“These investments contribute towards the accretive growth of our portfolio within the highly sought-after Southern California industrial market,” Howard Schwimmer and Michael Frankel, co-chief executives at Rexford Industrial, said in a statement.
The Gateway Pointe Industrial Campus in Whittier is the largest part of the transaction.
Rexford purchased the site — at 3963, 3931, 3735, and 3629 Workman Mill Road — for $296.6 million. The property sits on more than 45 acres and has four buildings totaling roughly 989,000 square feet. The buildings are 100% occupied at rents 21% below market value, according to Rexford.
The site has 32-foot clearance heights, dock-high loading and container parking, all desirable features for industrial properties.
Rexford Industrial plans to renew leases or put new leases in place at higher market rates.
The acquisition was funded using cash on hand and 1031 proceeds.
In a 1031 exchange, investors defer capital gains taxes by rolling capital gains from the sale of one property into the purchase of another, or vice versa.
“Gateway Pointe Industrial Campus provides nearly 1 million square feet of institutional-quality, Class A industrial space ideally positioned to serve last-mile, ecommerce-oriented tenant demand,” Schwimmer and Frankel said in a statement.
Activity is strong in the Mid-Counties submarket, which had a vacancy rate of 2.2% at the end of the third quarter and has 112 million square feet of industrial space, according to CBRE Group Inc. research.
Rexford also acquired a property at 13943-13955 Balboa Blvd. in Sylmar for $42.6 million.
The nearly 201,000-square-foot building, which sits on 10.5 acres, was 100% occupied by three tenants at the time of the sale.
Rexford said rents at the property were 19% below market value and close to their expiration dates.
The company plans to make some improvements and renew leases or sign new leases at higher rent levels.
The vacancy rate for industrial properties in the San Fernando Valley was 2.7% at the end of the third quarter, according to CBRE research.
CBRE found that asking rates rose during the third quarter in both the San Fernando Valley and the Mid-Counties submarkets.
Demand for industrial space has been increasing nationally as ecommerce continues to grow. CBRE predicts that 2 billion square feet of additional industrial product will be needed to meet demand in the next decade. The sector has experienced 41 straight quarters of positive net absorption.
So far this year, Rexford has closed on nearly $730 million of acquisitions. The company has another $600 million of new investments either with a letter of intent or under contract and are expected to close in the next few months.
“Rexford is exceptionally well positioned to capitalize on the demand for industrial space within infill Southern California as we execute our internal and external growth strategies to create shareholder value,” Schwimmer and Frankel said in a statement.
One of the company’s most recent acquisitions was two industrial buildings in the South Bay for $15.5 million. The properties, at 15505 and 15601 South Avalon Blvd., have 4.4 acres and were vacant at the time the sale closed.
Rexford plans to demolish the buildings and build a nearly 85,000-square-foot single-
tenant industrial site with high clearances, dock-high loading and a large yard for container storage.
Other companies have been buying up industrial properties as well.
Cohen Asset Management Inc. recently purchased an industrial building in West Rancho Dominguez for $37.3 million.
The property, at 15100 South San Pedro St., was developed by Panattoni Development Co. Inc. and M. Payne Investments. It was built in 2019.