BKM Capital Buys Orange County, Calif., Industrial Park for $62M

BKM Capital Partners has added more small-bay industrial space to its portfolio after acquiring a fully leased, 231,000-square-foot business park in Orange County, Calif., for $62 million. 

The Newport Beach-based investment management firm purchased Goldenwest Circle Business Park in Westminster, a city between Anaheim and Huntington Beach. The deal is equal to about $268 per square foot.

BKM did not disclose the name of the seller. However, PropertyShark records show Blackstone‘s Link Logistics previously owned the business park.

The 12-building park spans 12.3 acres at just east of Interstate 405 off Bolsa Avenue. The property includes 36 industrial units ranging from 1,700 to 20,000 square feet, averaging 6,400 square feet. The buildings feature clear heights of 14 to 20 feet, ground-level loading and truck parking.

The property’s largest tenant is Huntington Beach Harley-Davidson, which operates a dealership at the site. Other tenants include manufacturing, distribution, retail and business services.

“Freeway frontage like this is rare in Orange County, and it rarely comes up for sale,” Brett Turner, partner and chief investment officer at BKM, said in a statement. “Acquiring it at a significant discount to replacement cost gives us room to reinvest in a location that already works for its tenants.”

BKM plans to renovate and reposition the industrial park, but the company did not disclose its planned capital budget.

The acquisition comes as smaller industrial properties outperform larger facilities in Orange County, where limited development and rising replacement costs have constrained new supply.

The county’s small-bay, multi-tenant industrial vacancy rate stood at 5.7 percent in the second quarter, according to CBRE research shared by BKM. Vacancy was just 3.2 percent for buildings smaller than 25,000 square feet, compared with 15.2 percent for buildings between 100,000 and 199,000 square feet.

In the Garden Grove submarket, which includes Westminster, industrial availability stood at 5 percent.

Meanwhile, no new small-bay space was delivered in Orange County during the second quarter, and 300,000 square feet remained under construction across an existing inventory of 80 million square feet.

“High land and construction costs make it difficult to create new small-bay space at rents that work for many existing businesses,” BKM founder and CEO Brian Malliet said. “At the same time, older multi-tenant parks in Orange County are giving way to data centers, corporate campuses and mixed-use projects.”

The acquisition adds to BKM’s national portfolio of multi-tenant light industrial properties. Since its founding in 2013, the firm has acquired nearly 40 million square feet of industrial real estate valued at $8 billion.

Turner and BKM’s Michael Grossner led the acquisition. CBRE’s Darla Longo advised the seller.

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