Faropoint Acquires Inland Empire Portfolio
The four buildings in Ontario traded for nearly $64 million.
Faropoint has acquired a multi-tenant industrial portfolio in Ontario, Calif., for a reported $63.6 million, adding to its Southern California holdings.
The 243,394-square-foot portfolio, built in 2006 by Panattoni Development, includes four Class A buildings. The space in the strong Inland Empire industrial market traded for $261 per square foot.
The assets are located at 12580 Philadelphia (32,147 square feet), 2260 Archibald (38,441 square feet), 1930 Rochester (144,591 square feet) and 1920 Rochester (28,215 square feet).
The buyer plans to implement multiple capital improvements, including roof maintenance, HVAC replacements and interior upgrades. Panattoni Development constructed the properties in 2006.
“This is a very strong transaction for the market,” JLL Senior Vice President Jay Cuccia told Commercial Property Executive. “Tenant demand for small-bay buildings has remained consistently strong in the Inland Empire West. These particular properties are best-in-class multi-tenant buildings. The construction cost associated with building these types of properties in the current construction climate is substantial, strengthening the opportunity’s value and position.”
The shallow-bay warehouses are near Ontario International Airport. The properties are also close to interstates 10 and 15, as well as U.S. Route 60.
At the time of sale, the portfolio was 97.6 percent leased to 29 companies. Features include clear heights ranging from 20 to 25 feet, 150-foot shared truck courts, as well as front- and rear-load configurations.
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“The four buildings have been institutionally owned and managed since their development,” Harold Levy, vice president of acquisitions, Los Angeles, for Faropoint, told CPE. He pointed to their location in the most sought-after submarket within the Inland Empire. Ontario International Airport and major transportation routes including I-15, I-10 and Route 60 are nearby.
Levy said this portfolio is a good example of Faropoint’s investment thesis, which focuses on small to midsize industrial buildings with excellent functional characteristics. “Dock and grade loading in suites below 20,000 square feet are supply constrained and sought after by tenants, as evidenced by less than 2.5 percent vacancy rates in the Inland Empire West,” he said.
Multi-tenant building configurations are more expensive to develop and have higher replacement costs than their larger single-tenant peers. “As a result, there has been minimal development of smaller industrial buildings following the 2008 financial crisis,” Levy said. “Faropoint believes (these property types) are inherently supply constrained in nature and have less risk concentration than larger industrial buildings.”
The deal marked Faropoint’s second purchase in Southern California. The firm entered the market in March when it paid $10 million for a 35,956-square-foot asset in Torrance, Calif., according to CommercialEdge data. That facility is about 20 miles from downtown Los Angeles.
Faropoint specializes in last-mile facilities, and since its inception in 2012, it has acquired more than 500 assets totaling an industrial investment volume north of $3 billion. Set out to further expand its portfolio of urban warehouses, the company closed the Industrial Value Fund III last June with $915 million in commitments.
The firm operates in 16 U.S. markets, including Jacksonville, Fla., and Memphis, Tenn., two metros where Faropoint expanded by purchasing a 16-property portfolio for $105 million last year. In December, Faropoint announced plans to develop the Joyce Kilmer Logistics Center, a two-building Class A industrial project in New Jersey’s Exit 9 submarket. The delivery forecast for the smallish asset is by the fourth quarter of 2026.
Inland Empire investment off to a slow start in 2025
Against the backdrop of looming tariffs, investors weren’t quick to bet on the Inland Empire during the first two months of the year. The transaction volume stood at just $7 million, according to the latest CommercialEdge report.
However, assets in the metro changed hands for $153 per square foot, well above the $127 national average. Among Western markets, Orange County took the lead with properties commanding $340 per square foot, followed by the Bay Area ($292 per square foot).
In the first quarter of 2025, overall industrial vacancy in the Inland Empire West market was 4.7 percent, with 2.2 percent vacancy for assets less than 20,000 square feet.
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