Here are LA’s top industrial investment sales of 2018

Investors seized on the city's booming industrial market, which has been among the most active nationwide

TRD LOS ANGELES /
Dec.December 18, 2018 06:00 PM
From left: 5959 Randolph Street, A rendering of the Torrance project, and 5300 Sheila Street
 

Los Angeles’ industrial market has been booming in 2018.

Strong demand pushed leasing and purchase prices to record highs, particularly in the South Bay market, but also in cities like Burbank and Irwindale in the San Gabriel Valley. The L.A. market was the strongest  in the country this year and according to online real estate marketplace Ten-X, that trend should continue into the new year.

E-commerce was an important driver of activity. Nationwide, demand for warehouse and logistics space hit an 18-year-high and tenants are occupying space at a faster rate than what is getting delivered, according to CBRE.  In a recent survey, more than 90 percent of investors  said they were optimistic that industrial activity would remain steady or increase over the next year.

In L.A., a number of big-ticket industrial sales helped drive activity. Rexford Industrial Realty topped the list with the biggest acquisition — a nearly 700,000-square-foot property in Commerce. Of the top five deals in L.A., two were in the city of Commerce.

5300 Sheila Street, Commerce — Rexford Industrial Realty | $121M

Rexford was one of most active investors in L.A. last year, so it’s no surprise the Westside firm recorded the priciest trade of the year.

Rexford paid around $174 per square foot for the Commerce property, which has a 695,000 square foot distribution center spans 36 acres. The spread has enough room to accommodate 435 containers or trailers. The sale was a leaseback deal with national grocery distributor Supervalu. The company shed eight of its distribution centers around the country this year. Rexford said it is  paying below-market rents, so upgrades and a rent hike could be in the cards.

Bridge Point South Bay, Torrance — Morgan Stanley | $102.5M

Bridge Development Partners closed a big deal  for its new 512,500-square-foot warehouse at 20333 S. Normandie Avenue in May. The sale to Morgan Stanley came nine months Bridge’s planned deal with Industrial Property Trust fell through. The property has parking for 176 trailers and the warehouse has 56 dock doors and a flexible 20,000-square-foot office space.

The deal came out to around $201 per square foot. Morgan Stanley purchased it through its Prime Property Fund, which invests in core assets around the country. The South Bay site is a prime location for logistics, located near interstates 405 and 110, about halfway between the freight hubs of the Los Angeles International Airport and the ports of Los Angeles and Long Beach.

Randolph Business Park, Commerce — Liberty Property Trust | $92.7M

Pennsylvania-based Liberty Property Trust purchased the 400,170-square-foot Commerce warehouse from the behemoth portfolio of the California Public Employees Retirement System. CalPERS paid $53.2 million for the property in January 2014. It was Liberty Property Trust’s third major industrial buy in five months, during which it added 1.3 million square feet of industrial real estate to its portfolio. The purchase grew its Southern California portfolio to 3.7 million square feet.

The property is fully leased to OnTrac, a logistics company specializing in shipping services.

Backlot Burbank, Burbank — BKM Capital Partners | $85M

BKM Capital Partners picked up  this 302,000-square-foot campus from a joint venture of Penwood Real Estate Investment Management and Shubin Nadal Associates. The industrial park has 12 buildings and is fully leased to 16 tenants. There’s room to grow: rents there are averaging 22 percent below market rates.

BKM purchased the property through its BKM Industrial Value Fund II, a $300 million fund that targets value-add assets in the Western U.S.

13131 Los Angeles Street, Irwindale — Duke Realty | $62.5M

Duke Realty’s purchase of an undeveloped 25.5 acre site in Irwindale rounds out the top five trades of the year. The site could fit up to a 500,000-square-foot warehouse.

The Indianapolis-based real estate investment trust started off investing in office properties, but around 2011 decided to shed its portfolio and go after industrial and medical assets.

It was Duke’s third big buy in Southern California since 2017. That year it picked up a pair of 450,000-square-foot buildings, one in the City of Industry and another in Fontana, as part of a 10-property deal with Bridge Development Partners worth $700 million.

 

The Top 5 LA Industrial Sales in 2018

RankAddressPriceBuyerSeller
15300 Sheila Street$121,000,000Rexford Industrial REITSupervalu
220333 Normandie Avenue$102,500,000Morgan StanleyBridge Development Partners
35959 Randolph Street$92,700,000
Liberty Property TrustBentall Kennedy; CalPERS
44400 W Vanowen Street$84,222,000 BKM Capital PartnersShubin Nadal Associates; Penwood Real Estate Investment Management
513131 Los Angeles Street$62,500,000 Duke RealtySharon Tedesco

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