The local office of Sacramento-based Panattoni Development Co. is moving ahead with plans to put up industrial buildings in Anaheim on speculation they’ll find takers in an increasingly tight market.
Panattoni has plans for up to eight buildings totaling close to 900,000 square feet. The developer is looking to sell or lease the buildings.
The buildings are slated to be built near La Palma Avenue in the Anaheim Canyon business corridor along the Riverside (91) Freeway. Construction is expected by year’s end.
Panattoni is looking to build on former Boeing Co. land that it and ING Clarion Partners LLC, part of ING Group NV, acquired in 2007.
The developer’s plans for the site largely have been on hold as it waited out the real estate and larger economic downturn of recent years.
The project is set to be the first development on the 60 acres Panattoni bought from Boeing. The defense contractor sold the site as it relocated much of its local operations from Anaheim to Huntington Beach.
Improving economic conditions, rising demand for large industrial buildings in North County and lower construction costs make it a good time to break ground, according to Panattoni.
“We’re feeling a little bit more optimistic,” said Stephen Batcheller, a partner in Panattoni’s Irvine office. “It’s been a little slow the last couple years.”
The developer plans to start construction with four buildings that it’ll look to sell to company owners looking for a place to house their businesses.
First Buildings
The first buildings are planned for the northwest corner of La Palma Avenue and Miller Street. They’re set to run 46,300 square feet to 75,200 square feet, according to design plans.
The first phase of development would total about 240,000 square feet in all.
On the other side of La Palma Avenue, four larger buildings totaling about 625,000 square are expected to go up. Panattoni hopes to lease those buildings.
Both phases are slated to start construction by the end of the year, according to Batcheller. Some older Boeing buildings need to be demolished to make way for the new buildings, he said.
The project would be the first large-scale speculative development of its size to be built in Anaheim in nearly 10 years, according to Brad Bierbaum, senior vice president for the Anaheim office of CB Richard Ellis Group Inc., whose team has the listing for the developments.
A three-building project totaling about 120,000 square feet was built a few blocks away on Miraloma Avenue and Miller Street by Irvine’s Sares-Regis Group last year.
Two of the three speculative buildings at Sares-Regis’ project—dubbed Canyon Point—already have been sold for a combined $11.9 million.
Beyond Anaheim, Panattoni’s development would be the largest speculative industrial project to go up in Orange County since Gardena-based developer Overton Moore Properties began its 830,000-square-foot Pacific Gateway Business Center project in Seal Beach in 2006.
That 50-acre project also was built on land previously owned by Boeing and was started during the tail end of the last real estate boom.
Larger North County industrial buildings now are about 96% full after a string of high-profile leases in the past six months, according to Bierbaum.
“From a speculative development standpoint, there’s a lot of pent-up demand,” said Bierbaum, who’s marketing the projects along with CB Richard Ellis’ Ryan Peterson and Brian DeRevere.
Labor and materials also still are affordable, Batcheller said.
“It’s a good time to build, from a cost perspective,” he said.
Up to eight industrial buildings
Nearly 900,000 square feet
Some for lease, some for sale
Construction by year’s end
Former Boeing land bought in 2007
Other Deals
Panattoni’s been busy elsewhere in Anaheim.
Late last year, Fullerton’s Eastside Christian Church entered into a deal with Panattoni to buy a 20-acre property along East Miraloma Avenue. The site includes two former Boeing buildings totaling about 400,000 square feet.
The buildings and land are set to be redeveloped to hold a campus for Eastside Christian, one of the county’s fastest growing churches.
Anaheim’s Planning Commission approved the plans for the campus about a month ago, according to Eastside’s website.
A sale of the property is scheduled to close by the end of March. A sale price hasn’t been disclosed. The value is believed to be well below a $38 million price previously given to the buildings.
Plans are for the church to move to the new site in 2012.
Eastside plans to sell its existing 8.2-acre campus next to California State University, Fullerton, in order to help finance the deal.
In January, Eastside said it had reached a deal to sell the Fullerton campus for $16.6 million to the Dong Shin Presbyterian Church of Fullerton, a Korean-American church with about 1,000 members.
With development plans and the Eastside deal, the bulk of Boeing’s former campus now is spoken for, according to Panattoni’s Batcheller.
The developer is looking for a few other deals in the area, he said.
In addition to the Eastside sale, Panattoni’s looking to sell one other recently leased property it has next to the former Boeing campus, at 3454 E. Miraloma Ave., according to real estate sources.
The 300,000-square-foot industrial building previously was a distribution center for Anaheim-based mall retailer Pacific Sunwear of California Inc., which has its headquarters next door.
Pacific Sunwear sold the building to Panattoni and ING in 2008, for a reported $24.5 million.
The refurbished building landed a big tenant late last year.
Panasonic Corporation of North America, the U.S. arm of Japan’s Panasonic Corp., signed a five-year deal to move its local distribution operations from Santa Fe Springs to Anaheim. The lease started this month.
The Anaheim building recently was put up for sale by Panattoni. A deal is expected to close in the next two or three months, according to real estate sources.
An asking price hasn’t been disclosed. Sources expect the building to sell at a capitalization rate—or initial rate of return from rents—of close to 5.5%.
Batcheller declined comment on a potential sale of the Panasonic building.
