Black Creek Group Pockets $148M for San Diego Asset

North County Corporate Center. Image courtesy of Taylor Allan

North County Corporate Center, the largest pure industrial distribution park in North San Diego County at approximately 493,900 square feet, has come under new ownership. With the assistance of Newmark, Barings sold the 100 percent occupied, five-structure campus in Vista, Calif., to Black Creek Group in a transaction valued at $147.5 million.

The investment community was more than a little keen on NCCC. “There were over a dozen offers,” Jim Linn, executive managing director with Newmark, told Commercial Property Executive.

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NCCC is an institutional-quality property that made its debut in 1999 as a $21.5 million development project of Master Development Corp. Barings had owned the asset since 2014 when, then operating as Cornerstone Real Estate Advisers, the company had purchased it for roughly $57.7 million. The seven-year-hold proved timely and incredibly fruitful for Barings.

“Land is in very short supply in the North County market, which is limiting supply and pushing the vacancy to an all-time low. The shortage of available space combined with the user demand is driving rental growth, which in-turn is increasing the sale price per square foot,” Linn said.

Today, NCCC’s five buildings, ranging in size from approximately 71,500 to 123,300 square feet, house a total of six credit tenants. With below market rents in place and staggered lease rollovers, the property offers the new owner a great deal of upside potential via the aforementioned rising rents.

Many buyers, little product

The industrial real estate sector’s run as an investor favorite across the country continues.

“Institutionally owned and maintained property in the top MSAs in the U.S. have a tremendous demand due to durability and increasing NOI of quality, functional assets,” Linn noted.

Sales activity in the U.S. industrial sector totaled $24 billion in the second quarter of 2021, marking a 92.6 percent jump from the height of the pandemic in the second quarter of 2020 and a quarter-over-quarter increase of 12 percent, according to a report by Newmark.

However, the rolling 12-month totals suggest industrial volume has trended lower since reaching a pre-pandemic height, which is due to an absence of opportunity as opposed to lack of investor interest. As a result, pricing reached a new average high of $123 per square foot in the second quarter of 2021.

“With a record 423.4 million square feet of industrial space under construction, the development pipeline will, in a certain respect, also function as an investment pipeline, offering new opportunities to investors hungry for industrial assets,” according to the Newmark report.