Editor’s note: A version of this story was originally published in the Orange County Business Journal.

In one of the largest light industrial deals of the past five years, Orange County-based BKM Capital Partners and its investment partner, Kayne Anderson Real Estate, acquired a portfolio of 281 properties totaling 8.5 million square feet for $1.81 billion from a Blackstone affiliate.

This transaction includes eight sizable Los Angeles County business parks and properties, to the tune of 1.2 million square feet.

Founder and Chief Executive Brian Malliet said the acquisition makes Newport Beach-based BKM the largest owner-operator of multitenant light industrial properties in the country.

“It was a rare chance to pick up real scale in a part of the industrial market where scale is hard to assemble,” Malliet said.

“Multi-tenant light industrial is fragmented, and portfolios with this combination of size, quality and market concentration don’t come up often,” he said.

According to joint venture officials, this is the largest light industrial transaction in the U.S. since 2022, when New York-based Blackstone acquired PS Business Parks and its 27 million-square-foot portfolio of industrial, multifamily and office buildings for $7.6 billion.

Some properties in the joint venture deal with Blackstone affiliate Link Logistics Real Estate were previously part of the PS Business Parks portfolio, CoStar records show.

CBRE Group Inc.’s Darla Longo, Joe Cesta and Michael Longo represented the sellers in the transaction.

Malliet has built his career by investing in a specialized segment of the industrial real estate market.

Now, his company has become one of the dominant players in the “small bay” light industrial sector, which houses many of the small businesses that form the backbone of the U.S. economy.

He said the acquisition aligns with BKM’s core mission to “buy well-located small- and mid-bay assets in infill markets, run them hands-on and create value.”

Stabilizing industrial demand

The transaction comes at a time when L.A. County industrial activity is stabilizing after two straight years of occupancy losses.

CBRE’s first quarter data for 2026 shows that the vacancy rate for spaces under 100,000 square feet in L.A. County – by far the largest slice of rentable industrial space – is 4.9%. That’s a tad lower than the county’s overall industrial vacancy rate of 5.4%.

By submarket, the South Bay – where four of the local properties are located – had a slightly higher vacancy rate of 6.3% in the first quarter. The Greater San Fernando Valley – home to three of the sites – was slightly better at 4.8%. The remaining site was in the San Gabriel Valley, with a vacancy rate of 5%.

The South Bay is home to the bulk of L.A. County’s gross activity in the first quarter, at 37.4%.

Light industrial or “small bay” properties are typically low-rise business parks with suites ranging from 1,000 to 15,000 square feet. These spaces are often used by small businesses and local mom-and-pop shops for light manufacturing, distribution, service operations and last-mile logistics.

Malliet has previously described this property type as the “apartments” within the larger industrial real estate sector.

The portfolio adds

The recently acquired portfolio, which closed in May, includes 51 multi-tenant industrial properties located in California, Washington, Texas and Georgia.

Joint venture officials said the assets include nearly 2,000 tenant spaces across hundreds of buildings, with an occupancy rate of 90%.

In L.A. County, BKM increased its footprint by acquiring eight business parks totaling 1.2 million square feet in Signal Hill, Carson, Cerritos, Monterey Park and Chatsworth. Those include:

• 20620 S. Leapwood Ave., Carson
• 2225 E. 28th St., Signal Hill
• 2599 E. 28th St., Signal Hill
• Cerritos Business Center, Cerritos
• Monterey Park Business Center, Monterey Park
• Chatsworth Business Center, Chatsworth
• Chatsworth Business Park, Chatsworth
• Lurline Business Park, Chatsworth

The deal also expands the BKM-Kayne Anderson joint venture, launched in 2025, to 15 million square feet and brings BKM’s total managed portfolio to over 24 million square feet, Malliet said.

Beyond the real estate, the acquisition also includes eight regional offices and 40 employees who handle property management, leasing, construction and accounting.

Malliet said he plans to retain and integrate these teams into BKM’s platform. The additions bring BKM to nearly 200 employees in 25 offices nationwide.

“You can’t run these properties from a spreadsheet,” he said. “You need people on the ground who know the tenants and the brokers, understand the submarkets, and handle the day-to-day that comes with managing hundreds of small suites.”

He added that BKM plans to create more value in the properties by investing in exterior renovations, roof and HVAC upgrades and other improvements to vacant suites.

“The goal is to lead the market with a differentiated, high-image, high-touch product built for the tenants we’re targeting,” he said.

Acting Editor Zane Hill contributed to this report.