Oaktree Capital Management Acquires Inland Empire Industrial Development for $121M

By: Sharjeel Sohaib

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May 29, 2023

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  • Oaktree Capital Management, an institutional investor based in Los Angeles, has acquired a 457,125-square-foot industrial development in California’s Inland Empire for $121.1 million.
  • The Inland Empire, encompassing areas such as San Bernardino and Riverside counties, is a thriving market for industrial real estate investment.
  • Its strategic location near major population centers and excellent transportation infrastructure make it an ideal logistics and distribution hub, attracting investors looking to capitalize on the region’s growth potential.

Oaktree Capital Management, a Los Angeles-based institutional investor, has recently invested in the booming industrial real estate market of California’s Inland Empire. The company acquired a 457,125-square-foot development in San Bernardino for a staggering $121.1 million, indicating the growing interest of institutional investors in the region’s industrial opportunities.

Oaktree’s Acquisition

The property, located at 503 East Central Avenue, was sold by Real Estate Development Associates (REDA) at a rate of approximately $265 per square foot. The development attracted Oaktree’s attention due to its promising potential and reaching its completion last year on over 20 acres of land. Trust Bank (formerly SunTrust Bank) provided a substantial cross-collateralized debt of $475 million to help secure its acquisition.

Inland Empire’s Industrial Real Estate Market 

The Inland Empire, encompassing areas like San Bernardino and Riverside counties, has become a prominent industrial real estate investment destination. In the first quarter of this year, the region was among the two markets nationwide to witness industrial real estate transactions exceeding $1 billion, according to Commercial Edge.

Strong Market Fundamentals

One of the key factors driving interest in the Inland Empire is its impressive market fundamentals. With a low vacancy rate of 1.7 percent, the region has recorded the highest annual increase in asking rents, reaching an impressive 16.3 percent. These figures illustrate the area’s strong demand for industrial space and its potential for investors to achieve attractive returns.

Location Advantage

The Inland Empire’s strategic location is crucial to its attractiveness to investors. Situated near the major population centers of Los Angeles and Orange County, the region offers excellent connectivity and access to major transportation infrastructure, including major highways, rail networks, and airports. This advantageous positioning positions the Inland Empire as an ideal logistics and distribution hub, serving the growing e-commerce sector and facilitating efficient supply chain operations.

Growth Potential and Future Prospects

The industrial real estate market in the Inland Empire is expected to continue thriving in the coming years. The region’s favorable market conditions, the continuous expansion of e-commerce, and increased demand for last-mile logistics facilities make it an attractive investment opportunity for institutional investors like Oaktree Capital Management. Additionally, the Inland Empire’s relatively lower land and operating costs than the other major Southern California markets add to its appeal.

Conclusion

Oaktree Capital Management’s recent acquisition of substantial industrial development in San Bernardino highlights the increasing interest of institutional investors in California’s Inland Empire. The region’s robust market fundamentals, low vacancy rates, and strategic location make it an appealing industrial real estate investment destination.Β 

As the Inland Empire continues to witness rapid growth and demand for logistics and distribution space, it is poised to provide lucrative opportunities for investors seeking returns in the dynamic Southern California market.

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