REAL ESTATE NEWS

Morgan Stanley Investment Management has purchased an industrial outdoor storage facility in Fontana, California, for about $92 million. Simultaneously, Oldcastle Infrastructure will remain at the property and is locked into a "long-term" triple net lease, according to the real estate investor. The engineered building product solutions provider has operated at the IOS facility for three decades.

“By shifting property expenses, taxes, and maintenance obligations to the tenant, net lease structures mitigate real estate owners’ exposure to volatility and unexpected costs, making net lease cash flows among the most predictable in real estate,” Lauren Hochfelder, co-CEO of Morgan Stanley Real Estate Investing, said in a statement.

“Beyond the benefits of net lease, we expect U.S. industrial to benefit from the continued supply chain realignment, including increased onshoring of manufacturing.”

Also, Morgan Stanley called the property a "mission-critical asset for Oldcastle and a cornerstone for regional infrastructure supply." Moreover, the New York-based firm said that the facility was unique with its 26-acre parcel offering, with nothing comparable offered in the rest of the Fontana region.

In the post-pandemic world, the IOS sector has been in hot demand. In fact, a recent CommercialCafe industrial market analysis finds that rents in the asset class have skyrocketed 123 percent since 2020. In August, in-place rents in the Inland Empire increased by 8.1 percent year-over-year.

The strong growth has attracted other investment firms like Peakstone Realty Trust, which just announced its planned divestiture from office to concentrate on IOS. Some major activities in 2025 include Peakstone acquiring a 51-asset portfolio valued at $490 million, while a joint venture between Barings and Brennan Investment Group indicated it plans to pour $150 million into the sector.

Source: GlobeSt/ALM