2021 promises a remake of industrial spaces in O.C. – Daily News

on Jan24
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We’ve been blessed with five grandchildren – two of whom live within walking distance. We see them often. It’s AWESOME! Our oldest is obsessed with the history of the Titanic. Go figure. Suffice to say we’ve become quite expert on the pitfalls of icebergs.

As yet another documentary was consumed last night, my thoughts veered – sorry – to commercial real estate. Not the disaster part but the iceberg part. You see, what’s happening currently with industrial real estate is akin to those floating behemoths of frozen H2O – if you can’t see below the surface – you’ll miss 80% of the market’s activity.

If we take a look at north Orange County, which includes Anaheim, Placentia, Yorba Linda, Brea, Fullerton and Orange – and throw in East Yorba Linda, AKA Corona – for good measure – you will find a startling lack of available Class A buildings. And by Class A, I’m referring to those constructed since 2010. Many of these cities have ZERO availabilities above 100,000 square feet.

What’s special about Class A you may be wondering? Well, new inventory comes equipped with several goodies – such as taller ceilings, more powerful fire suppression and greater truck access. Might I mention ALL of these goodies are needed for the e-commerce occupants that stack and ship things.

One of the advantages enjoyed by the Inland Empire? There are still large swaths of land to be developed into concrete monsters and the existing buildings are newer. So what? Inland Empire lease rates are quickly surpassing those of north Orange County — especially if it’s a Class A building in Ontario vs. a Class C in Anaheim.

Occupants are paying for image and quality. So what if they drive a bit farther? Their business runs so much more efficiently.

So, how about what’s happening beneath the waves, so to speak?

Developers are voraciously gobbling campuses of industrial buildings formerly housing manufacturing entities. We saw this begin around 2003 and continue with a vengeance through 2008. Oops! Then came that minor reset! It started up again around 2014. Panattoni Development’s re-tool of the Boeing campus in East Anaheim was spectacular. It’s now a wonderful mix of quality manufacturing and logistics buildings delivered over several phases. Even Disney relocated its costume operation to the project.

Beckman Coulter in Fullerton must also be mentioned. If you’re ever in the neighborhood of Harbor and Lambert, take a look. You’ll be impressed! Western Realco created a masterful layout of logistics spaces that engendered great appeal and demand.

But over the last six months, acquisition activity has been turbo-charged! A former National Oilwell Varco site in Brea will soon house a gorgeous 108,000-square-foot development. Part of the former Mitsubishi holdings in Cypress will be re-developed by scraping some existing buildings and leaving some more on the 22-acre parcel.

Kimberly Clark’s operation – formerly located on Orangethorpe in Fullerton – could very soon be the home of your favorite warehouse operation. Planned are several large boxes for that site. Finally, that location you pass on the 91 Freeway – Universal Alloys? Yep, it’s also slated for a new development.

The landscape of available Class A inventory should change dramatically over the next 12 months. It will be curious to see if any of the buildings actually hit the market, or if they are simply pre-leased. I’m betting on the latter.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104.

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