A massive new freezer warehouse has sold for $91.5 million in Riverside, Calif., where the vacancy rate for cold storage is approximately 2%.

Cole Real Estate Investments purchased the 496,000 sq. ft. structure from the developers, Dexus Property Group and USAA Real Estate Co. Completed earlier this year, the building is certified by the U.S. Green Building Council for Leadership in Energy and Environmental Design for New Construction (LEED NC). Fulmer Construction built the warehouse using designs by HPA Architects.

The warehouse is fully leased to Wal-Mart with 15 years remaining on the term, plus renewal options. The triple net lease means the tenant is responsible for nearly all of the building’s expenses in addition to a base rent. Castle & Cooke Cold Storage manages the property for Wal-Mart.

Features of the cross-dock building include 60,000 pallet positions and an equipment penthouse on the roof, a design that offers maximum use of the cubic storage space available below. The building also features 97 dock-high doors, specialized load levelers, a large yard for trailer storage and 10,000 amps of power.

The warehouse is a good investment owing to its location in the Inland Empire, where large-scale distribution space is virtually full, according to Robert Micera, Cole’s chief investment officer for office and industrial. Refrigerated warehousing is indispensible to tenants that move frozen goods, he adds.

“Combined with the outstanding creditworthiness of the tenant, long-term lease, newness of the facility and demand for cold storage warehouses, this acquisition fits Cole’s conservative, disciplined investment strategy,” says Micera.

Phoenix-based Cole is a commercial real estate company that owns retail, office and industrial properties. Cole and its associated entities own and manage approximately 49 million sq. ft. of commercial real estate in more than 1,450 properties in 46 states. The combined cost to acquire those properties was more than $8.3 billion.

The prohibitive cost of construction associated with refrigerated buildings means there is almost no speculative market for this type of space, according to Darla Longo, a broker at CB Richard Ellis. Longo was part of a team at CB Richard Ellis that represented USAA Real Estate in the transaction.

The cold storage market in the Inland Empire is essentially full, according to Longo, who estimates the Inland Empire’s vacancy rate in the property type to be 2%. “The food industry is one of the most rapidly growing industries in the economy,” says Longo. “Yet the vast majority of the cold storage warehouse supply is older, functionally obsolete, mechanically inefficient and in need of repair and replacement.

“This newly constructed facility has significant long-term residual value, providing unmatched function and strategic access to the prestigious Southern California consumer market and the larger Western region,” she says.

Boyd Messmann, senior vice president of acquisitions at Cole, negotiated the acquisition for his firm. Working with Longo to represent the seller were Barbara Emmons, Jack Fraker, Josh McArtor, Rebecca Perlmutter and Art Rasmussen of CB Richard Ellis.

USAA Real Estate manages a multi-billion dollar portfolio of office, industrial, multi-family, retail and hotel properties as well as investments in real estate operating companies. Its recent activity includes acquisitions amounting to $3 billion and $2 billion of development.