A newly built distribution center blocks from the runways at Los Angeles International Airport has sold in the biggest industrial deal of the year in greater Los Angeles.
Morgan Stanley Real Estate Investing bought the 143,060-square-foot facility at 5705 W. 98th St. from Torrance-based Overton Moore Properties for $211 million, or roughly $1,500 per square foot, according to CoStar data.
The property opened this year as a build-to-suit for Amazon in one of the most in-demand industrial corridors in the country. Overton Moore purchased the site in a $115 million deal in 2020 before redevelopment.
Industrial sales volume is up 4% year over year in Los Angeles as capital costs have come down, driven by lower interest rates, according to Jesse Gundersheim, CoStar senior director of market analytics. The year-to-date deal count has topped 800 transactions, surpassing the full-year totals of the past two years, with sales volume above $5 billion.
“Institutional investors like Morgan Stanley continue to drive about one-third of the acquisition volume in LA this year,” Gundersheim said.
Morgan Stanley and Overton Moore declined to comment on the deal.
Industrial expansion
Amazon occupies the entirety of the building. It's not clear when the company's lease expires, but JLL’s guidance for logistics companies states that 15-year lease terms are standard for new build-to-suit industrial facilities, especially for e-commerce and distribution users.
For Morgan Stanley, the deal marks another bet on Southern California’s supply-constrained logistics market. The firm manages $53 billion in gross real estate assets worldwide and has been building a foothold in industrial hubs near major ports and transportation links.
Just last month, its real estate arm bought an industrial outdoor storage site in Fontana, California, for $92 million, underscoring its appetite for low-vacancy, high-rent Inland Empire and South Bay submarkets.
Will Milam, head of U.S. investments at Morgan Stanley Real Estate Investing, said in a statement the group is focused on “sourcing and securing institutional-quality investments in core logistics markets.”
With vacancy near historic lows and a lack of land around the Los Angeles airport, investors continue to crowd into the few modern developments that come online, especially when a tenant as large as Amazon is already in place, Gundersheim said.
Meanwhile, Overton Moore, one of the West Coast’s most active logistics developers, has been expanding aggressively in California. The firm raised $150 million last year to buy industrial buildings and now oversees a portfolio exceeding 6 million square feet.
It has built or acquired more than 40 million square feet over four states and continues to prune and reposition assets, including the sale of a 14,250-square-foot building in Burbank for $2 million in August.