Case Studies

Buzz Oates

Unlike the typical builder, Buzz Oates sticks around

Usually, after a piece of property is sold the builder lets go of all responsibility concerning the project, unless of course that property was developed and built by a company such as Buzz Oates, which has a longer-term interest.

Based in Sacramento, California, the vertically integrated development and asset management company specializes in building large industrial warehouses, office parks and distribution facilities. But unlike many construction companies, Buzz Oates doesn’t sell the majority of its properties. It stays on as property manager.

Buzz Oates

Chief Investment Officer Kevin Ramos says this adds a welcome level of pressure to deliver higher quality buildings because the company is held accountable to its tenants.

“We take our lessons learned on older projects, after we’ve seen them age for five, 10 or 20 years, and use that invaluable information from our property managers as innovation in our design and construction,” he says.

Today, Buzz Oates leases between 2 to 3 million square feet of industrial and office space in the Greater Central Valley every year, and currently manages a 23-million-square-foot portfolio.

“We are always listening intently to our tenants to make sure we’re delivering what their business practices demand,” he says. And this is how Buzz Oates is able to maintain 20- to 30-year relationships with some of the company’s largest tenants.

Survey says

Founder Marvin L. “Buzz” Oates started his business in 1946 with $2,000 he had saved as a member of the U.S. Air Force during World War II. Driven by an insatiable entrepreneurial spirit, his company evolved from being a locksmith to a retail distributor, eventually hitting its stride in construction, development and property management.

Ramos says this history and experience in the industry is one of Buzz Oates’ greatest assets. “We aren’t building based on theory of what works well, we’re designing based on our years of experience owning and operating these facilities,” he says.

For instance, Buzz Oates’ builders and construction managers know to pay special attention to the roof, floor slab and parking lot because they contribute to the most expensive and time-consuming maintenance.

To counteract that, the company uses superior materials and systems in the building process, installing metal roofs that come with a 20-year warranty and are insulated with vinyl and reinforced with R-13 fiberglass insulation. Truck courts are made with deeper-than-typical concrete dock aprons that can support an entire tractor-trailer.

Buzz Oates

Buzz Oates also regularly surveys its tenants to gage what they think of the property and how it could improve. “We believe that we are most successful if we listen to our tenants and deliver a product that meets their needs—be it big things like clear height or small things like LED lighting retrofits,” Ramos says.

This feedback has also helped Buzz Oates recognize how the market has evolved.

“You used to have just a few guys working in a warehouse moving product around, but industrial is no longer basic in curb appeal and solely focused on utility,” Ramos says. “Now industrial parks are vibrant business parks with many more employees.”

As a result, Buzz Oates builds many of its facilities with branded “identity glass,” outdoor seating and general outdoor landscaping. Ramos says tenants have actually come to expect these added design elements, which is also why Buzz Oates consistently uses a Floor Area Ratio (FAR) in the low 40s.

“Our tenants come back to us time and time again for another building or a larger facility, and we couldn’t provide that level of trust or service if we didn’t have a long-term investment strategy,” says Chief Investment Officer Kevin Ramos.

FAR measures how big a building is in relation to the property size. Most industrial construction companies use a FAR in the 50s or 60s, but Buzz Oates feels it’s important to leave a sense of space and “breathing room” on its properties.

Also, “older buildings with higher FAR were once considered efficient because you could get more building on your parcel,” Ramos says. “Now efficiency is measured in getting more trucks on and off the site more quickly, which requires more circulation space.”

Back for more

Ramos says this willingness to adapt has poised Buzz Oates for significant growth in the future.

Currently, the company has five projects under construction totaling 1.58 million square feet, including a 250,000-square-foot facility in Sacramento and a 450,000-square-foot facility in Stockton. Buzz Oates also has 1.50 million square feet under development that is expected to be delivered in 2018.

Buzz Oates

“Our intent is to hold the lion’s share of our portfolio and increase the size of our portfolio by 50 percent the next 10 years,” Ramos says. He adds that the best part of many of these projects is that they are for return customers seeking a larger facility or else just eager to work with Buzz Oates again.

“We couldn’t provide that level of trust or service if we didn’t have a long-term investment strategy,” he says.

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