State Street Flex - Value Add Opportunity

Investment Overview

State Street Flex has been held by a family trust for many years. For much of that period no leasing agent was assigned and vacant space was not actively marketed. It stands 48% vacant today. An agent was engaged in mid-2026 and has since signed multiple leases upwards of $1.31/SF. The surrounding market is tight. Per CoStar, Hemet and San Jacinto contain 4.2 million SF of industrial/flex space at an approximately 2.1% vacancy with nothing currently under construction, within a broader 9.5 million SF commercial market at 6.9% vacancy. The $61/SF basis sits below replacement cost and includes 1.55 acres of separately parceled, heavy manufacturing–zoned land to which no value has been attributed. 43,088 SF is available to lease. At the $5,410,000 asking price plus approximately $830,000 for tenant improvements, leasing commissions, and building/site work, stabilizing at 90% occupancy and $1.14/SF on average, produces roughly $821,000 of net operating income — a 13.17% yield on the total capitalized basis (purchase price + cost to stabilize), and a value of approximately $10,950,000 at a 7.50% exit cap.

Investment Highlights

• Textbook Value-Add Opportunity: With a current occupancy of 52% and low in-place rents averaging $0.93/SF gross, the asset features significant room for increased NOI and value creation.
• 13.17% Proforma Yield: If leased to 90% occupancy at an average lease rate of $1.14/SF gross, the property features an estimated proforma NOI of $821,000, translating to an 13.17% performance yield. At an estimated 7.50% exit cap rate, a conservative proforma exit value is approximately $10,950,000 ($123/SF), providing upwards of $5M in upside potential, not including the potential value of the additional land.
• Low Cost Basis - Far Below Replacement Cost: Priced at an attractive $61/SF, investors are provided with a cost-effective entry point compared to developing new industrial-flex/commercial property (currently estimated at $300 to $400/SF, not including land cost) or compared to acquiring other existing commercial assets at significantly higher price points per square foot.
• Multiple Paths to Create Value: Including the lease-up of the existing 48% of vacant space, development or sale of the additional 1.55 acres of land (which is included in the sale and already separately parceled), or piecing off individual portions of the property and selling them separately at a higher price per square foot.
• Multiple Exit Strategies: Upon stabilization, one could potentially sell the property and conservatively realize an estimated profit of $5 million or more, or refinance to recover the initial investment while retaining ownership of the asset, creating a stream of cash flow with likely none of their initial equity remaining in the deal. At 65% LTV on a $10,950,000 valuation, an investor could achieve approximately $7,200,000 in loan proceeds (recovering their entire initial investment) and retain ownership of the asset with significant cash flow generated with no remaining equity in the property.
• Significant Recent CapEx Investments: Including new “Enviro-White” reflective elastomeric acrylics roof coatings over all 4 flat roofs (remaining 6 roofs are steel).
• ±1.55 Acres of Additional Land at Virtually No Cost: No value has been attributed to the land as a part of the asking price. The land is separately parceled and could be sold separately to lower one's basis in the property, it could be developed into heavy manufacturing/industrial as currently zoned, or it could potentially re-zoned to another use.
• Small, Versatile Flex Space with Large Tenant Pool: With an average space size of under 1,000 SF, the industrial flex design allows for a diverse mix of tenants, appealing to a broad number of businesses across sectors such as light to heavy manufacturing, warehousing, office uses, retailers, automotive, service providers, and more.