The world of industrial real estate may not be glamorous, but in a volatile market, there was no sturdier asset to own this year in Los Angeles County.
As government-ordered shutdowns closed nonessential businesses during spikes in Covid cases, the need for distribution centers to fulfill e-commerce orders became even more important.
So it’s no surprise that the five priciest industrial investment sales in 2020 in L.A. County was from institutional investors. The firms — including Blackstone Group — remain eager to increase their exposure to Southern California’s strong industrial and logistics sector, as they have in recent years.
“Institutional investors see industrial as a safe haven as opposed to office for example, because we don’t know what that will look like post-pandemic, although I do see office recovering,” said Dain Fedora, Newmark’s director of research for the SoCal region.
The priciest deal overall was from prolific industrial investor Rexford Industrial Realty. It paid about $300 million for a nearly 1 million-square-foot complex in Whittier. The drop off from there was a sharp one; the No. 2 acquisition, from Blackstone, was just $83 million.
Meanwhile, Realterm’s purchase of a 130,000-square-foot Torrance warehouse that’s soon to be leased to Amazon was the most expensive on a price-per-square-foot basis.
In L.A., average industrial lease prices were up 2.2 percent in the third quarter year-over-year, and vacancy remained effectively flat.
“Many retailers have been trying to figure out their e-commerce strategies and if nothing else, the pandemic is pushing up their timetables,” said Dain Fedora, Newmark’s director of research for the Southern California region. “What was perhaps a five- to 10-year period for retailers to lock in their e-commerce strategies is being pushed to two- three years.”
Overall, the five priciest industrial deals this year totaled $593 million compared to $708 million in 2019. That’s a decline of roughly 16 percent. By comparison, the top five sales in the multifamily market were down 50 percent compared to 2019.
Here are the five largest industrial sales that closed in L.A. County in 2020:
3963 Workman Mill Road, Whittier — Rexford Industrial Realty | $297M
Rexford, which invests in infill industrial properties in Southern California, is one of the most active investors in the region. The firm bought this 45-acre industrial park in November around the same time it purchased three other industrial properties.
The complex has a total of 989,200 square feet of industrial space; the deal figures out to about $300 per square foot. The seller was Brea-based Unire Real Estate Group and Seattle-based Washington Capital Management.
8201-8221 Woodley Avenue, Van Nuys — Blackstone | $83M
Blackstone Group’s two-building deal in Van Nuys was the San Fernando Valley’s priciest deal of the year. The facility totals 10.3 acres of industrial and office space, according to Realty Bancorp Equities. The larger of the two buildings totals 290,254 square feet. Printer cartridge manufacturer Micro Solution Enterprises is the biggest tenant. Saint Gobain Containers and AT&T also rent space there. The seller was Woodland Hills-based Realty Bancorp Equities.
2751 Skypark Drive, Torrance — Realterm U.S. | $81M
Realterm’s deal in is the priciest per square foot this year at $548.33. That also makes it one of the priciest of the decade by that metric. That price is about twice the average rate for the area, according to the Los Angeles Business Journal. Amazon will lease all 130,500 square feet at the property.
The seller was Bridge Development Partners. It secured approval from Torrance to demolish what was once a Costco wholesale store in order to build the new facility. Instead, the firm decided to renovate the facility for the e-commerce behemoth. Bridge paid $41.3 million for the property last year.
15015 Valley View Avenue, Santa Fe Springs — Brookfield Property Group | $68M
The biggest sale of the third quarter came in at No. 4 overall. That happened in July when Brookfield bought this 303,000-square-foot distribution facility from Unified Grocers, which had also occupied the property. The deal figures out to about $224 per square foot. The facility was built in 1970 and the property totals a bit less than 17 acres.
2001 East Dominguez Street and 20740 S. Wilmington Avenue, Carson — Brookfield Asset Management | $64M
This industrial buy of two neighboring properties closed in early June. The seller was Western Tube & Conduit Corporation, which also occupied the space. The larger of the two buildings on East Dominguez totals 300,000 square feet and the entire property is 20 acres. The properties were built between the 1950s and ‘70s.