Rexford Scoops Up Prime Infill in SoCal Under the Radar

Rexford Industrial Realty has been flying under the radar as it grows its industrial portfolio in SoCal by focusing on off-market transactions for prime infill properties.

Rexford has been on an acquisition binge totaling $774M since the beginning of the year, growing its industrial portfolio to 322 properties encompassing nearly 39M SF of rentable space. The company says it has an additional $600M in investments under contract or with an accepted offer.

In announcing its latest acquisitions—four industrial infill properties that were purchased for a total of $163.8M—Rexford boasted that it has a “regional sharpshooter advantage” that enables the company to zero in on prime landfill properties in off-market transactions fueled by a healthy cash-on-hand balance sheet.

“These investments, acquired through off-market transactions, reflect our team’s ability to leverage its regional sharpshooter advantage and value-add expertise within infill Southern California, the nation’s lowest-supply and highest-demand industrial market,” said Howard Schwimmer and Michael Frankel, Co-CEOs of Rexford said, in a statement.

Rexford says that more than 85% of its $774M haul of acquisitions this year was acquired through off-market or “lightly marketed” transactions. Schwimmer and Frankel said Rexford’s “proprietary market access” gives the company “an information advantage to grow beyond our current portfolio.”

Based on the announcement of its most recent acquisitions, Rexford has been targeting under-used industrial sites and properties with single-tenant buildings in which the tenant currently is paying rents as low as 60% below current market levels in the tightest industrial market in the US.

Rexford Industrial’s infill acquisitions in SoCal include the $90.2M purchase of an 8.5-acre property in Panorama City, in the LA-San Fernando Valley submarket. that includes a 200K SF Class A industrial building. According to CBRE, the vacancy rate in the LA-San Fernando Valley submarket was 0.5% at the end of Q1 2022.

Rexford also purchased for $45M a 7.2-acre site in Fullerton currently occupied by a recently shuttered hotel, which will be redeveloped on the industrial-zoned site into a 138.5K SF Class A warehouse.

Rexford’s $10.8M purchase of a 2.3-acre site in Compton within the LA-South Bay submarket includes a 30K SF single-tenant industrial building that the company says is currently leased at rent that is 60% below market rates.

When the current lease expires at the property in Compton, Rexford says it intends to redevelop the site by constructing a 45K Class A industrial building. The vacancy rate in the LA-South Bay submarket was 0.6% at the end of Q1 2022, according to CBRE.

Rexford’s $17.8M acquisition of a 2.1-acre property in Ontario in the Inland Empire comes with a 44K SF Class A industrial building that is leased to a single-tenant at a rent the company says is 35% below current market rent levels.

The western half of the Inland Empire has effectively run out of vacant industrial space, with CBRE setting the vacancy level in the submarket at a microscopic 0.1% at the end of the first quarter.