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6/06/22
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Atlas Capital paid $39.8 mil for a 5.37-acre industrial redevelopment opportunity located at 19401 S. Vermont Ave in the infill South Bay submarket of Los Angeles, which continues to be one of the most supply-constrained industrial markets in the U.S.
The property, which is zoned M3-1 with maximum buildable floor area ratio, is currently comprised of 12 office buildings, totaling 94.1k sf. The location is coveted for its proximity to two of the busiest seaports in North America and LAX, the fourth ranked airport in the U.S. for cargo volume, as well as its immediate access to the 105,110, 710, 405 and 91 Freeways.
Kevin Shannon, Scott Schumacher, Ken White, Bret Hardy, Jim Linn, Andrew Briner, John McMillan and Danny Williams with Newmark represented the seller, Harbor Gateway LLC, in the deal. Shannon noted that given the industrial zoning and immediate access to the multiple major freeways, the offering represents an excellent opportunity to redevelop the existing, older office project into a Class A industrial product in the highly desirable Torrance submarket once short-term existing leases expire.
Schumacher commented, “With Los Angeles industrial rents for Class A product increasing over 60% these last four quarters, industrial land values have really exploded while opportunities for new development remain scarce.”
Office to industrial conversions continues to be an accelerating, yet niche, trend, according to Newmark Research. This trend quantified at least 49 projects converted nationwide since 2018 with 2.1 msf of office space converted in Los Angeles between 2018-2021. New construction in Los Angeles remains the primary vehicle to satisfy tenant demand in a market where vacancy is below 1.0%.
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