In June, Australian real estate giant Dexus Property Group opened a Southern California office and announced its intentions to acquire hundreds of millions of dollars worth of industrial properties in the region.
Its recent $14.4 million purchase of a 157,000-square-foot industrial property in the City of Industry marks the first step in that strategy. The multitenant property at the intersection of Hatcher Avenue and Railroad Street is 100 percent occupied by import-export businesses.
Bryan Bentrott, managing director for Dexus’ U.S. team, said that the group is looking to acquire everything from leased products to vacant problem assets to land where build-to-suit projects could be developed. Its all-cash offer for the Industry property was the highest of more than 30 bids.
“The cost to replace this kind of property, assuming you could find the land, would probably be around $150 per square foot, so it’s virtually impossible to replace,” Bentrott said. “We bought it for 92 bucks a foot, and that implies that rents should increase in that location over time.”
Dexus has $13 billion in assets under management in Australia and the United States. It owns properties in 17 U.S. markets, but wants to pull back to focus on just three. It plans to deploy $300 million in Los Angeles and the Inland Empire, $150 million in the Bay Area and $150 million in Seattle. The U.S. office is in Newport Beach.
“In Australia, Dexus has had a winning strategy of focusing primarily on two major cities, Sydney and Melbourne, and those teams are close to the markets and what the trends are, know the major tenants, know who the primary brokers are,” Bentrott said. “They want to adopt that same strategy for the West Coast.”
Alan Pekarcik of Voit Real Estate Services, who represented both the buyer and seller, said industrial markets have been picking up, in part due to the scarcity of supply.
“There’s a lot of institutional money out there, and it seems like the institutional guys are going down to $10 million deals, whereas before the cutoff was about $20 million,” he said.
The buyer and seller were also both represented by Dan Vittone and Nick Frasco of Voit Real Estate Services.
Carlisle Interconnect Technologies, which designs and manufactures high-performance wire, cable and connectors, has signed a five-year lease for flex industrial space in Cerritos valued at $1.66 million.
The St. Augustine, Fla.-based company, which sells to the aerospace, defense and other industries, is expanding its manufacturing operations in Southern California. It is relocating from a 38,000-square-foot property in Long Beach to the 69,600-square-foot space at 12900 Alondra Blvd.
The lessor of the freestanding building is Sasco, an electrical contractor that relocated its headquarters to Fullerton.
Chris Sheehan of Colliers International, who represented Sasco, said activity has been picking up in the market.
“There have been enough transactions to really develop a market rate for leases and for sales,” Sheehan said.
Jesse Laikin of Lee & Associates, who represented the tenant, agreed that rates have bottomed out. He said the company was capitalizing on “expansion with not much cost.”
Carlisle will move into the building Jan. 1. The company did not return a call for comment.
Adam Deierling and Alex Blecksmith of Colliers International also represented the landlord.
Encino’s Illi Commercial Real Estate, which leases shopping center space throughout Southern California, will be opening a second office in Valencia this month.
To head up the new office, Illi President Todd Nathanson tapped Valerie Camacho, who has extensive experience with shopping center properties in the Santa Clarita Valley.
“The vacancy (rate) in Santa Clarita is running higher mainly because it’s a newer community with a lot of new shopping centers that were rented or valued at a much higher rate,” Nathanson said. “There’s a large need for services.”
Camacho was previously a vice president at NAI Capital Real Estate Services. From 1997 to 2002, she was at Newhall Land & Farming Co., where she helped oversee ground-up development in the Santa Clarita Valley.
She echoed that the high shopping center vacancy rate in Santa Clarita was an opportunity for business. Camacho plans to open the office as early as this week.
For reprint and licensing requests for this article, CLICK HERE.