What $100 Million Can Buy in Industrial Markets Near Major US Ports
The pandemic arguably transformed the industrial sector's place in the commercial real estate hierarchy from overlooked contender to an investment-worthy darling, with buyers proving their willingness to pay record amounts for properties — especially those located near some of the nation's largest ports.
The prices that big-ticket distribution facilities, warehouses and fulfillment centers fetch often reflect how a market is performing, highlighting investor confidence or foreshadowing potential risk depending on factors such as regional job growth and consumer demand. They also provide a window into what attributes buyers are looking for and what they're willing to gamble on in the face of increasing economic turmoil.
And, of course, a building's location, age, condition, occupancy and other characteristics can affect the price of properties.
For investors shopping for industrial property, sites serving single tenants and those near U.S. ports are perceived to be particularly stable and in strong demand, attributes that came to the fore when the pandemic snarled supply chains. The clamor for close-by space has become so acute that it is pushing activity to inland locations such as Savannah, Georgia, and St. Louis, Missouri.
Here's a subjective look at how far roughly $100 million will go for a fully leased, single-tenant industrial property near the ports in Los Angeles, Seattle and Chicago.
The distribution center at 7816 Hawks Prairie Road NE in Lacey, Washington, was preleased to power tool company Snow Joe about six months prior to its early 2021 completion. (CoStar)
Address: 7816 Hawks Prairie Road NE Price: $90.75 million, or about $158 per square foot Size: Roughly 575,900 square feet across 30.25 acres Buyer: Global real estate investment manager BentallGreenOak Seller: NorthPoint Development, a Kansas City, Missouri-based firm and the property's developer Proximity to Nearest Port: About 28 miles south of the Port of Tacoma and about 57.5 miles south of the Port of Seattle Year Built: 2021 Primary Tenant: Power tool company Snow Joe, which preleased the property while it was under construction Fun Fact: Major retailers including Costco, Home Depot and Amazon have planted an industrial flag in the Lacey area in recent years, pushing vacancy down to a low of about 4% despite a construction boom, according to CoStar data.
Los Angeles, California
The warehouse at 920 East Pacific Coast Highway in the Wilmington neighborhood of Los Angeles is less than 8 miles from the ports of Los Angeles and Long Beach, the nation's largest and busiest port complex. (CoStar)
Address: 920 East Pacific Coast Highway Price: $100 million, or about $675 per square foot Size: Roughly 148,200 square feet across fewer than 8.5 acres Buyer: Rexford Industrial Realty, a Los Angeles-based real estate firm Seller: ACX Pacific Northwest, an animal-feed supplier that also occupies the property Proximity to Nearest Port: About 8 miles east of the ports of Los Angeles and Long Beach, the nation's largest and busiest port complex Year Built: 1954 Primary Tenant: ACX Pacific Northwest Fun Fact: Goods that land at the L.A.-Long Beach port complex account for 40% of all those imported to the U.S., making it a prime landing spot for retailers hunting for industrial space close by.
Retail giant Amazon leases the entire 753,000-square-foot distribution facility at 23700 West Bluff Road in Channahon, Illinois. (CoStar)
Address: 23700 West Bluff Road Price: $102.5 million, or a little more than $136 per square foot Size: Approximately 753,000 square feet across more than 34.3 acres Buyer: Ares Industrial Real Estate Income Trust, a Denver-based investment firm focused on warehouse and logistics properties Seller: IDI Logistics, an Atlanta-based industrial real estate firm and the property's developer Proximity to Nearest Port: Less than 50 miles southwest of the Port of Chicago Year Built: 2017 Primary Tenant: Amazon Fun Fact: While its inland location isn't as connected as other coastal, saltwater ports, the Channahon area benefits from a mix of other transit hubs including the BNSF Logistics Park Chicago and UP Joliet Intermodal railway centers — both of which are critical to import and export supply chains from Asia in the Midwest — as well as its proximity to the Mississippi River, linking it to other inland markets throughout the U.S.