Bristol Pays $190 Million for Industrial Space
A San Francisco-based real estate company has closed one of the biggest industrial-property sales transactions in Southland history. Bristol Group and its institutional investor partners bought 53 buildings with 3.8 million square feet of floor space for $190 million in cash.
Real estate investment professionals said the transaction illustrates pension funds’ desire to own more income-producing real estate--especially well-located industrial buildings in the development-restrictive Los Angeles vicinity.
Although the region has seen at least two other sizable deals in recent weeks, Bristol principals Jim Curtis and Jeffrey Kott noted that institutional-quality portfolios of this size rarely become available.
The group of business parks in and around the South Bay and central Los Angeles complement the approximately 2.5 million square feet of industrial properties Bristol and its partners already own in and around the San Fernando Valley, in Industry and in Orange County.
Bristol is also a partner in the new Los Angeles Center Studios complex on the former Unocal headquarters property near downtown Los Angeles. It also owns the high-rise office tower nearby at 1055 W. 7th St. and is redeveloping the Rolling Hills Plaza shopping center in Torrance.
Curtis said the Southland’s growing and diverse economy is a particular attraction for Bristol and its partners. Hence, they expect continued economic prosperity and a shortage of land to keep the buildings full--and push already rising rental rates even higher.
The buildings Bristol just purchased from a group headed by Boston’s AEW Capital Management reflect the region’s diverse tenant base. The vacancy rate is less than 2%, with its 60-some tenants including such large corporations as Northrop Grumman Corp., Marriott International, Toyota Motor Corp., Office Depot and the Los Angeles Times as well as many smaller businesses.
“Most pension funds are under-allocated in industrial real estate and are trying to bolster their positions,” said broker Jay Borzi of Cushman & Wakefield. So the chance to scoop up so much real estate in one fell swoop is a rare opportunity for buyers, he added.
With industrial land prices up about 50% since the region’s economy has bounced back in recent years, Kott said, the $50 per square foot that Bristol paid for the buildings is still less than it would cost to build the portfolio from scratch today.
The business parks that traded hands include Bell-Garfield Business Center, Dominguez Hills Industrial Park, Los Angeles Business Center, University Commerce Center and La Mirada Commerce Center. Brokerage teams from CB Richard Ellis, Seeley Co., Eastdil Realty and Trammell Crow participated in negotiating and closing the deal.
Two other large deals have closed recently. An investor group headed by veteran local developer Robert Voit has just purchased about 2 million square feet of industrial buildings for about $125 million. And in October, AEW sold another group of industrial buildings in Bell for just less than $100 million.
