KKR Makes $68M Phoenix Industrial Investment

The newly acquired portfolio expanded the firm's local footprint to roughly 2.5 million square feet.
120 E. Watkins St.

KKR has acquired a five-building, 540,000-square-foot industrial portfolio in Phoenix for $68 million through its Americas opportunistic equity real estate strategy. According to CommercialEdge information, the previous owner was Lincoln Property Co., which had bought the assets in separate transactions between 2002 and 2014.

The deal marks KKR’s second industrial real estate purchase in the Valley in 2021, expanding the firm’s total Phoenix industrial footprint to some 2.5 million square feet. In this year’s first acquisition, the firm paid $43.1 million for a 263,000-square-foot warehouse in Goodyear, Ariz., according to CommercialEdge.

Three of the properties are located within a 1-mile radius at 4441 W. Polk St., 4720 W. Van Buren St. and 5240 & 5302 W. Buckeye Road in the Phoenix West submarket. The fourth occupies more than 4 acres at 120 E. Watkins St., less than 2 miles south of downtown Phoenix and 10 miles from the other portfolio components.

All assets are last-mile warehouses completed between 1980 and 1990, CommercialEdge shows, featuring a 25-foot average clear height. The portfolio was fully leased at the time of sale, with the tenant roster including Trendwood Inc. and Express Furniture Rental.

Good times for industrial transactions

Phoenix ranked third in the top 10 markets for industrial transactions in 2020, according to CommercialEdge data. A total of 141 properties and portfolios traded last year for an aggregate value of more than $2 billion, 22.3 percent higher than the 2019 value.

The Phoenix West submarket accounted for some $950 million in industrial real estate investments, nearly half of the metro’s total. The submarket’s largest transaction involved a 684,420-square-foot industrial center also located on West Buckeye Road, which changed hands for $72.5 million. The property last traded in 2018 for $48.5 million.

The first quarter of 2021 continued the previous year’s strong investment activity. Except for KKR’s most recent transaction, five properties totaling nearly 1.2 million square feet changed hands in Phoenix West, CommercialEdge shows. In the largest deal, Link Logistics acquired a 682,291-square-foot warehouse at 1755 S. 75th Ave., financing the purchase with a $43 million loan from Wells Fargo Bank.