Rexford Industrial Pays $42M for LA-Area Office Campus

21415 Plummer St.

Rexford Industrial has acquired the 231,769-square-foot office campus within Chatsworth Business Park in Chatsworth, Calif., in an off-market transaction, for $42 million. The seller was Laramar Chatsworth Associates. CBRE brokered the sale on behalf of the seller.

Originally built in 1985, at 21415 – 21615 Plummer St., the two-building low-rise property is situated across 9.1 acres of industrial-zoned land. The office space is 85 percent leased to two tenants, including the County of Los Angeles, which has been at the property since 2000.

Office-to-industrial redevelopment

Once the current leases expire, the new owner plans to reposition the property as industrial space. Rexford will remove the two office structures and build two Class A, 32-foot-clear warehouse buildings totaling 182,000 square feet.

The CBRE team led by Mark Schaffer, Mike Longo, Anthony DeLorenzo, Todd Tydlaska, Sean Sullivan, Matt Heyn and Bennett Robinson brokered the off-market transaction on behalf of the seller.

Schaffer said in prepared remarks that the high demand for industrial space within the L.A. metro created the opportunity for office-to-industrial redevelopments in infill locations. He added that the strong in-place income from the existing office tenants along with the possibility to repurpose the property influenced Rexford’s decision to move forward with the transaction.

According to CommercialEdge’s latest national industrial report, Los Angeles’ industrial rent growth went up 6.7 percent year-over-year as of February, while the metro’s vacancy rate stood at 2.5 percent, well below the national average of 5.2 percent. Since L.A.’s industrial properties under construction represented only 0.6 percent of the total stock as of the end of February, the market is expected to remain tight. Thus, office-to-industrial redevelopments offer a viable opportunity to address the area’s strong demand for industrial space.

Last month, Rexford Industrial expanded its Southern California industrial portfolio with five acquisitions totaling $170 million. The company targeted properties with high value-add potential across key submarkets.