A global snack giant sold two of its Los Angeles industrial properties to the world’s largest logistics landlord in one of the region’s priciest industrial trades in recent months.
Purchase, New York-based PepsiCo offloaded a pair of Southern California facilities tied to its Frito-Lay brand to San Francisco-based Prologis for a combined $90 million. The properties are a 71,000-square-foot warehouse at 16701 Trojan Way in La Mirada, which traded for $48 million, and a 46,000-square-foot manufacturing facility at 14600 S. Proctor Ave. in City of Industry, which sold for $42 million.
At $765 per square foot, the portfolio deal price is a nearly 150% premium on the greater Los Angeles average sale price of $314 per square foot for industrial property, according to CoStar data.
The transaction is a notable one for Los Angeles as the industrial real estate sector works to recover from a post-pandemic demand decline. The regional vacancy rate climbed to 6% in the past year, up from 5%, as tenants gave back 6 million more square feet than they leased, CoStar data shows. The nation's industrial vacancy rate climbed to 7.1% from 6.2% a year ago, with "clear potential" for that rate to peak this year, according to CoStar market analytics.
Economic uncertainty and looming tariffs on Chinese goods have also caused some industrial users and landlords to rethink their growth strategies.
Prologis has previously said it expects warehouse demand to accelerate this year, despite potential tariffs. Since most logistics real estate is located close to consumers, e-commerce growth, supply chain modernization and consumption patterns affect warehouse demand more than trade policies, the firm said in January. The company reports first-quarter earnings on Wednesday.
Strategic sales
The sale fits into PepsiCo’s broader long-term strategy of monetizing industrial real estate while investing in next-generation manufacturing and logistics infrastructure. Over the past five years, the company has sold 50 industrial properties totaling 3 million square feet and generated $671 million in proceeds, according to CoStar.
“While Pepsi has been active in developing its own real estate, their disposition of assets outpaces acquisitions handily,” said Jesse Gundersheim, senior director of market analytics for Los Angeles at CoStar.
PepsiCo’s purchases in the same period have been more selective — about 10 properties totaling under half a million square feet of existing space, along with several land sites bought for future development.
On the other side of the table, Prologis continues to be one of the most active buyers in greater Los Angeles. The San Francisco-based REIT increased its acquisition guidance last year to as much as $2.3 billion with a focus on acquiring properties in major coastal and infill logistics markets.
The two companies have become familiar counterparts. In 2018, Prologis bought a 10-acre Pepsi bottling plant in Seattle for $65 million. In 2020, it purchased a Frito-Lay warehouse in Ridgewood, Queens, New York, for $37.5 million. Most recently, in 2023, Prologis acquired a Pepsi bottling plant in Nashville, Tennessee, for $28 million.
Even as it sheds legacy facilities, PepsiCo is investing in large-scale, modern sites to support its long-term manufacturing needs. It is developing a 1.2 million-square-foot manufacturing plant at 6972 Argonne St. in Denver. Meanwhile, Prologis recently completed a facility for Pepsi at 2020 Midway Lane in Smyrna, Tennessee, outside Nashville.