CITY OF INDUSTRY, CA-Owner-users here and in Pomona have acquired two industrial buildings totaling more than 319,000 for a total of $18 million, according to CB Richard Ellis brokers who were involved in the sales. In the City of Industry, American Paper & Plastics acquired a 296,960-square-foot building at 500 S. Seventh Ave. for $15.3 million , and in Pomona, Maxxsel Apparel bought a 22,135-square-foot building at 1613 W. 2nd St. for $2.7 million.
The City of Industry deal ranks as the largest industrial sale in the San Gabriel Valley in 2010, according to the CBRE team of David Fults, Kevin Shannon and Todd Tydlaska who represented the seller, iStar Financial. American Paper & Plastics plans to occupy half of the building in a relocation from its headquarters in El Monte.
Shannon describes the sale as, "another example of an owner-user looking for an opportunity to buy an investment-quality building rather than continue to lease space." This is an increasing trend with owner-users, who have accounted for approximately 33% of all major office and industrial sales since 2009, Shannon pointed out.
The buyer was able to purchase the property at a substantial discount to replacement cost in a supply constrained submarket with significant economic and physical barriers to entry, including a lack of new construction and scarcity of available land, according to Fults.
The building, which had been on the market since late 2008, was 100% occupied at the time of sale. American Paper will retain the existing tenant for a portion of the building, thus generating a revenue stream for that portion, Fults points out.
In the Pomona transaction, Maxxsel Apparel bought its new building from Long Beach, CA-based Seventh Street Development at the Mission-71 Business Park. The buyer was represented by CBRE’s Kevin Herron; the seller was represented by CBRE’s Lynn Knox, Barbara Emmons, John Privett and Lyn Eisenhower.
Maxxsel Apparel, a wholesale company for leather apparel, jackets and shirts, had been looking to lease a smaller building than the one it occupies in Baldwin Park. However, according to Herron, the buyer ultimately decided that by acquiring a building at a time of record low pricing and low financing rates available through SBA, it could achieve a mortgage payment below what it would be paying on a lease.
“At this point in the market cycle, we’re seeing more companies buying instead of leasing to take advantage of values created in the recent recession,” Herron said. “The availability of aggressive SBA financing is helping to bolster this segment of the market.”
With the most recent sale to Maxxsel Apparel, Seventh Street Development has sold nine of the 11 buildings at the Mission-71 Business Park, bringing the project’s first phase to near close-out. Other recent buyers in the business park include Dawson Company, a manufacturer and distributor of residential, commercial and industrial plumbing, heating and cooling equipment; Excellence Opto Inc., a company that makes light-emitting diode lamps for traffic lights and street lights; and Martin Purefoods Corporation, which specializes in the distribution of Filipino food products.
Phase II of the Mission-71 Business Park has been approved by the City of Pomona and will feature 1,500 lineal feet of freeway frontage on the 71 Freeway, just north of Mission Boulevard. The second phase will consist of three separate buildings of 42,000, 51,000 and 120,000 square feet that will be offered for sale or lease.
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