A company most Americans have never heard of is poised to control a large swath of urban industrial land in greater Los Angeles.
The North American unit of Australian real estate company Goodman Group (OTCMKTS:GMGSF) said it has acquired a 65-acre manufacturing and distribution site in Fullerton, California, located just 26 miles south of Los Angeles, and will turn the site into what it called a “logistics campus.” The facility, to be renamed the Goodman Logistics Center Fullerton, will be available for occupancy in late 2021, the Goodman unit said. Terms of the deal were not disclosed.
The transaction brings to 200 the amount of Los Angeles acreage that Goodman has acquired in just the past three months. The 65-acre property will most likely be dedicated to supporting last-mile deliveries of e-commerce orders within high-density residential areas. North Orange County is comprised of five cities, including Fullerton.
In a statement, the Goodman unit said the purchase supports the construction of up to 1.5 million feet of warehouse logistics space. This equals the amount of infill — industry lingo for land to support urban logistics operations such as local deliveries of e-commerce orders — available for lease in the entire Los Angeles market.
The unit did not disclose what percentage of the 135 acres, if any, that is already under management would be designated as infill land.
Based in Sydney, Goodman has about $33 billion of assets under management worldwide. About $4.3 billion of that is in the Americas, which includes the U.S., Canada, Mexico and parts of Central America. The company did not break out the size of its U.S. business on its website. It owns, develops and manages industrial property and business space.
North Orange County accounts for about 46% of the county’s industrial land that’s available for lease, according to third-quarter data from CBRE Services Inc. (NYSE:CBRE). The vacancy rate stood at 2.3%, and asking rents hit an all-time high, according to CBRE data. Approximately 1.2 million square feet were under construction at the end of September, the data showed. Net absorption, which is the amount of square footage leased minus the volume that is vacated by tenants and made available on the market, stood at just under 265 million square feet.
The availability rate, which divides the amount of space available for lease, sublease or sale by the total amount, stood at 4.6%. As an example, a property consisting of 100,000 square feet may have 10,000 vacant square feet available now and 5,000 square feet available in three months. This means the availability rate is 15%, while the occupancy rate is set at 10%. The availability rate is seen by some as the most accurate measure of a property’s or region’s prospects.
At quarter’s end, industrial occupancy was at its strongest levels in two years, with activity boosted by a slight increase in supply, CBRE said. However, the market remains undersupplied, and landlords are capitalizing by hiking rents, CBRE said.
“Food, manufacturing, third-party logistics, and e-commerce users continued to drive demand for space in Orange County due to the location’s proximity to ports, large labor pool and access to metropolitan areas,” CBRE said.
The facility is near the Los Angeles/Long Beach seaport complex, five freeways and 26 shipping centers operated by FedEx Corp., (NYSE:FDX), UPS Inc. (NYSE:UPS) and privately held regional parcel carrier OnTrac, which serves eight western states. Orange County, which covers about 980 square miles, had a population of 3.17 million at the end of 2017. It is the third most populous county in the nation.