Harbor Associates Makes $81M Buy in Small Bay Market with Near 0% Vacancy
Investors are now figuring that small bay industrial campuses with tenants that are largely AI-proof will remain strong in an evolving economy, according to Harbor Principal Justin Loiacono.
He told GlobeSt.com that some Orange County submarkets have among the strongest demographics, with median household incomes over $150,000.
An example is the Yorba Linda Commerce Center, a 280,000-square-foot, small-bay, multi-tenant industrial campus. Harbor Associates, in a joint venture with Farallon Capital Management, has acquired the asset in an off-market transaction valued at $81 million.
Loiacono noted that Harbor had been pursuing the property for several years because it represents an opportunity to own a high-quality Class A multi-tenant business park in a very tight, strong demographic submarket.
"Many of the business owners at the park live nearby and value the proximity of this Class A industrial park to their homes," Loiacono told GlobeSt.com.
"The strong demographics, coupled with tight submarket stats where vacancies are close to 0% and no new product is planned, make this a really compelling investment opportunity."
Located at 3910 Prospect Avenue, the 16.5-acre property comprises 10 single and multi-tenant buildings housing 83 units ranging in size from 1,200 to 24,000 square feet.
Each unit offers office space, clear heights up to 22 feet, ground-level doors, ample electrical capacity, LED lighting and updated HVAC systems. Built in 1987, Yorba Linda Commerce Center was 98% leased at the time of the deal's closing.
The seller, a private family that has owned the property for over 30 years, was represented by Gary Martinez of Ashwill Associates.
CBRE's Shaun Moothart, Bob Ybarra, and Andrew Post represented Harbor in securing a $56.30 million fully funded loan, which was provided by an affiliate of QuadReal Property Group. Brandon Bachner led the financing on behalf of QuadReal.
The small bay industrial segment remains the strongest in the Orange County industrial market, according to CBRE.
Vacancy for spaces under 24,000 square feet is approximately 2%, with spaces under 10,000 square feet near 1%, according to CBRE. This compares favorably to the 5.7% vacancy across the broader industrial market in Orange County, according to the firm.
While large-format warehouse development has surged in recent years, shallow bay industrial supply has expanded only modestly, leaving many markets with aging inventory and limited new construction.
CBRE identifies Orange County and Charlotte as the most supply-constrained shallow bay markets in the nation, with each posting low vacancies and some of the highest rents among the markets analyzed.
Source: GlobeSt/ALM