In the last year, ecommerce-related industrial demand has surged. Increased online shopping during the pandemic has boosted the already thriving industrial market in Southern California. The activity has not only fueled leasing demand, but it has also driven asset pricing and new warehouse development.
Driven by these trends, Orbis Real Estate Partners has sold two trophy industrial development sites in the Inland Empire for $140 million. The two sites total nearly 90 acres, and are entitled, designed and permit ready. "With lack of available land coupled with vacancy rates in the Inland Empire at historically low levels, the fully entitled land sites were unique in allowing investors to be in the ground immediately," Tom Money of Orbis Real Estate Partners tells GlobeSt.com.
It is no surprise that these deals also generated a lot of attention among investors. "There was an extreme amount of demand for both properties from both users and investors," says Grant Ross of Orbis. "We ended up going through multiple rounds of offers." Dermody Properties purchased the Homestead, a 47-acre site. It plans to build six warehouse properties totaling more than 1 million square feet. The buildings will range in size from 48,315 square feet to 501,649 square feet. Black Creek Group purchased the second property, Riverside Logistics Center. The 41-acre site is located in a hub for Fortune 500 industrial tenants.
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Although the pandemic has ultimately fueled industrial investment, there was a period of uncertainty in the second quarter. Orbis took a pause in response to the changing market dynamics. "We delayed the marketing process from March to June in order to better understand what the market reaction was going to be to the pandemic," says Money. "With logistics and e-commerce playing a major role in the pandemic, the sale of the properties generated greater demand than what was initially anticipated. We exceeded expectations."
Orbis is continuing to invest in the area. Over the next one to three years, the firm will develop 10 industrial buildings in Chino, California. According to Ross, the construction pipeline will create a substantial land position in the Inland Empire region. He adds, "We continue to evaluate all levels of risk while we remain opportunistic in the Industrial sector."
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Kelsi Maree Borland
