Pacific Industrial has sold the Sierra Pacific Center, a 1.46 million square foot class-A industrial property in the Inland Empire, for $213.4 million to an unnamed institutional life insurance company. At a 3.68% cap rate, the sale is the largest industrial transaction in California in the last 24 months.

The property is fully leased to FedEx and LG, and is a one-of-a-kind development. Pacific Industrial development the property for a long-term hold, but decided to change strategies. “We decided to change track on this project because we thought that we could sell it below a 4% cap rate,” Dan Floriani, partner and co-founder at Pacific Industrial, tells GlobeSt.com. “My recommendation to my partners was that if we felt good we could achieve that, then we should monetize the asset. That is ultimately what got us on board to sell.”

Pacific Industrial's long-term hold strategy contributed to the quality and distinctiveness of the property, and ultimately drove the interest and strong value. “We build and design our buildings as if we are going to hold them for the rest of our lives, and we do that because we want it to be the best asset possible,” Floriani says. “In a really good market, that is an offensive strategy to command great rents and great tenants. When the market is at its worst, it is a defensive strategy. We want to know that we will have the best building in the market when the market is at its worst. As a result, we end up building a better project.”