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Monday, Dec 5, 2022

Fullerton FedEx Hub Sells for $156M

Top industrial trade for year

A Fullerton distribution center that serves as a local base for FedEx has traded hands for $156 million, in the top reported industrial sale of the year for Orange County.

What’s more, the 406,261-square-foot facility sold for nearly three times its prior sale price in 2014, property records indicate.

It’s a strong sign of confidence for the industrial sector, which remains in growth mode more than two years after the onset of the pandemic, albeit at a slower clip than the breakneck paces seen in 2020 and 2021.

During the second quarter, local vacancy rates for the areas base of distribution warehouse facilities fell to another all-time low of 1.2% while average asking rents rose 9 cents to $1.34, up more than 20% year-over-year, according to a market report by Newport Beach’s Voit Real Estate Services.

GLP Fund

The Fullerton distribution center was built in 1974 on an 18.6-acre parcel at 458-486 E. Lambert Road. It’s about 2 miles west of the Orange (57) Freeway.

It’s fully leased by FedEx, which occupies a 161,461-square-foot space, and NorCal Beverage Company, which takes up the remaining 244,800 square feet. Both have been tenants for more than a decade.

Records indicate the buyer to be an affiliate of GLP Capital Partners, a Los Angeles investment manager that specializes in logistics properties.

The firm paid nearly $384 per square foot for the facility from Zurich-based Swiss Re Group. The seller, which refers to itself as the world’s largest reinsurer, paid a reported $55 million for the site in 2014.

GLP Capital was formed in 2019 and runs its logistics real estate operating platform under the Modlo name.

The Fullerton acquisition comes about a year after buyer closed its North American logistics real estate fund, GLP Capital Partners IV, totaling $2.3 billion in capital commitments.

The fund invests in “institutional-quality logistics assets across the value creation spectrum that are strategically located in infill and key distribution markets” across Southern California, Eastern Pennsylvania, Seattle, Portland, and South Florida, the company said in a press release.

“We began raising this fund just as the global pandemic changed so much about our economy and daily lives,” said company founder, CEO and Senior Managing Director Alan Yang.

“The fundraise is a testament to the demand for logistics real estate driven by accelerating e-commerce.”

Fullerton Hub

The sale is the priciest local industrial deal since June last year, when a large Amazon distribution facility in Irvine sold for $180.8 million.

An investment affiliate of Los Angeles-based brokerage giant CBRE Group Inc. paid about $457 per square foot for Irvine Crossings, a nearly 396,000-square-foot data center and industrial property on Von Karman Avenue that’s been home to Amazon since 2016.

The Fullerton site is about a block away from the Beckman Business Center, a 1 million-square-foot distribution campus that completed construction in 2019. The developer, Newport Beach-based Western Realco, has since sold the development in a series of deals topping $180 million on a combined basis.

Also in the city is the Goodman Logistics Center Fullerton, the former Kimberly-Clark Corp. manufacturing site that Goodman North America is redeveloping into a 1.5 million-square-foot logistics campus.

The Goodman project, just north of the Riverside (91) Freeway along Orangethorpe Avenue, is the largest new industrial project built in the county in several years and is expected to deliver this quarter.

Sparse Sales

Notable sales transactions in the industrial sector have been somewhat sparse in OC this year, though not due to a lack of demand.

Sales activity fell for the fourth quarter in a row during the second quarter, Voit Real Estate notes, which was “not unexpected given the shortage of space available for lease or sale.”

“Some buyers in the market are giving up on their searches and are opting to renew existing leases, more so now since the interest rates on SBA mortgages have spiked,” the report notes.

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