Fast-growing discount apparel chain Burlington shelled out $257 million for its distribution hub in California's Inland Empire, the priciest deal for the retailer as it takes control of its leased real estate across the country.
The company bought an 890,000-square-foot industrial warehouse in Riverside from BlackRock for roughly $289 per square foot. The deal for the property at 21600 Cactus Ave. marks the largest industrial real estate sale in Southern California in over a year by both price and size, according to Jesse Gundersheim, CoStar Group’s senior director of market analytics for Los Angeles.
The purchase reflects Burlington’s shift toward ownership of its logistics property network, a strategy intended to reduce operating costs and better control long-term capital investments. The Inland Empire deal is the company’s second major acquisition this year, following a similar buy near the Port of Savannah in Georgia, and the third total for the firm as it buys its real estate.
Of the deals it has made in that push, the Southern California one is by far the largest.
Burlington is leaning into the ownership of industrial space as it grows its leased store portfolio to reach more customers. The company opened 101 new stores in fiscal 2024 and relocated 31 oversized locations. As its network grows, controlling distribution has become critical to managing cost and performance, executives say.
“We’re redesigning how merchandise flows within [distribution centers], automating select processes and ultimately reducing touches and time to process merchandise and saving labor dollars,” said Kristin Wolfe, Burlington’s executive vice president and chief financial officer, during the company’s third-quarter earnings call.
Users edge out institutions
BlackRock acquired the site in 2017 from Lewis Commercial for $117 million and opened the sprawling distribution hub in 2019, the same year Burlington moved into the property.
The Cactus Avenue site includes 40-foot clear heights and 220 dock doors — features that support large-scale distribution and are difficult to replicate in newer developments without major investment.
“Deals of that size are typically dominated by institutional investors, but users have taken a larger portion of investment opportunities in the market recently,” Gundersheim said.
Industrial sales nationally have picked up after a slowdown, but the Inland Empire remains in recovery mode with sales volume down 19% year over year, while average prices are up just 1% in the last year, compared to a 4% U.S. increase, according to CoStar.
Not every investor is convinced that now is the right time to bet on ownership in the region. REITs, historically the leader of Inland Empire deals, have pulled back, representing only 6% of buyers in the last year, down from 10% over the past decade, Gundersheim said.
User-owner deals have helped to elevate industrial demand in the Inland Empire, according to Colliers Vice Chair Mark Zorn, who represented Burlington in the transaction. The amount of square footage leased topped 10 million for the third straight quarter in the fourth quarter of 2024, Zorn said.
With the Inland Empire deal in March, Burlington owns three of its 12 distribution centers. Its previous acquisition came in January, when it paid $205.5 million for a 2 million-square-foot distribution hub under construction near the Port of Savannah — one of the busiest shipping gateways on the East Coast.
Other retailers are adopting similar strategies. In March, Target paid $231 million for a 530,000-square-foot warehouse near Denver, expanding its footprint in one of the region’s densest logistics corridors. It also owns a nearly 1 million-square-foot distribution center in Pueblo, Colorado.
Users like Burlington accounted for 22% of the Inland Empire's industrial buyers in the past year, up from a historical average of 13%, according to CoStar. As institutional capital takes a more cautious approach, users are stepping in to lock in long-term control of key assets.
For the record
Along with Zorn, Colliers Vice Chair Cory Whitman led the disposition process on behalf of the buyer. CBRE represented the seller.