The subprime meltdown and the crippled U.S. real estate market have created a number of investment opportunities in some areas, one of which is the San Diego region. One company well positioned to take advantage of the overseas interest in San Diego is Knoefler Enterprises Inc, a full service real estate development and investment corporation. The company’s business activities range from urban development and master planning to commercial-office, light industrial and residential projects in California, Indiana, Michigan, Georgia and Florida.

Heading up the San Diego office is Josh Knoefler. Nominated one of 50 people to watch in San Diego by San Diego Magazine last year, Knoefler is focusing his company’s efforts on creating partnerships in Japan to capitalize on the investment opportunities in the U.S. and the long-term trend of sustainability in the U.S. development industry.

Japan Today editor Chris Betros caught up with Knoefler during a recent visit to Tokyo.

How did you get into this industry?

I am originally from Indiana. We are a family owned full service real estate development business. My father started our family businesses about 22 years ago in Indiana, focusing primarily on single family residential building. I run our West Coast division. My brother runs the East Coast office out of Miami. I have been in San Diego for a little over 5 years.

What do you mean by full service?

We are primarily focused on development, project and construction management and also real estate consulting and brokerage services. We act as a one-stop shop and basically do everything.

How long have you been coming to Japan?

I’ve been coming here every two to three months for about a year. We are still in the business development phase with Japan. What we are trying to do is create some strategic long-term partnerships with developers, businesses and investors who are looking to take advantage of the crippled real estate market as well as the devalued U.S. dollar.

What sort of partners are you talking to?

Japanese real estate developers who want to expand their businesses in the U.S. or open new offices. I’ve also met with small to medium-sized firms who are looking at opening offices in the U.S. We can locate office space and we do have our own investment properties that we can provide. I’ve been meeting with individual investors as well.

Is it slow going?

Well, it’s all based on relationships, as I expected. I’ve done quite well just on the few trips I’ve made over here so far. Most of the individuals I speak with are fluent in English, and probably the “doorkeeper,” so to speak. There are always multiple doors we have to go through. Being a member of the American Chamber of Commerce in Japan has been a big help because it provides guidance on how to start building and expanding relationships.

How much overseas interest is there in U.S. real estate?

About a third of all commercial property purchased in the U.S. in the last quarter of 2007 was based on foreign investment. There are a number of individuals who are putting together private equity funds to capitalize on the devalued dollar, the crippled real estate market and the lack of financing available in the U.S. It is definitely a buyers’ market for foreign investors.

What makes San Diego an attractive investment opportunity?

It has one of the best climates on earth, 60-80 degrees all year round, with low humidity. California’s population is expected to near double by 2050, so that’s a lot of people who are going to need housing over the next 30-40 years.

What projects are you working on that promote sustainable development?

Green Village is a stand-alone urban redevelopment project that will be sustainable by generating its own energy and recycling its own water. In California, that is extremely important for the future of real estate development. It is mixed use with office, commercial, residential and retail components. We own strategic parcels of land and it is a long-term investment.

How has your company weathered the subprime crisis?

Smaller private companies have more ability to withstand risk. We can weather a downturn in the real estate market much better than a big company that has stockholders to answer to. Furthermore, our industry in the Midwest is primarily high-end luxury custom home building. That market has been almost entirely unhit by the subprime crisis. In southern California, a lot of the brokering that I have been doing has been primarily in the higher end luxury property market. It’s the same in Georgia.

How do you approach a project?

When we go into an area, we hire consultants and put together a team of all local experts in engineering, architecture, legal and public affairs. We act as the master developer.

You must travel a lot?

Yes, and sometimes it gets a bit tiring, but I enjoy meeting people and working with different cultures. I’d struggle without my Blackberry.

You come from a civil engineering background. Has that been a help to you?

The most valuable thing I have from my engineering background is the ability to understand process. When you are looking at organizing and developing projects, the ability to put the pieces together is important.

When you are not working or traveling, how do you like to relax?

I make Sunday my day off. I enjoy yoga for physical and mental well-being. The geography of San Diego means I can drive from the ocean to the mountains to the desert. It’s a great place to live.

For more information, visit www.KnoeflerEnterprises.com

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4 Comments

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  Everton2 at 10:04 PM JST - 6th August

  Whatever you do, don't invest in the US real estate market especially now. Its boom and bust nature will certainly guarantee that you will loose money over time

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  tokyotom at 09:36 AM JST - 7th August

  SD weather attracts wealthy retirees from all over the world, pricing worker-bees out of the market for decent housing, that is the hurdle no business can overcome

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  Mark_McCracken at 06:55 PM JST - 8th August

  I'm looking to invest in US real estate, but in about 4 years, after the prices have come down much more, and my yen buys more dollars.

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  Weasel at 05:46 AM JST - 10th August

  ...pricing worker-bees out of the market for decent housing, that is the hurdle no business can overcome.

  The worker bees already walk across the border from Tijuana, where housing is less expensive than in the US. That hurdle has been; and will continue to be, exploited by businesses for decades to come.

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