Rexford Industrial Realty is showing no signs that its voracious appetite for acquiring infill and other industrial sites in Southern California will be sated any time soon.
The pure-play REIT, which acquired more than $2B in SoCal infill sites last year, announced this week that it has acquired three more industrial properties for an aggregate purchase price of $357M. The REIT’s year-to-date acquisitions for 2023 is already at $762M.
In off-market and lightly marketed transactions the company acquired 3520 Challenger Street in Torrance, located in the LA – South Bay submarket, for $14.2M.
The 2.5-acre industrial zoned, covered land site is improved with a light industrial R&D office building leased long-term to a single tenant, generating an initial unlevered cash yield of 6.3%.
Also acquired was 9000 Airport Boulevard in Los Angeles, located in the LA – South Bay submarket, for $143M. The 18.4-acre industrial zoned site is located immediately adjacent to Los Angeles International Airport. The property is leased to a single credit tenant through a three-year sale leaseback with 4% embedded annual rental rate increases.
Rexford plans to redevelop the property into a Class A industrial campus or to reposition it for industrial outdoor storage uses.
The other property acquired this week was located at 9223 and 9323 Balboa Avenue and 4285 Ponderosa Avenue in San Diego. The site was acquired for $200M. The 26-acre industrial zoned covered land site is currently improved with industrial, R&D and offices.
In February, Rexford said it is anticipating 15% market rent growth this year in the Southern California infill markets that make up Rexford’s massive industrial portfolio, the companies co-CEOs said in a Q4 earnings call last week.
Rexford said its acquisitions binge of infill industrial sites in off-market transactions—which in 2022 totaled $2.4B in 52 transactions encompassing 5.9M SF as well as nearly 32 acres for near-term redevelopment—will continue in 2023.
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 an earnings call.
“Infill Southern California continues to experience a virtually incurable supply demand imbalance due to an extreme scarcity of land and development constraints that prevent any material increase in new supply,” Frankel said.