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COSTA MESA, CA—Last-mile logistics assets in the Orange County market are setting new records for industrial prices, and this has a lot to do with the overall industrial inventory of just above 1% vacancy, Colliers International SVP Chuck Wilson tells GlobeSt.com. In a transaction that demonstrates the skyrocketing investment value of so-called “last-mile” logistics properties, a FedEx-occupied, 112,000-square-foot building here has been acquired by a Santa Monica-based investment firm for $33.4 million, or $298 per square foot, which ranks it among the top industrial sales ever recorded in Orange County, Colliers has reported.
Sovereign Capital Management Group Inc. of San Diego sold the 1650 Sunflower building to BLT Enterprises Inc. Colliers' Institutional Investment Services Group—Western Region negotiated the sale, as well as a “blend-and-extend” lease that will keep FedEx in the building until 2028. Its original lease was set to expire next year.
We spoke with Wilson about the transaction and the rising sale prices for these types of facilities in Orange County.
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GlobeSt.com: What stands out most for you about this transaction?
Wilson: They still had some term left on the lease, so we did a blend-and-extend and renewed for an additional 10 years. In this market, it's so difficult to find facilities they can use for their operations this one, which had a handling system, truck facilities and an area for truck maintenance. To find this is next to impossible. It's a situation where they're located in between L.A. and Orange County, with direct access off the 405 to L.A., so it's a good spot.
GlobeSt.com: How do you view the rising prices for last-mile industrial logistics properties in Orange County?
Wilson: They are setting new records for industrial prices, and this has a lot to do with the overall industrial inventory of just over 1% in Orange County.
GlobeSt.com: How close is the market to its threshold in terms of pricing for these properties?
Wilson: At some point, it's got to give, but we're so tight and demand has been so strong. Companies need to be located here.
GlobeSt.com: What are the absolute necessities investors are seeking in these properties?
Wilson: First off, the building has to be functional, and also the credibility of the tenant. In this case, you have FedEx Corporate. This particular buyer has several other FedEx locations, so this was a big factor in their decision making.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
