BKM Capital Partners and Kayne Anderson Acquire 890K-SF Phoenix Light Industrial Portfolio for $167.9 Million

Large-Scale Acquisition Expands BKM’s Arizona Footprint to 4.5 MSF, Firm Surpasses $3 Billion in Assets Under Management

Elwood Industrial Park | Phoenix, AZ

Newport Beach, CA—September 9, 2025—BKM Capital Partners, a vertically integrated institutional fund manager specializing in multi-tenant light industrial real estate, and Kayne Anderson Real Estate, the real estate investment arm of Kayne Anderson, have acquired an 889,352-square-foot portfolio in Metro Phoenix. The $167.9-million acquisition, which involves 8 small-bay properties in the top-performing Airport and Tempe submarkets, also brings BKM’s total assets under management to more than $3 billion as the firm expands it national footprint.

The transaction was completed at a significant discount to replacement cost, creating a favorable all-in basis relative to recent comps. An affiliate of Equus Capital Partners, Ltd.  sold the portfolio, which features 364 units in 41 buildings that are collectively 89% occupied by a diverse array of tenants.

“This was a rare opportunity to acquire a diverse collection of infill assets across Tempe and Phoenix, each with its own path to value,” said Brian Malliet, BKM’s Founder, CEO, and CIO. “As Phoenix transforms into a high-tech manufacturing and logistics hub, the need for functional, small-bay space has never been greater. This portfolio gives us both critical mass and operational flexibility in one of the nation’s top industrial markets. Surpassing $3 billion in assets under management further highlights our sustained growth and reflects the deep confidence our investors continue to place in our strategy.”

BKM picked up two properties in Phoenix’s Airport submarket, including Elwood Industrial Center (four buildings, 133,076 square feet), and the Roeser Commerce Center (two buildings, 59,620 square feet).

The rest of the properties span 35 buildings across the Tempe area. They include:

Buttes Business Center (13 buildings, 188,282 square feet)

Tempe Commerce Center (eight buildings, 177,354 square feet)

Priest-Excel Business Park (five buildings, 155,094 square feet)

Expressway Corp. Center (six buildings, 79,333 square feet)

Mineral Road (two buildings, 68,693 square feet)

Harl Industrial Park (one building, 27,900 square feet)

Primarily built in the 1970s and 1980s, the assets feature clear ceiling heights of 14 to 20 feet and an average unit size of 2,400 square feet. The properties have a collective WALT of approximately two years, presenting a 22% mark-to-market opportunity in rental rates. The portfolio’s diversity offers multiple avenues to drive performance and capture upside, and BKM has structured its approach to maximize flexibility in both leasing execution and long-term disposition.

“This is a high-quality portfolio with a lot of embedded opportunity—well-located assets, diverse suite configurations, and a strong tenant base,” said Brett Turner, Senior Managing Director of Acquisitions & Dispositions at BKM. “It allows us to tailor our strategy at the property level while staying aligned to a broader vision of unlocking value and offering institutional-quality space in high-demand submarkets.”

BKM plans to implement a comprehensive business plan focused on unlocking embedded value through physical upgrades, strategic reconfigurations, and operational efficiencies. Select larger units will be demised into smaller, high-demand configurations catering to growing tenant need for right-sized, flexible industrial space. As with most of its acquisitions, the firm will also invest significantly in capital improvements to address deferred maintenance—including roof replacements, HVAC system upgrades, and aesthetic enhancements—across the portfolio. Onsite property management will be deployed to improve service delivery and drive tenant retention while rents are marked to market.

The acquisition comes at a time of rapid evolution in the Phoenix industrial market. After peaking earlier this year, overall vacancy dropped 30 basis points to 10.9% at midyear, the first decline since 2022. Leasing activity has surged, with net absorption rising 50% over the year to 6.8 million square feet in the first half of 2025. At the same time, new construction has slowed dramatically, with Q2 deliveries at their lowest since 2021 and just 11.2 million square feet underway at midyear, marking a 60% decline from last year.

With most of the pipeline skewing toward big-box product, small-bay assets have become some of the most sought-after and highest-rent properties in the market. Vacancy for small-bay space is just 4.1% metro-wide and as low as 1.1% in submarkets like the Airport area. By comparison, Phoenix big box vacancy sits at a 15-year high of 16%.

Against this backdrop, investor appetite remains strong, further supporting BKM’s investment theory. Year-to-date sales volume hit $1.75 billion, up 33% from last year, and average pricing went up 29% during the same timeframe to $245 per foot.

“The backdrop here isn’t just cyclical—it’s structural,” said Turner. “Phoenix is undergoing a transformation driven by reshoring, advanced manufacturing, and tenant demand for smaller, more efficient formats. That dynamic plays directly to our strategy. This portfolio gives us a platform to meet today’s needs while staying nimble enough to adapt to where the market is heading.”

The seller was represented by CBRE National Partners' Rusty Kennedy, Executive Vice President, Joe Cesta, Executive Vice President, and Darla Longo, Vice Chair & Managing Director. Turner, with support from Michael Grossner, Director of Acquisitions and Dispositions, led BKM’s in-house acquisitions team.

With this acquisition, BKM’s Arizona portfolio now totals roughly 4.5 million square feet across 27 properties. It also represents the sixth investment made through the BKM-Kayne Anderson joint venture since the partnership was announced earlier this year.