Duke Realty Corp., which last month agreed to be acquired by Prologis, is plowing ahead with investment and development plans for Southern California, a critical market for the company, where roughly one-fifth of its portfolio is located.
The Indianapolis-based real estate investment trust recently completed four projects in Long Beach and Fontana and has 2.1 million square feet under construction. It plans to build another 1.5 million square feet of industrial space this year in Southern California, according to a statement. In all, Duke said it plans to invest $500 million in Southern California, where it has a portfolio of roughly 19 million square feet, in 2022.
The recently completed projects are a three-building development in Long Beach that includes the 73,000-square-foot building at 2861 Orange Ave., the 49,000-square-foot development at 2851 Orange Ave. and the 40,850-square-foot 1180 Spring St. Duke also wrapped construction on a 173,000-square-foot building at 10905 Beech Ave. in Fontana.
Looking ahead, Duke has about nine projects under construction in Southern California, including three larger than 300,000 square feet each. Those projects are a roughly 530,000-square-foot development at 13131 Los Angeles St. in Irwindale, a 331,000-square-foot development at 23840 Rider St. in Perris and a 304,000-square-foot development at 1865 Mountain View Ave. in Redlands.
Duke has been the fourth-most active buyer of industrial space so far this year in the L.A. region, with roughly $142 million in acquisitions, or about 3% of the area's total sales volume, according to CoStar data.
Nancy Shultz, president of Duke Realty’s West Region, told CoStar News the company wants to invest in Southern California due to the growth in e-commerce and demand coming from supply chain issues and businesses needing to maintain inventory levels.
"Warehouses are at capacity and companies need more modern, conveniently located facilities to meet consumer needs. The demand and difficulty in getting development product out of the ground has exacerbated a supply-and-demand imbalance," she said.
The greater Los Angeles industrial market is one of the most in demand in the U.S. due to its proximity to the ports of Long Beach and Los Angeles, the nation's busiest. The market's average annual asking rent is $17.21 per square foot, up from $15.11 one year ago, according to CoStar data. The market's average vacancy is 1.9%, down from 2.31% one year ago.
In June, San Francisco-based Prologis, the largest U.S. industrial REIT, said it was buying Duke for $26 billion. That deal is expected to close in the fourth quarter.