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6/27/17
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A 112k sf, FedEx-occupied building in Costa Mesa has been acquired by Santa Monica-based BLT Enterprises Inc for $33.4 mil, or $298/sf. As part of the transaction, FedEx will remain in the building, located at 1650 Sunflower, until 2028.
Originally constructed in 1976, the building was re-purposed in 2008 by its then-owner Panattoni Properties. FedEx has occupied the building for nearly a decade and was nearing the end of a 10-year lease agreement. As part of the “blend-and-extend” lease agreement, FedEx was given the opportunity to pay a slightly lower lease rate if it agreed to extend its occupancy for another 10 years.
The property was sold by Sovereign Capital Management Group Inc of San Diego. Rick Putnam and Eric Cohen with Colliers International represented both parties in the sale, while Colliers’ Chuck Wilson and Brian Chastain repped the new owner in the lease extension. Jeff Kernochin at Fischer Company represented FedEx.
“This transaction underscores institutional investor demand for urban, in-fill logistics properties, which has grown in lock-step with online consumer buying,” said Putnam. “As FedEx and other logistics firms are pressed by retailers to guarantee next-day, or even same-day, deliveries, the interest from institutional investors and capital market financing firms has never been higher for urban in-fill properties. The problem is there are very few available now and that has pressed logistics firms like never before.”
Not only is the building centrally located, but the property benefits from significant improvements to fit FedEx’s logistics needs. Those improvements include drive-in/drive out capability and specialty conveyor and sorting equipment to accommodate the firm’s ground delivery operations. A separate vehicle maintenance facility was also added.
“This is a phenomenally rare urban coastal location with immediate access to all of Greater L.A., which is the largest and most densely populated region in the nation,” said Wilson. “Plus, the location has immediate access to John Wayne (Orange County) and Long Beach airports, both of which are heavily used by FedEx to ship and receive packages.”
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