A 270,000-square-foot industrial property in Walnut recently sold. Terms of the transaction were not disclosed but news reports peg the deal at $100 million.
CapRock Partners sold the property, known as West Valley Logistics, to an alternative fashion company that will use the property as its corporate headquarters and for its business operations.
CapRock finished developing the center late last year. It purchased the 12.5-acre asset in 2020.
“This is a brand new, Class A industrial building that we developed with the intention to lease the property, but we were able to execute a successful sale to an owner-user,” Taylor Arnett, senior vice president of acquisitions at CapRock Partners, said. “It was a large owner-user transaction and that’s pretty unique. Usually properties this size are purchased by investors. This was a business that was purchasing the real estate for their own use.”
He added that while CapRock initially planned to lease the property, when it got an offer “from the buyer at a price that was interesting, it did pique our interest.”
“Our objective is to create value for our investors and to create Class A buildings for businesses and thought we could meet both of those objectives with a sale,” Arnett said.
Jon Pharris, co-founder and president of CapRock Partners, added that the center “exemplifies CapRock Partners’ entrepreneurial approach to identifying and executing strategic opportunities in one of the nation’s most competitive investment markets.”
“We were able to use our significant in-house capabilities to redevelop a well-located older manufacturing location that had complex environmental challenges into a state-of-the-art distribution facility,” he said in a statement. “We continue to see compelling opportunities to invest in Southern California and anticipate commencing construction on additional sites within the next year.”
The property, at 4200 Valley Blvd., features dock-high doors, parking and a two-story office space.
Arnett said the buyer will double the amount of office space currently in the building, which CapRock will help with.
Stream Realty’s Matt Moore, Wes Hunnicut and Michael Torres represented CapRock Partners in the transaction. Colliers’ Mike Hartel and Nick Velasquez represented the buyer.
The San Gabriel Valley is one of the tightest industrial markets in the county. During the fourth quarter its vacancy rate rose to 5.8%, up from 3.9% the previous year, but still below the vacancy rates seen in most other submarkets, according to data from Jones Lang LaSalle Inc.
The asking rent in the area was $1.46 a square foot, 3 cents below the county average, according to JLL data.
Roughly 3 million square feet of industrial space sold or leased during the quarter, up from 2.6 million square feet during the same time period the previous year.
But the vacancy rates are still historically low while asking rents are high.
“L.A. County and Southern California is the strongest market in the United States and perhaps even the world for industrial,” Arnett said.
He added that the large population and ports are major drivers.
Arnett said the San Gabriel Valley market is one CapRock will continue to invest in and the company already owns other assets in the area.
And new building regulations in the Inland Empire may make Los Angeles even more desirable.
“The new regulations are going to construct supply and when supply is restricted, markets continue to get tighter. The question will be if the demand continues which we believe it will,” Arnett said. “…You’re never going to replace the ports.”
