A joint venture between publicly registered, non-traded real estate investment trust (REIT) Strategic Storage Trust Inc., self-storage real estate developer Westport Properties, and a fund called USA Hawthorne LLC has sold a 510,000-square-foot building in Hawthorne, Calif., that was originally earmarked for storage, according to a press release. Purchased by an unnamed, publicly traded REIT for $46.7 million, the office and industrial facility is leased entirely to Space Exploration Technology Corp. (SpaceX), a space-launch services provider.
SpaceX moved into the building at 1 Rocket Road in 2007 and is under lease until 2023, with two additional five-year renewal options, according to Strategic Storage Trust officials.
"This property was part of the Northrup campus in Hawthorne, Calif., and was acquired for the purpose of redeveloping the building into an indoor RV- and boat-storage facility," said H. Michael Schwartz, chairman and CEO of Strategic Storage Trust. "However, when the opportunity arose to lease the entire facility to SpaceX for their corporate offices and the development of rockets, we quickly changed courses to everyone's benefit—the tenant, SpaceX and for our investors."
SpaceX has invested its own capital into the building, creating an open floor plan and a glass-walled mission-control center that monitors and directs launches and flight missions, among other improvements. The company is also planning a $40 million parking structure across the street from the facility, according to the release.
"With historically low vacancy rates in this Los Angeles submarket, combined with the aggressive cap rates [that] quality, single-tenant industrial buildings are trading at, we felt this was an ideal time to sell this unique asset," said Charles Byerly, president and CEO for Westport Properties. “Considering the sale was not without mixed emotions for our entire team, it was very exciting to indirectly be a part of SpaceX's historic journey."
The SpaceX building location is attractive due to its proximity to the Hawthorne Municipal Airport, freeways, Los Angeles International Airport, and the ports of Los Angeles and Long Beach.
Founded in 1985, Westport Properties is a full-service real estate company specializing in self-storage properties. An affiliate of US Storage Centers, the company owns and operates 85 storage facilities in 12 states. Its portfolio of owned and managed properties comprises approximately 5.5 million square feet in more than 50,000 storage units.
Strategic Storage Trust was launched in 2008 and operates a portfolio of 126 self-storage facilities in 17 states and Canada. Branded as SmartStop Self Storage, the properties comprise approximately 80,000 units and 10.5 million rentable square feet of storage space.