One of the darlings of the commercial real estate industry since the start of the global pandemic has been the industrial sector. Vacancies have almost disappeared, rents have increased, and every institutional investor with an eye on Southern California real estate is considering ways to incorporate industrial in its portfolio. Goodman, a Sydney, Australia-based global industrial property owner is one of these companies, and it recently expanded its footprint in Orange County by acquiring 5757 Plaza Dr., a 331,376 square foot property in the Cypress submarket, according to a recent Kidder Mathews Orange County Industrial Report for Q3 of 2021. New York-based DRA Advisors was the seller, and the property sold for $83.6 million, or around $252.24 per square foot.
Goodman, which operates its North American headquarters from Irvine, is also in the process of delivering around 1.5 million square feet of industrial space across four buildings in Fullerton at 2001 E. Orangethorpe at its Goodman Logistics Center. The delivery is expected for August of 2022.
The company is a global industrial player with 26 office locations across 14 countries. Goodman focuses on high-quality properties in key industrial locations across the world. It manages assets worth over $57 billion, according to the company’s website, and in the Americas that represents about $5 billion across 20 properties.
DRA is a New York-based commercial real estate investor with regional offices in San Francisco and Miami, Fla. The company, since its inception, has made over $34 billion in acquisitions across 1,800 properties. Along with industrial, the company also focuses on multifamily, retail and office products. It currently manages over $11 billion of assets, according to the company’s website.
In Orange County, the user demand for industrial space has never been higher, according to the Kidder Mathews report. Direct asking leasing rates for the third quarter were $1.09/square foot, which is a new record for the market.
Nearly 2 million square feet of industrial space is under construction in Orange County, and developers remain aggressive in searching and repurposing properties.
However, leasing activity, which was at 2.2 million square feet and recorded 911,000 square feet of positive absorption, did see a slight dip, which is primarily due to lower vacancy, now trending toward 1.5 percent, levels not seen since 2017.
In the near- to mid-term, the economic forces will bode well for this sector. Kidder Mathews is tracking an unemployment rate at 6 percent in August of 2021, which is 30 basis points lower from the month before and lower than the state average of 7.5 percent. One element of concern is the 66 cargo ships, as of the time this report was published, that are waiting to dock. This has pushed processing times from two days to six, with the Port of Long Beach seeing an 11.3 percent increase in volume from a year ago.
