KKR Buys 566 KSF Multi-State Industrial Portfolio

By acquiring the five facilities in Baltimore, San Diego and Huntington Beach, Calif., the company grew its industrial portfolio to 8 million square feet nationwide.
Image via Pixabay

KKR has acquired five industrial distribution properties totaling 565,644 square feet. The buildings have joined KKR’s Alpha Industrial Properties portfolio, which now totals 8 million square feet across eight high-growth markets in the U.S. KKR made the investment through its Real Estate Partners Americas Fund II.

The properties are shallow-bay, “last mile,” light industrial warehouses in San Diego, Baltimore and Huntington Beach, Calif. Their average vintage is 1995, while their overall occupancy is 91 percent. The properties were acquired from three different sellers.

KKR did not respond to Commercial Property Executive’s request for additional information.

All eyes on vacancy 

Though the U.S. industrial real estate market was sailing steadily in the first quarter, players are keeping a close watch on leasing activity, given concerns about economic and trade factors, as well as an increase of 10 basis points in the average nationwide vacancy, which rose to 5.0 percent, according to a first-quarter market report from JLL.

Still, “vacancy continues to be near all-time historic lows,” JLL noted, and most industrial markets saw rent growth.

Three trends bear watching, says JLL:

  • Supply continues to increase, with the construction pipeline up 4.3 percent through the addition of 10 million square feet, bringing the under-construction total nationwide to 258.8 million square feet.
  • Though rental growth is slowing, it continues to rise, hitting a national average of $5.79 per square foot.
  • Perhaps surprisingly, traditional retailers are driving leasing activity, at nearly 13.6 percent, followed closely by logistics and distribution and by 3PL, in second and third place, respectively. The three together account for more than a third of all U.S. industrial leasing. 

In February, KKR purchased for $43.5 million a recently completed 406,650-square-foot distribution facility, at the 1.5-million-square-foot Optimus Logistics Center in Perris, Calif., in the Interstate 215 corridor. The seller was Rockefeller Group.

In a very different purchase last December, KKR, along with TMG Partners, acquired 1221 City Center, a 24-story office tower in downtown Oakland, Calif. UBS Realty Investors sold the 522,000-square-foot building for a sum reported to be about $255 million.