And the location continues to be a top spot for data centers. That will continue. In the near term, the data centers are of highest and best value because of the supply of industrial in Phoenix.
Jon Petersen: Got it. Very helpful. Thank you.
Operator: And the last question comes from Vikram Malhotra with Mizuho. Please go ahead.
Vikram Malhotra: Thanks for taking the follow-up. Just two quick ones. So just on your — any statistics you can give on the box sizes in SoCal that are renewing. And I just want to make sure the assumption you made on not renewing, you haven’t heard specifically from the tenant. This, as you said, is just a bigger, broader assumption.
Jojo Yap: I’ll answer the next question. The next question. It was a macro assumption that we only renewed one tenant of the two. There continue to be discussions with both. And to the first question.
Scott Musil: One was the land lease, and the other was approximately how many square feet? 300,000. I think his question was like, Vikram, was it having to do different box sizes in Southern California?
Vikram Malhotra: Yes just the size, yes just the box sizes. Yes exactly. How big are these two assets that you’re now trying to lease up? Renewal. Sorry, the renewal? Yes, just how big the boxes are.
Jojo Yap: Yes. They’re in the 150,000 to 300,000 square-foot range.
Vikram Malhotra: Okay, great. And then just last one. With all the move-out, like, I mean, not move out, but moving pieces to development. You leased big — a big one. The great progress on Stockton, it sounds like all of that’s coming along well but just your commentary, some of it getting pushed up, some of it not. Is this just sort of a timing within 2024? I.e. are you still feeling as good as you felt last quarter about lease up or has something changed? I just want to make — I just want to be clear because it sounded like they were still moving pieces.
Peter Baccile: Yes. I mean, as I mentioned in the beginning of the call, this has been a pretty difficult year to project when certain assets are going to lease. We have some developments that are underway. We have completed developments and we have completed developments that have gone into service without tenants. So that scenario continues because again it’s difficult to know when these rather elongated conversations are actually going to turn into ink. And that has impacted, that is — great example of that is getting Stockton done. It wasn’t even on our — in our budget for this year. And we’ve got some other assets where the conversations are going a bit slower than we thought they might and they may happen later in the year. So it’s really just trying to do our best to use all of the information we have from our teams on the ground, the tone of the conversations we’re having to project out when we’re going to turn these conversations into lease.
Vikram Malhotra: Thank you.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Peter Baccile for any closing remarks.
Peter Baccile: Thank you, operator. And thanks to everyone for participating on our call today. If you have any follow-ups from our call, please reach out to Art, Scott or me. We look forward to connecting with many of you in June in New York.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
