What is the story about?
What's Happening?
BKM Capital Partners, in collaboration with Kayne Anderson Real Estate, has acquired an 889,352-square-foot light industrial portfolio in Phoenix for $167.9 million. The portfolio consists of eight properties with 364 units across 41 buildings, primarily located in the Airport and Tempe submarkets. This acquisition increases BKM's Arizona portfolio to approximately 4.5 million square feet across 27 properties. The properties are nearly 90 percent occupied and offer a 22 percent mark-to-market opportunity on rents. BKM plans to implement value-add projects, including physical upgrades and strategic reconfigurations, to meet tenant needs and improve service delivery.
Why It's Important?
The acquisition by BKM Capital Partners highlights the growing demand for functional, small-bay industrial spaces in Phoenix, a market evolving into a high-tech manufacturing and logistics hub. With leasing activity surging and new construction slowing, small-bay assets are experiencing increased demand and higher rents. This transaction provides BKM with critical mass and operational flexibility in one of the nation's top industrial markets. The investment aligns with the joint venture's strategy to target value-add opportunities in middle-market areas, potentially benefiting tenants and investors through enhanced property management and capital improvements.
What's Next?
BKM plans to transform select larger units into smaller, high-demand configurations and invest in capital improvements such as roof replacements and HVAC upgrades. The firm will provide onsite property management to drive tenant retention as rents are marked to market. The acquisition was completed at a significant discount to replacement costs, offering BKM a rare opportunity to acquire diverse infill assets. As the Phoenix market continues to grow, BKM's strategic investments may further solidify its position in the industrial real estate sector.
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