CapRock Partners has acquired a 230,000-square-foot industrial property in Pomona that it eventually plans to raze to make way for a larger industrial building with offices fit for distributors.  

The buyer declined to disclose the purchase price and seller, but CoStar Group Inc. records indicate Consolidated Precision Products Inc. sold the 12.5-acre site for $30 million.

Newmark Group Inc.’s Wes Hunnicutt, Matt Moore, and Eric Tomchick represented CapRock Partners and the seller in the transaction. Jones Lang LaSalle Inc.’s Greg Brown, Peter Thompson and Sam Godfrey arranged the debt.

The property at 4200 W. Valley Blvd. was acquired under an increasingly popular deal type known as a sale leaseback, in which a company sells a property and leases it back.

These deals benefit sellers, who get cash infusions while continuing to operate out of their buildings. They also benefit buyers, who get new investments with a negotiated lease already in place. Typically, the tenant remains responsible for maintenance and even property taxes.

Under its deal with CapRock Partners, the seller will remain in the building for about two years. Once the lease expires, CapRock Partners plans to demolish the building and erect a new 270,000-square-foot building with high clearance heights and speculative office space.

Taylor Arnett, first vice president of acquisitions at CapRock Partners, said location made the site desirable.

“The location is phenomenal for industrial purposes. It’s in the San Gabriel Valley, which has a vacancy of 3% or less and has for the last five years. There’s such a shortage of land sites that can accommodate new industrial facilities,” he said.

Arnett said users could get from the site to most of L.A. within an hour, making it “a perfect location for distribution tenants in the future.”

CapRock Partners buys properties, adds value to them, then sells them off. It is not a long-term real estate holder. It is choosing to build on this site, Arnett said, because there’s a scarcity of new buildings in the area, and that will make it desirable.

The new building would feature large truck courts with trailer parking, which he said is rare in infill locations like this one.

“We designed the building to be flexible to have up to two tenants, but given the strong demand and the rarity of having your own building and private truck court, I think there’s a pretty good chance we would find a single tenant,” he said.

Arnett said construction is expected to start in a little more than two years and be delivered in three years.

The property was acquired as part of CapRock Partners’ Industrial Value Add Fund III.
The fund will allow $1 billion worth of properties to be acquired and focuses on scooping up middle-market, value-add industrial properties in the Western United States.

Arnett said the company is looking at assets that are at least 5 acres and valued between $20 million and $50 million.

More L.A. properties are on the fund’s wish list.

“Every industrial investor and developer would love to buy and build more in L.A., as would we,” Arnett said.

He called Southern California the “No. 1 market that we are targeting.”

But there is more competition now than ever.

“The competition is very stout and not only (now), it has been the last five or 10 years, but post-Covid there has been more players or investors that have jumped into industrial and pivoted from other product types,” Arnett said. “It’s as competitive as it’s ever been.”