Brett Dedeaux is the chief executive and managing partner of Dedeaux Properties, a Santa Monica-based developer of industrial and logistics real estate that operates over $1.3 billion of assets under management and has a portfolio that spreads more than 14 million square feet.
Dedeaux is the grandson of Rod Dedeaux, former University of Southern California head baseball coach and founder of Dart Entities, a distribution and fulfillment provider that became the Dedeaux family company.
After completing college at USC himself, Brett Dedeaux worked at Dart for a couple of years before spinning off his own firm in 2005 – which he launched alongside his dad, uncle and grandfather – based on the knowledge they had gained from operating their separate trucking company.
Dedeaux Properties develops mainly in California and has projects up and down the coast, from Northern California, East Bay, San Jose and Southern California.
Dedeaux sat down with the Business Journal to discuss getting his start in development, the growth of his firm, as well as the impact of the recent Los Angeles wildfires on the logistics supply chain and what’s needed to rebuild.
Tell me about the company at large. Why focus on industrial specifically?
With our (family’s) logistics background, what we recognized is that other developers didn’t have our roots of running an industrial company that uses these buildings day in and day out. Maybe other developers build office buildings and retail and industrial, but they didn’t have, I think, inside knowledge (on things like) how many truck doors does a logistics company need? What depths of the building should they design? How much trailer parking do they need?
As a user of these buildings ourselves, and with logistically having a lot of large corporate clients, we got very good insights and very accurate insights on how to develop these buildings: what the right dimensions are, the amenities, the clear heights and so on. I felt we had a competitive advantage with those insights of going into industrial versus other asset types, so it was the natural fit for us as a company to become an industrial logistics developer.
Is there a specific type of industrial property that you’re most interested in?
When we started the company, our first project was cold storage, and we developed a number of both cold storage and dry buildings, traditional industrial buildings. We took a deep dive in the beginning stages into understanding food safety regulations, different types of freezer systems and all the components that are involved in building specialty buildings and what those tenants needed.
That was our first entree into understanding a niche within industrial, always doing traditional industrial (development) as well, but, with our deeper roots in transportation-oriented properties, we saw an even bigger opportunity in doing these logistics, transportation-oriented buildings, now called IOS or industrial outdoor storage. We, I think, became most well-known as the leader in this region of going heavily into IOS and I think that’s one of the defining characteristics of Dedeaux. We have most of the leading transportation logistics companies in the country in our portfolio now and we learn from them every day.
Last year was a busy year for Dedeaux Properties. The company had several large portfolio recapitalizations and developments underway. What were some of your biggest accomplishments?
We built a facility in the Inland Empire in Perris that was really designed to service reverse logistics, which is people’s return of goods for a lot of the e-commerce companies. We identified a need for those types of buildings that wasn’t being met … and we, in a down market, got very good economics by having a building that a lot of the leading national logistics companies (want). They were very pleased that we understood what their needs were and delivered that kind of building to the marketplace, so it kind of validated us taking some of these risks and building types of buildings that other people were not building and having success with it.
Another major project that we’re really excited about – it was (one of) the biggest transaction(s) in Los Angeles County (two years ago) – we bought the 99 Cents Only Stores corporate headquarters and distribution facility (for $190 million). It’s an over 900,000-square-foot building in Central Los Angeles. We pursued this deal for a long time. It’s in a private gate garden campus where we control the majority of the real estate, and we have another 400,000 square feet adjacent. It’s something we worked on for literally 10 to 20 years to put this whole deal together.
Dedeaux Properties is entering its 20th year in business. How has it grown since its inception?
To me, and I’m using kind of using a baseball analogy, I think you’re only as good as your team and one thing I’m really proud of is our team. I’m so proud of the accomplishments of everybody here, glad that these guys trusted their careers with me – a lot of these guys came from other successful careers, but they saw what we were doing, they believed in what we were doing, believed in the vision and decided, ‘I’m going to hang my hat here at Dedeaux Properties for some pretty established careers elsewhere.’ And to be able to move this needle with this great team of executives is exciting. I think one of our great accomplishments is just the culture that we have here.
What’s it like working for a family business?
We’re very family oriented – that’s a big thing that we bring through here. People know here that, whenever anything personal is happening, we’re all about family first and so there’s built-in flexibility here – there’s a lot of trust to get the work done and I think that’s something different.
I know that some of our more institutional partners, they reorganize, and things happen, and changes are bad and people are let go. Here, I think there’s a lot of stability. We feel like we are all one big work family and there’s a lot of trust and loyalty and things that gets embedded into that.
How do you think the recent Los Angeles wildfires will impact the supply chain, from a logistics point of view?
There’s a lot of product and equipment and so forth that needs to be stored so we do think there’s going to be some increased demand for industrial space for all the building materials and equipment and so forth that’s going to be needed to rebuild so many homes, including my home. We lost our family home in the wildfires and our company lost two others. Half our company was evacuated – we’re all kind of West Los Angeles-based, so it definitely affected us firsthand.
We are keeping a close eye on (the fires’ impacts) – it’s what we have to do as developers. There’s such a big upswing of demand and building materials that can affect our construction pricing and underwriting. We’ve got to keep an eye on that – although it’s not always industrial building (materials) like concrete and steel (that are) directly correlated to building residential real estate – but there is some correlation in labor costs and (availability and other) things we’re seeing go up.
What other challenges are currently facing the industrial market?
I mean, there’s a new administration (in office). A lot of us are keeping a close eye on that – tariffs and various things … I think corporate America makes a lot of decisions based on certainty and I think, at these beginning stages, it’s not fully clear yet on what the administration is going to stick with. But, at the same time, I think what we’re already seeing from corporate America is that they feel that we’re in an era of deregulation and they feel that we can start growing more. And with that, then, there’s a need for additional industrial space when corporate America starts growing again.
As we begin 2025, what expectations do you have for this year? Any growth or expansion plans?
Definitely, we have a growth mindset. We want to take advantage of our infrastructure and our team and our capabilities to continue to grow. This year, we think there’re good opportunities to buy existing buildings as well as develop.
We’re not just a developer; we’re also an investor and so we think that would be opportunistic to current market conditions to buy existing facilities we may reposition as well as develop. Certain submarkets are pretty tight – San Fernando Valley, Orange County and others are tight due to an absence of vacancies – what we’re looking at this year is to get a lot more absorption. When there’s not as much competition, then you start developing again. We look at this as a year of absorption.
