La Quinta Shallow Bay Warehouse_Property for Sale

1271 & 1282 La Quinta Drive, Orlando, FL 32809

La Quinta Shallow Bay Warehouse

Asset Description

Jones Lang LaSalle ("JLL") is pleased to exclusively offer the opportunity to acquire La Quinta (the "Property," "Portfolio," or the "Buildings"), an infill, shallow bay industrial portfolio consisting of two shallow bay warehouses totaling 61,200 SF with 5,400 SF of self storage in Orlando, FL. The Property is conveniently situated just 10 minutes away from MCO airport and provides exceptional accessibility to FL's Turnpike less than 5 minutes away. This central location enables users to conveniently serve Florida's major demand drivers, including globally-renowned theme parks, Orlando International Airport (FL's most traveled airport), and access to over 3.5 million consumers within a 60-minute drive.

The Building's functionality and convenient location have led to strong leasing performance as evidenced by an average downtime of 1.3 months, minimal concessions, and an average rental premium of 30% upon lease expiration. This strong property performance is supported by a diversified rent roll of 18 tenants with no tenant occupying more than ~8% and a average tenant size of 3,128 SF, catering to the deepest pool of tenant demand in Orlando and reducing major shifts in occupancy and cash flow.

This investment is further bolstered by the compelling shallow bay market fundamentals within the greater Orlando area. Currently, there is no competitive supply under construction or proposed and of 6,900 existing buildings within the MSA only 220 (3%) could accommodate tenant requirements less than or equal to 25,000. Further, more than 60% of all industrial leasing YTD in Orlando has been in spaces 25,000 SF or smaller. This supply and demand imbalance is even more acute for spaces <5,000 SF.

La Quinta Business Center offers a coveted opportunity to acquire an infill, highly functional multi-tenant industrial asset in one of the US's best performing markets at a discount to replacement cost, with strong current income, a dearth of competive supply, and potential for substantial value creation from above-market contractual escalations and continued rent appreciation.

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Attributes

Building area net

6,187 m²

Occupancy

89%

Year built

1973

WALT

2.23 years

Number of buildings

Media

Investment Highlights

Strong In-Place Cash Flow With Immediate Upside

Favorable lease terms with annual rent increases averaging 4.28%
NOI projected to grow 28% over the next 5 years
73% of tenants roll within the first three years

Compelling Orlando Shallow Bay Fundamentals

Currently, there is no competitive supply under construction or proposed and of 6,900 existing buildings within the MSA only 220 (3%) could accommodate tenant requirements less than or equal to 25,000.
Minimal concessions provided on recently signed leases which average 0.22 months of free rent and $0.21 Psf in TI’s.
Sub-3% vacancy for buildings less than 100,000 SF within the SE Orange submarket.
50%+ of all leases signed YTD in Orlando have been in spaces 25,000 SF or smaller.
Rising costs for land, construction, and financing have driven replacement cost to $230 PSF+. These cost increases help to reduce competitive supply and increase renewal probabilities within the sector.

Mark To Market Opportunity With Average In-Place Rents 10% Below Market

Roughly 2.2-Year WALT remaining allows investors to take advantage of record market rent growth which is projected at 21.7% over the next three years by Green Street, resulting in a substantial hedge to an inflationary environment.
Recent leases have averaged $16.50 PSF, a 15% premium to current in-place rents of $14.29 on average
Additional opportunity for future income growth through the lease up of available self storage suites.

Highly Functional Assets with Diversified Rent Roll

86% of the rent roll is comprised of spaces 2,000 SF or less providing for a varied rollover profile.
Ideal bay size relative to tenant demand in the submarket with 50% of leases done YTD < 25,000 SF
Combination of dock-high and grade-level loading offers optionality and the ability to cater to any tenant’s loading need.
Each unit is individually metered with built-out office and dedicated plumbing.