For Infill Industrial, Go Off-Market

The industrial asset classes is rapidly becoming a favorite of investors. This year alone, we have heard the debt and equity capital sources are looking to increase exposure to industrial product—especially in L.A. where the nation’s two largest ports have contributed to one of the tightest industrial markets in the country—and from investors who are looking to increase exposure to the L.A. market specifically.

Liberty Property Trust is one of those investors looking for opportunities in the L.A. industrial market. This year, the investor purchased its first industrial asset in the City of Commerce, a 400,000-square-foot facility for $92 million. It was the firm’s fourth acquisition in the L.A. market since September of last year, and it hopes to continue its aggressive acquisition strategy this year. The problem: competition. As industrial product grows more popular in L.A., competition and pricing are on the rise. As a result, few properties are coming to market. Liberty Property Trust has curbed the competition by focusing on off-market deals. Specifically, they are approaching owners with a to-dollar price to persuade them to sell. “In those closer infill markets, there is not a lot of product that comes to market,” Erin Plourde, VP of Acquisitions at Liberty Property Trust, tells GlobeSt.com. “We have been lucky working with brokers trying to find off market opportunities, and we have been lucky to reach out to some groups that were interested in selling.”

It isn’t a new strategy. Apartment investors have been focusing off-market for the last couple of years to curb competition and find better yields. The cornerstone to the strategy, however, is pricing. “It’s not easy, but as we are paying market rates for these buildings, sellers are willing to not go through the marketed process for these properties,” adds Plourde. Price is always the winner.”