Can Industrial Owner-Users Still Compete for Product?

LOS ANGELES—Global Agri-Trade Corp. has purchased a port-proximate new construction industrial property from Panattoni Development Co. Located at 15500 S. Avalon Blvd. in Los Angeles, the 62,482-square-foot property is a rare find, especially for an owner-user, in a market with a sub 1% vacancy rate. As a result, the process of finding and vetting a property took 14 months. The purchase price was not disclosed.

“Global Agri-trade wanted to be close to the port and needed a certain amount of dock-high loading,” Christopher Beck, managing director at Newmark Grubb Knight Frank, tells GlobeSt.com. “Due to the low vacancy and the lack of available product on the market, to find an efficient building with dock-high loading was very difficult. We looked in several markets in the South Bay, Mid Cities and Central L.A. for an opportunity, and we were able to check all of the boxes. This property fit really well for them from a transportation standpoint.” Beck represented the buyer in the transaction along with NGKF senior managing director Ryan Harding.

Because of the dearth of supply in the market, the buyer was looking at all potential options, including land for a build-to-suit. With very specific high-dock-loading requirements, they were limited to new product in the already tight market. “The existing product that is on the market wouldn't have fit their requirement because of the loading,” adds Beck. “Buildings that were built in the 50s, 60s and 70s were more manufacturing intensive, not distribution intensive. When you are a distribution company, you want more dock-high loading that anything else.”

In the infill Los Angeles market, competition for any industrial asset it high, and this deal was no exception. Beck educated his client in advance so that when the right property came along, they were able to be aggressive. “The owner of the property was familiar with who we were and our financial strength,” adds Beck. “We were aggressive in how we pursued the property, and educated our client on market conditions. We told our client from the beginning that once we find a property that works. We need to aggressively go after it, not only from a pricing standpoint but also from a due diligence standpoint and close of escrow. We really created a partnership to give them a level of comfort that we were going to perform. In today's market, I think that is all sellers are looking for.”

Time also worked in their favor. They submitted their offer just before Christmas, and signed the paperwork two days after the holidays. According to Beck, there wasn't another property like this, and it was imperative to close quickly.

Although this owner-user found a great property, Beck says that this transaction is unusual and there won't be an increase of owner-users in the market. “It is very rare that an owner-user gets an opportunity because product rarely becomes available,” he says. “The barrier-to-entry is so difficult, and owners very rarely leave.”

LOS ANGELES—Global Agri-Trade Corp. has purchased a port-proximate new construction industrial property from Panattoni Development Co. Located at 15500 S. Avalon Blvd. in Los Angeles, the 62,482-square-foot property is a rare find, especially for an owner-user, in a market with a sub 1% vacancy rate. As a result, the process of finding and vetting a property took 14 months. The purchase price was not disclosed.

“Global Agri-trade wanted to be close to the port and needed a certain amount of dock-high loading,” Christopher Beck, managing director at Newmark Grubb Knight Frank, tells GlobeSt.com. “Due to the low vacancy and the lack of available product on the market, to find an efficient building with dock-high loading was very difficult. We looked in several markets in the South Bay, Mid Cities and Central L.A. for an opportunity, and we were able to check all of the boxes. This property fit really well for them from a transportation standpoint.” Beck represented the buyer in the transaction along with NGKF senior managing director Ryan Harding.

Because of the dearth of supply in the market, the buyer was looking at all potential options, including land for a build-to-suit. With very specific high-dock-loading requirements, they were limited to new product in the already tight market. “The existing product that is on the market wouldn't have fit their requirement because of the loading,” adds Beck. “Buildings that were built in the 50s, 60s and 70s were more manufacturing intensive, not distribution intensive. When you are a distribution company, you want more dock-high loading that anything else.”

In the infill Los Angeles market, competition for any industrial asset it high, and this deal was no exception. Beck educated his client in advance so that when the right property came along, they were able to be aggressive. “The owner of the property was familiar with who we were and our financial strength,” adds Beck. “We were aggressive in how we pursued the property, and educated our client on market conditions. We told our client from the beginning that once we find a property that works. We need to aggressively go after it, not only from a pricing standpoint but also from a due diligence standpoint and close of escrow. We really created a partnership to give them a level of comfort that we were going to perform. In today's market, I think that is all sellers are looking for.”

Time also worked in their favor. They submitted their offer just before Christmas, and signed the paperwork two days after the holidays. According to Beck, there wasn't another property like this, and it was imperative to close quickly.

Although this owner-user found a great property, Beck says that this transaction is unusual and there won't be an increase of owner-users in the market. “It is very rare that an owner-user gets an opportunity because product rarely becomes available,” he says. “The barrier-to-entry is so difficult, and owners very rarely leave.”