Captiva Partners' Brian Abers on Creating Big Value in Small Bay Industrial Real Estate

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Date:

24 Mar 2025

In a market where flashy office towers and luxury residential developments often grab headlines, Brian Abers has found success in what he calls “essential real estate” – small bay industrial properties that house the businesses forming the backbone of local economies.

As founder and managing partner of Captiva Partners, Abers is expanding his firm’s footprint beyond its Southern California base into Phoenix, starting with the acquisition of a 40,075-square-foot multi-tenant industrial property in Tempe at the end of 2024.

“Phoenix was our initial target market for expansion,” Abers explains. “We decided in early 2024 that we wanted to make sure we got an acquisition under our belts in Phoenix. We closed on December 31, and it’s the first of many.”

Building Value Through Attention to Detail

With 18 years in institutional commercial real estate, Abers has developed a strategy that applies lessons from experiential retail and multi-family to the industrial sector, creating differentiated value where others might see only utilitarian space.

“People like space that feels good, and that applies to warehouses too,” says Abers. “When we look at small bay industrial, we think there’s a huge opportunity to really improve the experience for the tenant.”

This approach translates to concrete improvements like new paint, landscaping, and investing in the office spaces within warehouses – areas where people spend most of their time. The strategy also includes proper branding to create what Abers describes as a “best in class experience” for tenants.

The First Street Commerce Center in Tempe (located at 2209-2211 W 1st St.) will undergo these improvements with new signage, refreshed landscaping, exterior painting, and upgraded interiors.

Serving the Backbone of the Economy

Captiva’s tenant profile illustrates the essential nature of these properties and their importance to local communities. Their spaces house HVAC repair businesses, roofing companies, last-mile delivery operations, maker spaces, and distributors serving the surrounding area.

“I’m very proud to say that we are providing space to the businesses that form the backbone of our US economy and our local economies,” Abers notes. “It’s all types of typically small and medium-sized businesses who have a need for warehouse space and need to be in these infill, dense locations because their customer base is the local community.”

This tenant-centric approach has yielded tangible results beyond financial returns. Abers shares that they often encounter existing tenants who were contemplating relocation but change their minds after seeing Captiva’s improvements.

“What we hear from tenants is that they’re so happy that we came in and that we’re professionally managing the property, being responsive to their needs,” he says. “They were thinking about maybe leaving, and they need more space… we can accommodate that. It’s a win-win for everybody.”

A Compelling Market Segment

What makes this property class particularly attractive as an investment is the fundamental imbalance between supply and demand. Abers points to high barriers to entry for new development, including lack of available land, prohibitive construction costs, and zoning challenges.

Many similar properties are being demolished to build larger single-tenant warehouses or redeveloped for other uses like apartments. “We’re typically buying them in locations that are growing and getting better. So if anything, we’re seeing a destruction of supply, not an addition of supply,” Abers explains.

The result is sub-5% vacancy rates in most markets Captiva operates in, with virtually no new supply coming online – in some cases for decades. When Captiva renovates these older, infill assets, they’re creating a product that Abers describes as “near impossible to build and create new today.”

Looking Forward

Captiva’s approach may not generate the same attention as signature high-rises, but the firm sees substantial opportunity in its proven model.

“We’re not developing architecturally interesting apartment towers or big office buildings, but it really is essential. And when you do it right, and when you properly marry function and form, the market really responds well to it.”

The company’s expansion into Phoenix marks just the beginning of a broader growth strategy. “We plan to grow our footprint in Phoenix and expand to other growth markets on the West Coast. We have high conviction in the asset class and will continue to focus on this small bay industrial strategy,” says Abers.

For a market segment that Abers describes as “still very much under the radar,” Captiva Partners is demonstrating that attention to detail, operational expertise, and a focus on tenant experience can elevate these essential spaces into thriving business communities – creating value for investors, tenants, and local economies alike.