LOS ANGELES—Western Realco has sold two newly constructed speculative industrial properties for a combined total of $14 million. These are the first newly constructed industrial buildings to trade hands in Los Angeles County this year. The buildings together have 96,464 square feet.
The sale of these two properties shows that the strong demand of industrial properties is not limited to big-box facilities. “The larger properties brought us out of the recession because a lot of the corporate users were demanding larger buildings,” Luke McDaniel, a JLL broker who represented the seller along with Cameron Driscoll, tells GlobeSt.com. “I think the smaller, local companies took a little more time to catch on and get out of the recessionary mode. Now, the sweet spot really is anywhere from 10,000 to 100,000 square feet for owner-user sales.”
Rockman Company USA acquired the first building, a 52,032-square-foot facility located at 12011 Smith Ave. in Santa Fe Springs, CA. The property has 30-foot clear heights and an ESFR sprinkler system. D & L CA Holdings acquired the second, smaller industrial property, a 44,432-square-foot property located at 12039 Smith Ave. in Santa Fe Springs, CA, with a 26-foot clear height. Both buyers plan to occupy the buildings.
The limited supply of smaller industrial properties fuelled strong demand for the properties. The larger property went into escrow more than a year before construction was completed. “They really kicked off the program,” says McDaniel. The smaller property was then placed under contract for $145 per foot, but the brokerage team continued to receive backup offers for up to $150 a foot. “In the mid-counties market, where these buildings are located, these are the only two smaller speculative buildings that have been built since 2008,” McDaniel adds. “There is a lot of demand for more modern buildings that have good sprinkler systems and adequate loading, which is why we had an unbelievable amount of activity on these buildings.” Although the exact prices for each building were undisclosed, sources unrelated to the deal approximate a sale price of $7.6 million for the larger building and $6.4 million for the smaller building.
This increased demand for smaller industrial spaces isn’t to say, however, that demand for big box spaces has dropped. “All industrial buildings for sale are getting a lot of action,” McDaniel explains. “There are very few properties, a lot of demand and the market is screaming for new development; but, in the infill markets, there is really just no land for development.” The few industrial buildings under construction in Los Angeles County include Pacific Industrial‘s 500,000-square-foot, three-building facility in the City of Bell, CA. The developer purchased the land last year from the city, signing a lease for a portion of the space as part of the transaction.