Atlas Capital has purchased a 5.37-acre office-to-industrial redevelopment opportunity in Torrance for $39.8 million. Harbor Gateway sold the property, which is located at 19401 S. Vermont Ave.
Newmark Group Inc.’s Kevin Shannon, Scott Schumacher, Ken White, Bret Hardy, Jim Linn, Andrew Briner, John McMillan and Danny Williams represented the seller.
“Given the industrial zoning and immediate access to the multiple major freeways, the offering represents an excellent opportunity to redevelop the existing, older office project into a Class A industrial product in the highly desirable Torrance submarket once short-term existing leases expire,” Shannon said in a statement.
The Torrance property, currently comprised of 12 office buildings with a total of 94,113 square feet, is zoned for industrial use.
The South Bay submarket is incredibly desirable to industrial tenants and developers. In the last four quarters, industrial rents for Class A product in the area increased by more than 60%, according to Schumacher.
But development has not always kept up.
“Industrial land values have really exploded, while opportunities for new development remain scarce,” Schumacher said in a statement.
As a result, more developers have been looking at outdated office space, particularly on land that is already zoned for industrial use, as a way to develop more industrial space. This trend has already been playing out both nationally and locally. Nationwide, 49 such projects have already been completed since 2018. Locally, 2.1 million square feet of office space was converted to industrial product in L.A. between 2018 and 2021.
In L.A., the industrial vacancy rate during the first quarter of 2022 was a mere 0.6%, down from 2.9% the year prior, according to data from Jones Lang LaSalle Inc.
In the South Bay, the industrial vacancy rate was also 0.6%, down from 2.2% the previous year.