Newport Beach-based investment firm BKM Capital Partners is expanding its presence in the small-bay industrial and commercial property sector. The firm secured the fully let Goldenwest Circle Business Park in California's Orange County for 62 million US dollars. The purchase price for the approximately 231,000-square-foot site equates to around 268 dollars per square foot.
The property is located in Westminster, a city situated between Anaheim and Huntington Beach. Although BKM did not officially disclose the vendor, PropertyShark records identify Link Logistics, Blackstone's logistics platform, as the previous owner. The site comprises twelve buildings across an approximately 12.3-acre plot directly east of Interstate 405 on Bolsa Avenue.
Structured space and planned repositioning
The business park provides a total of 36 units ranging in size from 1,700 to 20,000 square feet, representing an average of around 6,400 square feet. The warehouses offer clear ceiling heights of 14 to 20 feet, grade-level loading and parking bays for heavy goods vehicles. The largest tenant on site is Huntington Beach Harley-Davidson with its own dealership. Additional units are leased to companies operating in production, distribution, retail and business services.
Brett Turner, Partner and Chief Investment Officer at BKM, noted that direct motorway access in this part of Orange County is exceptionally rare and that properties of this type seldom come to market. He added that the acquisition at a substantial discount to replacement cost provides the company with the necessary headroom to reinvest in the established location. BKM intends to refurbish and reposition the park, though it did not disclose the size of the planned investment budget.
Shortage drives demand for small commercial space
The acquisition comes at a time when smaller commercial units in Orange County are outperforming large-scale spaces significantly. Restrictive construction activity and rising building costs are noticeably curbing new supply. According to research by CBRE, the vacancy rate for small-bay business parks stood at 5.7 per cent in the second quarter. For properties under 25,000 square feet, vacancy was as low as 3.2 per cent, whereas assets between 100,000 and 199,000 square feet registered a vacancy rate of 15.2 per cent. In the Garden Grove submarket, which includes Westminster, the rate stood at 5 per cent.
Brian Malliet, Founder and Chief Executive Officer of BKM, pointed out that high land and building costs now make the development of new small commercial space at economically viable rents virtually impossible. In addition, older multi-tenant parks in Orange County are increasingly being replaced by data centres, corporate campuses or mixed-use districts. Since its establishment in 2013, BKM has acquired almost 40 million square feet of commercial property with a total value of 8 billion dollars. The current transaction was led internally by Brett Turner and Michael Grossner, whilst Darla Longo from CBRE advised the vendor.
