GLP Capital Partners Buys Inland Empire Warehouse for $158M

GLP Capital Partners is acquiring a SoCal warehouse from Clarion Partners for $158M, which is more than three times what Clarion paid when it bought the property in 2016.

The 580K SF distribution center, located on a 28-acre site at 3900 Indian Avenue in the heart of the Inland Empire in Perris, is fully leased to third-party logistics player Kenco Group.

The industrial facility at the Perris Gateway Commerce Center, at the southwest corner of North Perris Boulevard and Ramona Expressway, is adjacent to a 397L SF warehouse that also is operated by the 3PL company.

Clarion has been busy closing transactions this year in its growing industrial footprint in the Inland Empire, the tightest industrial market in the US, where vacancies have been less than 1% since the beginning of the year.

Last month, Burlington Stores inked a lease to occupy all of Knox IV, a 410K SF warehouse that is part of the 249-acre Knox Logistics Center, which Clarion is developing in a partnership with Trammell Crow in Perris.

In June, Home Depot agreed to pre-lease 1.1M SF Class A warehouse under construction at the Ontario Ranch project that Clarion is developing in Ontario with Real Estate Development Associates. JP Morgan is providing a $210M construction loan for the first phase of the project.

In 2019, GLP Capital Partners sold $18.7B worth of US industrial assets to Blackstone, encompassing 179M SF, in what was then the largest global real estate transaction.

The industrial vacancy rate in the Inland Empire hit an all-time low of 0.2% in Q2 2022, according to CBRE’s market report. Construction activity hit a record high of 39M SF, with more than 41% of the new construction pre-leased.

“Even as construction activity ramped up, most new warehouses that completed construction were immediately occupied, leaving little to no available product in the market,” the CBRE Q2 report said.

Taking rents increased in the second quarter to $1.43 per SF per month—a quarterly increase of 16.3% and a YOY gain of 99%–in the Inland Empire, with the largest second quarter rent gains reported in the Inland Empire West, where taking rents rose to $1.55 per SF per month, a 158% YOY increase.

The Inland Empire has the densest as well as the tightest industrial market: the overall warehouse footprint in the two-county region that stretches from the LA city limits to the Arizona border is estimated to be more than 1B SF.

As industrial space for 1M SF big-box warehouses has dwindled to a diminishing number of infill sites in the western half of Inland Empire, new warehouse construction has moved to the east and to the north, where it is encountering increasing backlash. Warehouse moratoriums have been proposed in more than a dozen communities in the Inland Empire.