The Magellan Group intends to demolish a 21,000-square-foot South Los Angeles light manufacturing complex it acquired last month and replace it with a sprawling “state of the art” self-storage facility, according to records filed with the Los Angeles City Planning Department.
In December, the Century City-based real estate investment and development firm paid $7.35 million for the site located at West 25th Street and Broadway. It plans to replace the existing structures with a 109,000-square-foot storage facility featuring 24-hour digital surveillance and controlled access. Such complexes comprise the heart of Magellan’s industrial portfolio.
This latest site — in the heart of historic South Los Angeles — is located in one of the so-called Opportunity Zones created by President Donald Trump’s 2017 tax plan. Over 8,700 such zones have been created across the country. Developers who undertake projects in them can realize significant tax benefits by investing their capital gains in the designated census tracts.
The zones have not been without controversy, and a group of Democratic lawmakers, including New Jersey Sen. Cory Booker, have requested that the Treasury Department’s internal watchdog investigate allegations that a site in Nevada was designated an opportunity zone because a Trump supporter planned a project there. According to data gathered by the accounting firm Novogradac, at least $7 billion has been invested in Opportunity Zones since the program went into effect.
Magellan’s founders and principals, Kevin Staley and Martin Slusser were formerly partners in the Trammell Crow Co. During his time there, Staley oversaw the highly successful development of the Citadel, a former rubber manufacturing site, in the City of Commerce.
Overall, demand for industrial properties has been strong in L.A., in particular the Inland Empire, which has been at the center of much of the expansion. The appetite for distribution and last-mile centers helped push the local industrial market to the lowest vacancy rate of any major market in the U.S., according to a third quarter report from Cushman & Wakefield. Even with the addition of new industrial construction in L.A., vacancy isn’t expected to rise beyond 4 percent, according to the report.
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