Inland Empire Warehouse Trades for 3X Original Value

New York Life pays $84M to buy asset TA Realty paid $30M for 2019.

By Jack Rogers | June 28, 2023 at 06:27 AM

ALM | GlobeSt 062823

Inland Empire warehouses continue to appreciate from pre-pandemic values, trading for multiple times more than the last time they traded hands.

This week, the industrial player reaping these returns is TA Realty, which has sold a 272K SF industrial asset in Bloomington for $84M to New York Life Insurance.

Boston-based TA Realty, which has managed, acquired or invested more than $39B since it was founded in 1982, purchased the property, located on 3350 Enterprise Drive, for $30M—which means it sold for 2.8 times more than it cost to acquire. The sale price translates into $309 per SF.

The 13-acre industrial campus, which is part of a Riverside Avenue cluster that includes distribution centers for Amazon and FedEx, is currently occupied by Cooper Lighting Solutions.

Despite the delivery of nearly 30M SF of new warehouse space over the past year—including 9.9M SF in Q1 2023—overall net absorption in the Inland Empire totaled 4.9 M SF in the first quarter.

Leasing activity in the Inland Empire West submarket featured two deals each encompassing more than 1M SF: Constellation Brands signed a 1.4M SF deal in Jurupa Valley and Francisco Street LP signed a 1.1M deal in Fontana.

The largest lease deal in the Inland Empire East submarket in Q1 2023 saw NFI inking an 864K SF lease in Perris and Nordstrom renewing a 606K SF warehouse in San Bernardino.

With the western half of the Inland Empire nearly filled to capacity and sites for developing large warehouses disappearing, there’s a hotbed of new activity in the East submarket—the East leads the overall Inland Empire market with 5.6M SF of net absorption due to large tenant move-ins, which included Target, Spotify and Shein, Savills reported.

Regardless of whether an economic slowdown develops in Q2 2023, future absorption is expected to remain positive in the Inland Empire due to anticipated deliveries and expected large tenant move-ins, including Amazon scheduled occupation of a 4.4M SF mega-warehouse in Ontario.

Preleasing of facilities under development in the Inland Empire has been so strong that the additional 25M SF in new warehouse space scheduled to be delivered during the rest of 2023 is not expected to impinge on positive absorption.

The sprawling Inland Empire market—now home to more than 570M SF of warehouses—encompasses Riverside and San Bernardino counties from the Los Angeles city limits to the Arizona border. The 2.8% industrial vacancy rate in Inland Empire remains one of the lowest in the US.

Founded in 1982, TA Realty is an experienced and established real estate investment management firm. The Firm is headquartered in Boston, Massachusetts, with additional offices in Newport Beach, California, Dallas, Texas and San Francisco, California. Since its inception, through June 30, 2023, TA Realty has acquired, invested and/or managed approximately $40 billion of real estate assets through core, core plus and value-add strategies and customized separate/advisory accounts. TA Realty’s investment philosophy focuses on creating diversified real estate portfolios that aim to generate strong cash flow, receive intensive asset management, and seek to achieve long-term value creation. For four decades, TA Realty has maintained this philosophy through multiple real estate and economic cycles, a strength recognized by pension funds, endowments, foundations, and high-net-worth individuals. For more information, please visit www.tarealty.com.