Port of Long BeachLosAngeles-located single-tenant industrial properties are inhigh-demand. The problem: they are becoming a rare find in theextremely tight and competitive market. This year, however, moreproduct could come to market with owners encouraged by the strongmarket dynamics and record pricing. DaumCommercial's Casey Mungo recently sold a57,000-square-foot single-tenant asset in the Greater L.A. market,and says that while highly desirable, there are opportunities tobuy.

|

"Since these assets are in high demand, cap rates can sometimesbe extremely compressed," Mungo, EVP at Daum, tells GlobeSt.com."We are seeing cap rates between 3.5% and 4.5% on a regular basis.Sellers are taking this opportunity to move their equity intoinvestments producing increased cash flow."

|

These deals are highly desirable because of the location.Southern California and Los Angeles in particular is one of themost coveted industrial markets in the country. "Well-appointedindustrial properties in the submarkets within the immediatevicinity of the ports of Los Angeles and Long Beach are highlydesirable and sometimes hard to come by, as demonstrated byvacancies consistently posting in the 2-percent-range," saysMungo.

|

To win these deals, buyers have to come in with competitivepricing as well as certainty of execution. "Often, these propertieswill have a pool of several potential buyers," says Mungo. "Weadvise our clients to take a 'best-foot-forward' approach and havea sound strategy in place that will position them to make a highlycompetitive offer from the start."

|

For buyers looking to win a deal, this could be the year. It islikely that owners will look at the market timing and decide tosell. "With vacancy rates reaching all-time lows, there are stillexcellent opportunities in the market," says Mungo. "Bullishinvestors will continue to build their industrial portfolios,especially as the economy appears to be holding steady withattractive interest rates."

|

Despite the limited opportunities, sales volumes are stillstrong in the Los Angeles market, with institutional investorsbecoming highly active. "We are still seeing relatively highinstitutional investor activity in the market and are anticipatinga sustained strong sale volume throughout 2020," says Mungo.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.