Amazon distribution center at LAX sells for record price

An Amazon warehouse near the gates of Los Angeles International Airport has sold for a record price as logistics centers near transportation hubs grow in value.

The real estate investment arm of global financial services firm Morgan Stanley recently paid $211 million for the distribution center on 98th Street amid several private long-term parking structures that serve LAX.

It was the biggest industrial real estate deal of the year in greater Los Angeles, according to real estate data provider CoStar.

The distribution center was built earlier this year to serve Amazon, which occupies the entire 143,060-square-foot facility in what CoStar said is “one of the most in-demand industrial corridors in the country.”

With industrial property vacancy near historic lows in the region and a shortage of land around LAX, investors continue to crowd into the few modern developments that come online, said Jesse Gundersheim, a senior analyst at CoStar.

Having a prominent tenant in place made the distribution center even more desirable, he said.

“The rise of e-commerce has fundamentally increased demand for well-located, modern logistics assets, which we believe are critical infrastructure for today’s economy and offer strong, long-term growth,” said Will Milam, head of U.S. Investments at Morgan Stanley Real Estate Investing.

The seller was Overton Moore Properties, which paid $115 million for the site in 2020 before redeveloping it for Amazon. Torrance-based Overton Moore develops and operates logistics properties in the Western U.S.

Morgan Stanley manages $53 billion in gross real estate assets worldwide and has been building a foothold in industrial hubs near major ports and transportation links.

“We are pleased to acquire this facility in a highly strategic distribution location, underscoring our continued strategy of securing key net lease investments in core logistics markets,” said David Gross, managing director at Morgan Stanley Real Estate Investing.

“This facility in particular is a critical asset for distribution and logistics needs in a significant region of Southern California where both a lack of space and regulatory hurdles present development constraints,” he said.

Industrial sales volume is up 4% year over year in Los Angeles as capital costs have come down, driven by lower interest rates, Gundersheim said.

The year-to-date deal count has topped 800 transactions, surpassing the full-year totals of the past two years, with sales volume above $5 billion.

Institutional investors such as Morgan Stanley have been responsible for about one-third of the acquisition volume in Los Angeles this year, Gundersheim said.