Atlas Capital is advancing further in Los Angeles, this time with plans to convert a South Bay office campus into an industrial complex.
The Manhattan-based firm paid $39.8 million for an expansive 5.4-acre office site in the Harbor Gateway region. The property at 19401 South Vermont Avenue includes 12 office buildings with 94,113 square feet, but it’s zoned for maximum buildable floor area ratio in one of the tightest industrial markets in the country.
Newmark announced the deal and represented the seller, Harbor Gateway LLC.
“Given the industrial zoning and immediate access to the multiple major freeways, the offering represents an excellent opportunity to redevelop the existing, older office project into a Class A industrial product in the highly desirable Torrance submarket once short-term existing leases expire,” Newmark’s Kevin Shannon said in a statement.
Office-to-industrial conversions are becoming more popular as developers look to take advantage of the sky-high demand for warehouse space. Newmark’s research shows at least 49 office properties converted nationwide since 2018, with 2.1 million square feet of such space converted in L.A. alone between 2018 and 2021. New construction in L.A. remains the primary vehicle to satisfy tenant demand in a market where vacancy is below 1 percent.
“With Los Angeles industrial rents for Class A product increasing over 60 percent these last four quarters, industrial land values have really exploded while opportunities for new development remain scarce,” Newmark’s Scott Schumacher said.
Earlier this year, Atlas sold a development with 146,765 square feet near the Vermont Avenue location to Rexford Industrial Realty for $64.3 million. Atlas is also redeveloping the former L.A. Times printing plant in Downtown L.A. into a 26-acre soundstage and office complex for the entertainment industry. The firm owns creative office buildings around the county, too.
Newmark’s Shannon and Schumacher represented the seller of the Vermont Avenue office property, along with Ken White, Bret Hardy, Jim Linn, Andrew Briner, John McMillan and Danny Williams. It wasn’t immediately clear who represented the buyer.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.