Brookfield Buys Office Near Port of LA for Industrial Conversion

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With demand for new industrial space at an all-time high, and available space at an all-time low, more investors are looking to convert other property types into warehouse space throughout Southern California.

Brookfield has acquired a two-story creative office building known as The H with more than 125,000 square feet near the Port of Los Angeles in the South Bay, and plans to explore logistics-based redevelopment projects, Commercial Observer has learned. Montana Avenue Capital Partners and Contrarian Capital Management sold the 5.2-acre property at 19701 Hamilton Avenue in the city of Torrance for $36.1 million. 

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Colliers represented the sellers, but declined to identify the buyer, other than to say it was an institutional investment firm. JLL’s Chad Solomon represented the buyer, but was not immediately available for comment. 

Montana Avenue and Contrarian Capital first acquired the asset in 2016 for $17.3 million, property records show. It’s currently 70 percent leased to 10 tenants, and it also includes conference facilities, mixed-use recreational space and outdoor lounge areas.

Colliers’ Kristen Bowman represented the sellers with Steve Solomon (Chad Solomon’s father), who said the sellers weren’t originally thinking about industrial conversions when they put it on the market before the COVID-19 pandemic. But now, Solomon said, “the industrial market is on fire.”

“Land values have gone up 100 percent in the past 18 to 24 months,” he said. “So, the new buyer plans to scrap the building and build an industrial project or a logistics truck parking lot. And in the meantime, they’ll have steady income from the building.”

Solomon added that there’s another office nearby that Clarion is converting into industrial, and that he and Chad are working on more similar industrial land plays.

“Rents are spiking and new product is getting leased almost right away,” he said. “Thirty years ago, I never would have guessed that industrial land would be worth more than office, but I expect this cycle to remain for several years to come.”

Gregory Cornfield can be reached at gcornfield@commercialobserver.com.