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PS Business Parks Pays $143M For NoVa Industrial Portfolio

The 15-building Northern Virginia Industrial Park in Newington, Va.

MRP Realty has found a buyer for its 19-property Northern Virginia industrial portfolio, three months after putting it on the market

PS Business Parks announced Monday it acquired the portfolio, consisting of two industrial sites in Newington and Springfield, for $143.3M. Transwestern's Gerry Trainor and Mark Glagola brokered the deal on behalf of MRP. 

The 1.1M SF portfolio includes the 15-building Northern Virginia Industrial Park in Newington and the four-building Fullerton Industrial Park in Springfield. The properties sit just off Interstate 95, about 4 miles outside the Beltway. 

MRP, in partnership with institutional investors advised by J.P. Morgan Asset Management, acquired the properties in 2015 for a combined $116M. It invested in renovations of the properties and brought the occupancy rate to 76%. Trainor said the investor appetite for this type of industrial property is "extremely strong." 

"There was a lot of interest," Trainor said. "We did a full, broad marketing campaign and, at the end of the day, there were five groups that were actively pursuing it very hard, and PS Business Parks was the high bidder." 

Glendale, California-based PS Business Parks already owned three Northern Virginia industrial parks. The latest acquisition, which was funded with 1031 exchange proceeds from three previous sales, brings its footprint in the market to 1.7M SF. The new owner plans to spend more money upgrading the properties to improve occupancy. 

"This acquisition enhances PSB's industrial presence in Northern Virginia," PS Business Parks CEO Maria Hawthorne said in a release. "The location is superb as it is adjacent to Fort Belvoir and just south of the Pentagon in a densely populated area with excellent access to transportation." 

The portfolio, roughly 13 miles outside of D.C., is branded as last-mile industrial, a highly coveted property type for e-commerce companies seeking to deliver to population centers. Last-mile product has become scarce as developers demolish warehouse properties in D.C. and the close-in suburbs to build multifamily and other uses, and high land prices in those areas make it difficult to build new industrial. 

PS Business Parks is unlikely to tear down the industrial buildings to construct multifamily itself, Trainor said. But given the strategy it has taken with other properties, and the area's growing population, he could see it potentially selling portions of the site to a residential developer in the future. 

"This product is not going to be torn down in the next five years, but if you look out 20 years, there's a good chance it will be," Trainor said.