BKM Capital Partners Acquires 9-Building Small Bay Light Industrial Property in Tempe, AZ for $17.4M

Milestone 100th Transaction Brings AUM to $2.3B, With 10.8 MSF Across 6 States

Tempe, AZ—August 19, 2024—BKM Capital Partners, a vertically integrated institutional fund manager, has completed the $17.4-million acquisition of Ash Business Center, an 89,728-square-foot small-bay industrial facility in Tempe, AZ. The deal represents BKM’s 100th acquisition since its inception a decade ago.

Since 2013, the Newport Beach-based real estate fund manager and operator has completed $3.6 billion worth of transactions involving 18 million square feet of small and mid bay industrial space in the Western U.S.

Last year was particularly active for BKM, which invested more than $575 million in 11 strategic acquisitions across 15 properties. The firm also added 20 new staff members and executed over two million square feet of leasing. The momentum continued well into 2024, with Ash Business Center bringing BKM’s acquisitions total to $800 million and more than 4.2 million square feet of space in 17 transactions since 2023.

“As a longtime strategic investor, BKM has always maintained a bullish outlook on the light industrial sector, even when market conditions prompted others to pull back,” says Brian Malliet, BKM’s CEO and CIO. “While market conditions kept a lot of others on the sidelines, we remained steadfast in our approach, continuing to identify and acquire value-add opportunities in our core markets. Our commitment to this strategy has paid off, enabling us to aggressively expand our portfolio and solidify our position as one of the most active and largest players in the space. The momentum we've built is evident in our ongoing acquisitions well into 2024, and we're excited to see where this trajectory takes us.”

Located at 4666-5010 S. Ash Ave. in Tempe, Ash Business Center consists of nine light industrial buildings housing 89,728 square feet of space. Built in 1986, the park features 16 units averaging 5,608 square feet, 16- to 18-foot clear ceiling heights, 16 grade-level doors and ample parking. The property previously underwent a large overhaul of both the exterior facade and select interior suites, utilizing periodic vacancies to produce high-quality spaces that would appeal to Downtown Tempe’s dense population centers and providing necessary upgrades to the property’s operational efficiency, curb appeal and overall value.

“We have seen exceptional growth in the Phoenix market in the past few years, creating yet another fantastic opportunity for BKM to deploy its proven investment thesis onto a high performing asset,” says Brett Turner, BKM’s Senior Managing Director of Acquisitions and Dispositions. “Although the property is at near-full occupancy, we feel there’s more value to be extracted given the market’s high trailing rent growth.”

BKM intends to take advantage of the asset’s 2.8-year WALTs and consistent tenant demand for infill small-bay projects to correct the existing 22% market deficiency in rents. The firm also plans to reduce the property’s share of office space as leases roll to deliver more functional suite layouts sought after by high-profile industrial tenants.

In addition to Ash Business Center, in 2024 BKM acquired North Cabot Industrial Park, a 51,038-square-foot property in Hayward, CA; the 375,429-square-foot Columbia Commerce Park in Portland, OR; the 140,693-square-foot PDX Distribution Center in Portland, OR; the 198,728-square-foot Canyon Industrial Park in San Diego, CA; the 100,375-square-foot Baseline Business Park in Tempe, AZ; and Production, a 222,794-square-foot park in San Marcos, CA.

A DECADE OF UNPRECEDENTED GROWTH

Founded by Brian Malliet in 2013, BKM has emerged as a leading institutional fund manager and operator of multi-tenant, small-bay light industrial assets in the Western U.S. Whereas significant capital has historically focused on larger, big-box logistics-focused facilities, “I wanted to take an institutional approach to a segment of the market that had historically been overlooked and undervalued,” explained Malliet. “By leveraging the fragmented and somewhat localized nature of the sector, we were able to uncover opportunities to create value for investors via our niche expertise and sophisticated management approach.”

The tactic has proven to be effective thus far. Having started out with just two employees and five assets worth $77 million, BKM has grown its assets under management by over 2,902% over the past decade. Today, BKM is a 90+ member operation that owns or has interests in $2.3 billion in assets, covering 10.8 million square feet across Arizona, California, Colorado, Nevada, Oregon, Texas, Utah, and Washington.

BKM’s investment strategy capitalizes on identifying underperforming properties located in high barrier-to-entry markets with in-place rents that are considerably below market rates. These factors create a conducive environment for rapid property-level NOI growth without relying on future market rent growth, or exposure to potential oversupply scenarios—both factors that are playing out in the current environment.

BKM has invested significant effort and resources into preparing for its next phase of expansion, focusing on strategic investment opportunities that align with its core expertise. “The small-bay industrial sector is experiencing significant momentum, and we believe this is just the beginning of a sustained upswing. Market activity is increasing, values are strengthening, and we are fully committed to our investment strategy. Our deep focus on this product type, coupled with our disciplined approach and industry-leading technology, positions us perfectly to seize the opportunities emerging in this vibrant market. As transactions continue to accelerate, we're excited to drive further value for our investors and expand our presence across the Western U.S.”