LOS ANGELES—We need industrial space. The industrial vacancy rate in Los Angeles is sub 2%, and even lower in some submarkets. With the push for more product, developers are managing to scrounge up every last piece of available land for new industrial development. Every time it happens, we hear that this site is one of the last industrial land development sites in all of Los Angeles County. It has happened again. GlobeSt.com has learned exclusively that Duke Realty Co. has acquired a 22.6-acre land site from Chevron USA in La Mirada with plans to build a 475,000-square-foot distribution facility.

The terms of the deal were not disclosed, although there was strong competition for the site. The deal was fully marketed through Colliers International's Investment Services Group by managing director Bret Hardy and senior EVP Clyde Stauff, both of whom also represented the buyer in the deal. “There was very strong interest in the property as it is one of the last major “infill” sites available in the greater Los Angeles market,” Stauff tells GlobeSt.com about the marketing process. “Almost all of the interested developers favored a development plan for a single, state-of-the-art cross dock logistics facility that would attract an e-commerce logistics tenancy.”

It isn't surprising that the deal received a lot of attention. In this industrial climate, even low quality sites are getting attention, but this one is not low quality. It is in a great location between Los Angeles and Orange County and has immediate freeway access to reach anywhere in Southern California. “The central location will provide for “same day” or “two hour” delivery for a large logistics company servicing the greater Los Angeles area,” says Stauff, who adds that the site formerly served as a pumping station for Chevron's pipeline operation, which was consolidated into a smaller area at the same location, “allowing for the redevelopment of the site.”

While there is plenty of demand in general for industrial space, there is especially high demand from same-day logistics companies, which Duke will be targeting as users. “The demand from consumers for same day (or less) delivery time in densely populated areas will drive demand for large logistics facilities in the infill markets of Los Angeles on a “going forward” basis. There is an extremely limited supply of such buildings,” adds Stauff. “Given the turnaround time and drayage costs from the Ports of Los Angeles to the Inland Empire East and West markets, not all logistics firms will be able to service growing consumer demand for same day delivery from the Inland Empire markets. Therefore, demand from developers for larger infill sites that can be redeveloped with state-of-the-art distribution facilities will continue to be strong.”

Duke will develop a state-of- the-art cross-dock logistics facility with up to 110 dock-high loading doors and two large concrete truck courts on the site. The project will be built on a speculative basis and Duke plans to own and operate the property for the long term. It is scheduled for completion in October 2017.

The industrial sector has become the hottest segment in commercial real estate. How will logistics companies keep up with the market forces of omnichannel commerce? When will new supply finally catch up with demand? Who's putting investment capital into industrial and what does the future hold? Join us at RealShare Industrial on November 16 and 17 for answers to these and other questions. Learn more.

Instant Insights /

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