Success with its first local acquisition in industrial real estate helped convince Los Angeles-based Rising Realty Partners to make a second one.
The firm closed escrow earlier this month on South Point Business Park, a four-building property of 84,000 square feet in South Sacramento, at 6520-6600 44th St.
“We’re bullish on the Sacramento market fundamentals,” said Scott Word, a principal in industrial investment for Rising Realty. “Once we plant a flag in a market, we’ll try to expand our brand there.”
Records show Rising Realty paid $9.75 million for South Point, built between 1985 and 2005 and currently 78% leased. Word said rents at the property, which has 10 current tenants, are about 25% to 35% below market rate.
Rising Realty secured capital for the purchase through RealtyMogul and the Rising Investor Platform, which allows accredited investors to partner with Rising Realty in asset ownership.
Earlier this year, Rising Realty paid $21.9 million for nearby Alpine Industrial Park, a larger but otherwise similar industrial property to South Point. That property was 83% leased at the time of sale in February but is now fully leased, Word said, a good sign for leasing prospects for South Point.
ARB Investments, with an address is Colusa, is listed as the seller for South Point. A message left for a representative of ARB was not returned this week. According to real estate data service Reonomy, ARB Investments bought the property in 2016 for $6.75 million.
Though the budget is still being worked out, Rising Realty plans to spend some additional dollars on cosmetic upgrades to South Point, such as landscaping and exteriors, he said.
Also, a 16,000-square-foot building in the park will be divided into smaller, move-in-ready suites of 2,000 to 4,000 square feet each.
Word said he believes there’s market demand for space in that size, noting overall industrial vacancy in the Sacramento region is around 3%. The majority of the new construction has been for large distribution centers in places like Metro Air Park and West Sacramento, leaving smaller tenants with few options, he said.
“We believe there’s a bit of an imbalance between supply and demand,” Word said, adding, “what we’ve learned through the acquisition process is that the tenants here are compelled to stay and looking to expand.”
That’s also true for Rising Realty, which is looking to further add to its local holdings, he said.
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