Prologis Nabs Sun Valley Distribution Center

LOS ANGELES—Prologis has purchased the Sun Valley Distribution Center, a 168,000-square-foot industrial facility. The seller and the purchase price of the transaction were both not disclosed, however, industry sources unrelated to the deal name the seller as Invesco Real Estate and the purchase price as $22.8 million.

"In the San Fernando Valley, it is really hard to acquire properties. The vacancy rate there is about 1.3%, buildings rarely trade and you have a lot of owner/users," Scott Irwin, VP investment officer of Los Angeles for Prologis, tells GlobeSt.com. "Getting into that market was a big driver for us to purchase this property. After the last downturn, the values really held up, and vacancies peaked at 3.5%. So, the market dynamics are strong. We currently only own about 400,000 square feet in the San Fernando Valley, and we are going be actively and aggressively trying to increase our presence there."

The property is positioned near the 5, 210 and 405 freeways, as well as state routes 170 and 118 and 101, and, because of the location and tight supply, the market attracts premium rental rates. According to CBRE vice chairman Barbara Emmons, who represented the buyer and the seller in the transaction, along with her CBRE colleagues, vice chairman Darla Longo, VP Rebecca Perlmutter Finkel and local SVPs Greg Geraci and David Harding; there is a limited supply of 100,000-square-foot-plus industrial properties in the San Fernando Valley and a low 1.3% vacancy rate in the submarket. In Sun Valley, that number plummets to nearly nothing. There is 304,476 square feet of available industrial space in the San Fernando Valley, and none of it is in the Sun Valley submarket.“The San Fernando Valley is one of the most stable markets in Southern California and Prologis saw this acquisition as a good opportunity to build their portfolio in this submarket,” Emmons tells GlobeSt.com.

In addition to the rarity of the asset and the location, the property also had good bones. "We liked the functionality of the building," says Irwin. The property has 168,000-square-feet of rentable space, and sits on 7.71 acres of land. It features 24-foot truck heights, a large year and sprinklers. The property is currently fully occupied by Sugar Foods, who has occupied the building for more than 30 years.

With few industrial properties trading hands in the San Fernando Valley, many investors are trying to penetrate the market. Late last year, Rexford Industrial purchased a property in the San Fernando Valley for $30.5 million. They also cited the great location and freeway access as reasons for purchasing the property.