Rexford's SoCal Industrial Acquisitions Dropped to $1.5B in 2023

The slowdown in CRE transactions in the second half of last year was reflected in the reduced volume of Rexford Industrial Realty’s acquisitions binge in Southern California, where the REIT has been scooping up tranches of infill properties in mostly cash transactions for the past two years.

Last week, Rexford reported that its total industrial acquisitions tally for 2023 was $1.5B, which still qualifies as a binge but is almost 40% lower than the $2.4B total for 2022.

Rexford continued the torrid 2022 pace in the first quarter of 2023, vacuuming up another $762M in SoCal industrial infill sites, zeroing in on off-market and lightly marketed targets, many with tenants paying below-market rents, and scooping them up in cash-fueled deals.

As industrial transaction volumes plummeted in H2 2023, Rexford slowed the pace of its acquisitions, reflecting the diving volume of U.S. transactions, which dropped below $45B in 2023, compared to $129B in 2021 and $101B in 2022, according to CommercialEdge data.

Rexford started the new year by announcing two acquisitions and one disposition it closed in December. The acquisitions were purchased for a total of nearly $70M.

The REIT acquired 600-708 E. Vermont Avenue in Anaheim, located in the OC-North submarket, for $57M, the equivalent of $108 per SF. Following a short-term leaseback, Rexford intends to redevelop the 12-acre site into a 264K SF divisible Class A building.

Rexford also bought 11234 Rush Street in South El Monte, located in the LA-San Gabriel Valley submarket, for $12.5M or $61 per SF through an off-market transaction.

Rexford intends to develop the vacant 4.7-acre site into a 102K SF Class A industrial building, designed to accommodate up to four tenants. The REIT projects the investment will generate a 6.4% unlevered stabilized cash yield.

In December, Rexford disposed of 3720-3750 W. Warner Avenue, Santa Ana, located in the OC-Airport submarket, for $11.3M. Proceeds from the sale were reinvested into the acquisition of 600-708 E. Vermont Avenue.

Rexford has disclosed that it has another $75M in acquisitions in its pipeline that it expects to close this month.

The REIT has said that its “proprietary market access” gives it what Rexford calls a “regional sharpshooter advantage” to target under-used industrial sites and properties with single-tenant buildings. Many of the acquisitions are followed by redevelopments that produce new Class A warehouses that can charge higher rents.

“Rexford Industrial’s investment activity highlights the company’s continued ability to leverage its value-add expertise and proprietary market access within infill Southern California to drive substantial value creation,” said Howard Schwimmer and Michael Frankel, Co-CEOs of Rexford, in a statement.

Rexford Industrial’s portfolio now includes 373 properties encompassing almost 46M SF.