Prologis Inc., the country’s largest warehouse property owner, is beefing up its Orange County presence following the largest industrial purchase in the area so far this year, and through the blockbuster acquisition of a national competitor with a modest local portfolio.
The San Francisco-based real estate investment trust, whose market value is about $34 billion, bought one of South OC’s largest industrial buildings last month, a 307,781-square-foot building in Foothill Ranch.
The 50 Icon property sold for about $55.4 million, or $180 per square foot. By total price, it’s the largest industrial sale in OC since December, according to data from CoStar Group Inc.
It’s just north of the Foothill Corridor (241) Toll Road and next to the headquarters of sunglasses and apparel maker Oakley Inc. in the Foothill Business Center.
The property is one of just three OC industrial buildings south of Irvine larger than 300,000 square feet, and it’s the priciest single-building industrial sale in South OC in over a decade, according to CoStar records.
The building is dividable but is fully occupied by Hampton Products International, whose headquarters is there.
Privately held Hampton makes a variety of locks, residential hardware, lighting and travel security products. It’s occupied the building for 14 years, and its lease doesn’t expire until 2023.
The property was sold by an affiliate of Los Angeles-based AEW Capital Management in a deal brokered by Darla Longo, Barbara Perrier, Brett Hartzell and Rebecca Perlmutter Finkel with CBRE Group Inc.’s National Partners West Coast team. CBRE’s Greg Haly served as local market representative.
“50 Icon was a unique opportunity to acquire a state-of-the-art industrial building that is easily divisible, which provides the new owner with the opportunity for rent increases and market flexibility down the line,” Perrier said in a statement. “This site is an incredible last-mile location as it has immediate access to major population hubs via the transportation arteries in the region.”
AEW paid a reported $32.5 million for it in 2005 when the building traded at a 5.8% capitalization rate. This time, the cap rate was closer to 4.1%, CoStar records show.
3 More in Foothill Ranch
Prologis now has about a dozen large OC properties, according to its website.
Its area portfolio is listed as completely occupied, largely in line with the area’s tight industrial space. CBRE’s latest data says the area’s base of 256 million square feet has a vacancy rate of less than 2%, one of the best-performing markets in the U.S.
More local buildings appear likely to fall under Prologis’ watch in a few months.
The company announced plans last week to buy another industrial-focused REIT, Denver-based DCT Industrial Trust Inc. The deal, totaling $8.4 billion factoring in stock and assumption of debt, is scheduled to close in the third quarter.
DCT’s portfolio is about 71 million square feet, while Prologis has a base of nearly 290 million square feet.
DCT owns other OC industrial buildings and has a local office in Newport Beach. Notable area properties include three buildings next to Prologis’ just-bought property totaling about 240,000 square feet.
Last year, it paid a reported $56.6 million for 3454 E. Miraloma Ave., a 300,000-square-foot industrial building near the Riverside (91) Freeway in Anaheim.
The building once served as a distribution center for retailer Pacific Sunwear of California Inc. but is now occupied by Kuehne & Nagel, a Germany-based logistics company.
DCT also has a sizable portfolio in Los Angeles County and the Inland Empire; its Southern California portfolio stood at 50 properties totaling nearly 9 million square feet at the end of last year.
