Prologis spends $50M on office-industrial building in Commerce
Sale comes as industrial vacancy in greater LA reaches 4.6%, highest in a decade
Prologis has picked up a 251,000-square-foot office and warehouse in Commerce for $50 million.
An affiliate of the San Francisco-based real estate investment trust bought the 13-acre property at 7400 East Slauson Avenue, CoStar News reported. The seller was an affiliate of the Gehr Group, based in Los Angeles.
The Gehr Group, whose divisions include Gehr Industries and Gehr Development, had used the two-story building as an industrial and office hub. The warehouse, built in 1951 at Slauson and Greenwood avenues, is a couple of blocks west of the 5 Freeway.
Prologis, the world’s largest industrial real estate owner, has in the last five years been the second-most active buyer of industrial properties across the Los Angeles region, buying $1.4 billion in industrial real estate, according to CoStar.
The REIT said in a November report that U.S. logistics real estate was experiencing some “cyclical short-term uncertainty.” The firm expects this may be offset by a drop in construction, which could “reintroduce scarcity” to many markets.
The vacancy rate for industrial buildings across greater Los Angeles is 4.6 percent, the highest level in a decade, according to CoStar. A year ago, the vacancy rate was 2.4 percent.
In Commerce, the industrial vacancy rate was 3.9 percent, up from 1.1 percent last year.
Despite high interest rates and the ULA transfer tax in the city of Los Angeles, investors poured big money into industrial properties across Southern California last year. While price growth and rent growth for Los Angeles industrial properties slowed, the average price is $340 per square foot, surpassing the national average, according to Matthews Real Estate Investment Service.
In November 2022, Prologis filed plans to redevelop a former Greyhound bus terminal in Downtown Los Angeles into an 8.3-acre studio production campus at 1716 East 7th Street, in the Arts District.
The REIT has also hit legal headwinds across the Southland.
In June, a group of Los Angeles residents sued Prologis, alleging it was liable for negligent storage of toxic materials after a major fire two years earlier ripped through a warehouse in Carson, leading to chemical runoff and weeks of air pollution.
In March, the Los Angeles County Metropolitan Transportation Authority sued Prologis, alleging the REIT allowed toxic substances to be released from a warehouse near Downtown Los Angeles.
— Dana Bartholomew