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11/24/14
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After months of negotiations, escrow extensions and re-negotiations, a 136k sf industrial building in Ontario finally sold, in an off-market deal valued at $10.6 mil ($78/sf).
First Industrial, based in Chicago and the owner of industrial properties throughout the United States, was the buyer. The De Pietro Corp, a Los Angeles-based regional investment firm, was the seller.
The concrete, tilt-up structure is a warehousing and distribution center for Horizon Hobby, a national hobby wholesaler. The property is located on over six acres at 4710 Guasti Rd, just south of I-10 and west of I-15, adjacent to Ontario International Airport. The building was designed in such a way that it can be divided for multi-tenant use in the future.
Features of the structure include cross-dock loading, 30-foot clearances, 22 dock-high loading doors, two ground-level doors, nearly 13k sf of flex/office space on two levels, a 4k sf H-2 room, state-of-the-art fire suppression systems, and two fully secured truck courts.
“This property was not listed on the market and, after many meetings and discussions, the owner decided to give us a price it would consider for selling the property,” said Colliers Vice President Brad Yates, one of three Colliers brokers who represented both companies in the transaction. “After some lengthy negotiating sessions between the proposed buyer and the now-willing seller, we reached an agreement on price. But what came next was a surprise. We just had no idea it would take more than a year to finally close the transaction.”
As it turned out, the owner of the building exercised several options that allowed escrow to be extended if a suitable replacement property could not be found. It was those extensions that delayed the closing and served to magnify the lack of Class A industrial product in the Inland Empire markets, Yates noted.
Underscoring that point, at the end of the third quarter, the vacancy rate for Class A industrial buildings throughout the region was 4.9 percent, one of the lowest vacancy rates ever recorded, Colliers reported in its latest study of the area’s industrial markets. In the Ontario submarket, the vacancy rate was even lower at 4.3 percent.
First Industrial finally took ownership of the 12-year-old building some 13 months after its offer was first accepted, making it one of the lengthiest escrows of the year in the Inland Empire. Joining Yates on the Colliers team that represented both the buyer and seller were Vice President Richard Schwartz and Associate Stefan Pastor, all of the brokerage firm’s Ontario office.
“As the economy continues to recover, what we are seeing is more and more of a need for distribution and warehousing facilities in this size range that just were not being built during the economic downturn,” said Yates. “Developers of mid-sized buildings are now beginning to meet that need, and the lag time for completed buildings has been shortened. But there is still such demand for certain types of buildings that it can be a challenge to find just the right building.”
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