LOS ANGELES—Black Equities has just gained some major market share in the Mid Counties industrial market. The investor bought a seven-building 452,000-square-foot industrial project at 13810-13950 Cerritos Corporate Drive in Cerritos from Angelo, Gordon & Co. and Crownsnest Properties for $62 million. This is a strong acquisition in a market with a very tight vacancy rate, high demand and rising rents.
“The vacancy rate in the Mid-Counties submarket is 0.5%,” Rebecca Perlmutter, VP at CBRE, tells GlobeSt.com. “This area has convenient access to all of the major freeways in Los Angeles and Orange County and sits within 16 miles to the Long Beach International Airport, 28 miles to Los Angeles International Airport and 20 miles to the Ports of Long Beach and Los Angeles. The barriers to entry are extremely high due to the lack of available land. Hence, this submarket has one of the lowest vacancy rates in the country. These facts point toward rent growth as the existing inventory is getting absorbed.” Rebecca Perlmutter represented both the buyer and the seller in the transaction along with CBRE's Darla Longo, Barbara Emmons, Michael Kendall and Rick McGeagh.
The previous owners separately parceled the buildings to take advantage of rent growth and sold the property to take advantage of cap rate compression. The property is 96% leased to 14 tenants. The new ownership will benefit from similar growth at the property, including increasing net operating income as leases roll. “In addition, this is a very core, infill location. Land prices continue to rise and are estimated in the $40 per-land-square-foot range in Cerritos, but there hasn't been any development of comparable product since 2007,” adds Perlmutter. “Given these dynamics, the purchase price is a significant discount to replacement cost, which is about $180 per square foot. As a result, competing supply is constrained, which will continue to drive rents higher. The buyer intends to hold the asset long term, but there are opportunities to sell the smaller buildings to users at a significant premium to where they purchased the buildings. Given the location and high-image construction in a business park setting, this type of property will always be highly sought after by users. Investors continue to target high-quality, infill assets like this that are more defensive in nature.”
The sale had ample interest from investors trying to take advantage of these market factors. “We were pleased by the level of interest,” says Perlmutter. “We had a broad range of buyer profiles from REITs, funds, advisors and private investors, which created a very competitive bidding environment.”
LOS ANGELES—Black Equities has just gained some major market share in the Mid Counties industrial market. The investor bought a seven-building 452,000-square-foot industrial project at 13810-13950 Cerritos Corporate Drive in Cerritos from
“The vacancy rate in the Mid-Counties submarket is 0.5%,” Rebecca Perlmutter, VP at CBRE, tells GlobeSt.com. “This area has convenient access to all of the major freeways in Los Angeles and Orange County and sits within 16 miles to the Long Beach International Airport, 28 miles to Los Angeles International Airport and 20 miles to the Ports of Long Beach and Los Angeles. The barriers to entry are extremely high due to the lack of available land. Hence, this submarket has one of the lowest vacancy rates in the country. These facts point toward rent growth as the existing inventory is getting absorbed.” Rebecca Perlmutter represented both the buyer and the seller in the transaction along with CBRE's Darla Longo, Barbara Emmons, Michael Kendall and Rick McGeagh.
The previous owners separately parceled the buildings to take advantage of rent growth and sold the property to take advantage of cap rate compression. The property is 96% leased to 14 tenants. The new ownership will benefit from similar growth at the property, including increasing net operating income as leases roll. “In addition, this is a very core, infill location. Land prices continue to rise and are estimated in the $40 per-land-square-foot range in Cerritos, but there hasn't been any development of comparable product since 2007,” adds Perlmutter. “Given these dynamics, the purchase price is a significant discount to replacement cost, which is about $180 per square foot. As a result, competing supply is constrained, which will continue to drive rents higher. The buyer intends to hold the asset long term, but there are opportunities to sell the smaller buildings to users at a significant premium to where they purchased the buildings. Given the location and high-image construction in a business park setting, this type of property will always be highly sought after by users. Investors continue to target high-quality, infill assets like this that are more defensive in nature.”
The sale had ample interest from investors trying to take advantage of these market factors. “We were pleased by the level of interest,” says Perlmutter. “We had a broad range of buyer profiles from REITs, funds, advisors and private investors, which created a very competitive bidding environment.”
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