A Los Angeles nutrition company that sells everything from vitamins to protein drinks is marketing a different product: commercial real estate.
Herbalife wants to part ways with Herbalife Plaza, its roughly 186,000-square-foot Los Angeles property at 950 W. 190th St., according to marketing materials. Meanwhile, the nutrition company has started an application process to allow for the development of approximately 195,000 square feet of new industrial space on the property.
Herbalife is marketing Herbalife Plaza as a sale-leaseback opportunity with the company leasing back the existing office building for two years with two, six-month options to extend, according to marketing materials. Replacing the office space with industrial space would begin when Herbalife leaves the property in two to three years.
A representative from Herbalife didn't respond to an emailed request to comment from CoStar News.
Rafael De Anda, associate director of CoStar Market Analytics, said the industrial conversion of Herbalife Plaza makes sense. The building is located in the Torrance submarket near the ports of Long Beach and Los Angeles, the nation's busiest, which drive demand for industrial real estate. In addition, the property sits near several major highways including Interstates 405 and 110, making it attractive for industrial development, he said.
Industrial Supply Scarce
"There's scarcity of new and large industrial buildings in the Torrance submarket, potentially making redevelopment plays more rewarding," De Anda said.
The Torrance industrial market currently has no industrial space under construction, according to CoStar data. The market's average rent is $20.06 per square foot, above the greater Los Angeles average of $19.10 per square foot.
Meanwhile, the 190th Street corridor office market that includes Herbalife Plaza has an average rent of $34.73 per square foot, well below the greater Los Angeles average of $41.55 per square foot. The market's office vacancy rate is 19.7%, above the greater L.A. average of 15.4%.
Herbalife's decision to sell the office is the company's latest attempt to trim its real estate footprint. In July 2022, Herbalife commenced planning to leave its downtown Los Angeles offices and move its employees to Herbalife Plaza. The company bought Herbalife Plaza in April 2016 for $29.6 million, or about $159 per square foot, according to CoStar data.
Herbalife reported $3.6 billion in net sales in the nine-month period ending Sept. 30, down from $3.7 billion from the year-prior period, according to a Securities and Exchange Commission filing.