NEWPORT BEACH – In one of the largest light industrial deals of the past five years, locally based BKM Capital Partners and its investment partner, Kayne Anderson Real Estate, acquired a portfolio of 275 properties totaling 8.5 million square feet for $1.81 billion from a Blackstone affiliate.
Founder and CEO Brian Malliet told the Business Journal the acquisition makes Newport Beach-based BKM the largest owner-operator of multi-tenant light industrial properties in the country.
“It was a rare chance to pick up real scale in a part of the industrial market where scale is hard to assemble,” Malliet said. “Multi-tenant light industrial is fragmented, and portfolios with this combination of size, quality and market concentration don’t come up often.”
According to joint venture officials, this is the largest light industrial transaction in the U.S. since 2022, when New York-based Blackstone acquired PS Business Parks and its 27 million-square-foot portfolio of industrial, multifamily and office buildings for $7.6 billion.
Some properties in the joint venture deal with Blackstone affiliate Link Logistics Real Estate were previously part of the PS Business Parks portfolio, CoStar records show.
CBRE’s Darla Longo, Joe Cesta and Michael Longo represented the sellers in the transaction.
Malliet has built his career by investing in a specialized segment of the industrial real estate market.
Now, his company has become one of the dominant players in the “small bay” light industrial sector, which houses many of the small businesses that form the backbone of the American economy.
He told the Business Journal that the acquisition aligns with BKM’s core mission to “buy well-located small- and mid-bay assets in infill markets, run them hands-on and create value.”
Small Bay Demand
The transaction comes at a time when demand for small or shallow bay industrial properties is strong, even as overall commercial real estate investment activity has slowed.
CBRE’s Q1 2026 data reports that vacancy for spaces under 50,000 square feet in Orange County is 2.9%, much lower than the county’s overall rate. New leasing activity jumped nearly 95% quarter over quarter.
“Light industrial, particularly small- and mid-bay, has seen a surge of capital driven by the diversity of the rent roll, limited new construction, and strong rent growth potential,” said Barbara Perrier, vice chairman, National Partners Industrial & Logistics at CBRE.
Light industrial or “small bay” properties are typically low-rise business parks with suites ranging from 1,000 to 15,000 square feet. These spaces are often used by small businesses and local mom-and-pop shops for light manufacturing, distribution, service operations and last-mile logistics.
Malliet has previously described this property type as the “apartments” within the larger industrial real estate sector.
The JV Portfolio
The recently acquired portfolio, which closed in May, includes 51 multi-tenant industrial properties located in California, Washington, Texas and Georgia.
Joint venture officials said the assets include nearly 2,000 tenant spaces across hundreds of buildings, with an occupancy rate of 90%.
In Orange County, BKM increased its footprint by acquiring eight business parks totaling 1.27 million square feet in Lake Forest, Garden Grove, Santa Ana, Stanton, Anaheim and Yorba Linda. Notable properties include the 300,000-square-foot Canada Business Center in Lake Forest and the 190,000-square-foot Hoover Business Park in Garden Grove.
The deal also expands the BKM-Kayne Anderson joint venture, launched in 2025, to 15 million square feet and brings BKM’s total managed portfolio to over 24 million square feet, Malliet said.
Beyond the real estate, the acquisition also includes eight regional offices and 40 employees who handle property management, leasing, construction and accounting.
Malliet said he plans to retain and integrate these teams into BKM’s platform. The additions bring BKM to nearly 200 employees in 25 offices nationwide.
“You can’t run these properties from a spreadsheet,” he said. “You need people on the ground who know the tenants and the brokers, understand the submarkets, and handle the day-to-day that comes with managing hundreds of small suites.”
He added that BKM plans to create more value in the properties by investing in exterior renovations, roof and HVAC upgrades and other improvements to vacant suites.
“The goal is to lead the market with a differentiated, high-image, high-touch product built for the tenants we’re targeting,” he said.
SoCal Properties
The $1.8 billion joint-venture deal between BKM Capital Partners and Kayne Anderson includes the following 19 Southern California properties comprised of 144 buildings totaling 3.1 million square feet:
Orange County
• Canada Business Center in Lake Forest
• Garden Grove Business Center in Garden
Grove
• Hoover Business Park in Garden Grove
• Harbor Business Park in Santa Ana
• Commerce Park Anaheim Business Park in
Anaheim
• Garden Grove Business Park in Garden
Grove
• North County Business Park in Yorba Linda
• Harbor Warner Business Park in Santa Ana
Inland Empire
• Archibald Business Center in
Rancho Cucamonga
• Golden West Business Park in
Rancho Cucamonga
• Mountain Avenue Business Park in Upland
Los Angeles
• 20620 S. Leapwood Ave. in South Bay
• 2225 E 28th St. in South Bay
• 2599 E 28th St. in South Bay
• Cerritos Business Center in Cerritos
• Monterey Park Business Center in Monterey
Park
• Chatsworth Business Center in
San Fernando Valley
• Chatsworth Business Park in San Fernando
Valley
• Lurline Business Park in San Fernando
Valley
— Joseph Pimentel
BKM Hits a New MilestoneÂ
For BKM Capital Partners, the transaction marks a major step in its growth from an Orange County-based light industrial investor with some national presence to a major national owner-operator.
Founder Brian Malliet told the Business Journal that the company expected to grow but did not anticipate reaching this scale so soon.
Earlier this year, the Newport Beach-based company, founded in 2013, reached a milestone and celebrated controlling a little over 100 multi-tenant light-industrial properties
nationwide, that serve thousands of tenants. Now, the deal brings them to more than 150 properties and over 24 million square feet under management.
“We always knew there was room to grow, but growth like this doesn’t happen on a schedule,” he said. “You stay ready and you move when the right opportunity shows up. This one pulled the timeline forward, but it wasn’t growth for its own sake.”
The opportunity arose as institutional investors increasingly focused on the multi-tenant light industrial sector. For years, most investors and capital went into large Amazon-type warehouses and logistics facilities.
Now, Malliet said investors are “catching on” and showing greater interest in smaller industrial properties used by small businesses such as contractors, suppliers, service companies, local distributors and light manufacturers.
“Investors are catching on to the fact that small- and mid-bay has strong fundamentals of its own,” he said. “The tenant base is broad, and in a lot of infill markets that product is hard to replace because the land is built out and new development often doesn’t pencil.”
However, Malliet said it takes a knowledgeable operator to make this work. Rather than dealing with one or two major tenants occupying a large industrial warehouse, a small bay facility houses several smaller operators with different needs.
“The sector is getting more institutional, but the operational demands aren’t going away,” he said. ”If anything, they’re growing. Smaller suites, more tenants, shorter leases, demand drivers that are specific to each submarket…all of that takes day-to-day execution and people who know the market, and that’s the part our platform was built around.”
