Turnbridge Launches SoCal Infill IOS Strategy

Turnbridge Equities, an East Coast industrial player that has amassed an 8M SF last-mile warehouse portfolio in the NYC, NJ and DC markets, has launched a strategy of acquiring industrial outdoor storage infill sites in high barrier-to-entry, high-population density coastal markets.

Last week, NYC-based Turnbridge announced its first acquisition in the IOS campaign: the firm purchased for $18.3M a 2.49-acre site at 555 W. 189^th Street in Los Angeles that it will develop for IOS use.

The site is within a mile of six highway cloverleaf intersections for the 405, 110 and 91 freeways, with 410 feet of frontage along 110. The location is within 11 miles from the Port of Los Angeles and Los Angeles International Airport.

“Our strategy is specifically targeting port-proximate infill sites with high barriers to entry and strong demand drivers that are difficult to replicate elsewhere. We feel these sites are highly desirable and highly protected against new supply,” said Jack Hechinger, VP of Acquisitions for Turnbridge, in a statement.

In choosing Los Angeles as the location of its first IOS acquisition—and by acquiring the property in an off-market transaction—Turnbridge is putting down a marker that it intends to go head-to-head with Los Angeles-based Rexford Industrial Realty in its own back yard.

In 2022, the Rexford REIT scooped up more than $2.4B worth of infill industrial sites in 52 off-market transactions encompassing 5.9M SF as well as nearly 32 acres for near-term redevelopment, an acquisition binge that continues in 2023.

Rexford said it already has closed this year on two stabilized transactions totaling $405M, has more than $125M worth of “highly accretive transactions” in its pipeline under contract or accepted offer—and has identified as suitable candidates for acquisition off-market properties encompassing 250M SF of industrial space.

Rexford scours the landscape for assets that it considers a sure thing: infill industrial properties currently occupied by tenants paying below-market rents in SoCal. Rexford’s strategy is built around using rent intel—which the REIT says it acquires through its “proprietary access”—to target its SoCal acquisitions, then pouncing in off-market, cash-fueled deals. The company positions itself to make quick acquisitions by maintaining a low-leverage balance sheet.

In a fourth quarter earnings call, Rexford said it is anticipating 15% market rent growth this year in the Southern California infill markets.

Rexford said a perfect storm of conditions in SoCal’s industrial market—including high demand from tenants, vacancies below 1%, lack of new land for development and “development constraints” hindering new supply—are creating an “incurable supply-demand imbalance” in SoCal that will continue to lift industrial rents.

“Our infill Southern California markets are operating at well above structural full occupancy of about 1% market vacancy and with the highest year-over-year market rent growth of any major industrial market in the nation,” Rexford Co-CEO Michael Frankel said, during the earnings call.