The local office of Panattoni Development Co. plans to break ground on more than 1.6 million square feet of high-end industrial buildings in Anaheim next year, with the first buildings slated to start construction within a few months.
Sacramento-based Panattoni recently unveiled an updated site plan and construction timeline for the now 80-acre Anaheim Concourse development, a sprawling, multi-building project planned to go up in Anaheim on former Boeing Co. land. The project, which should cost close to $160 million to build, is expected to be one of the largest industrial developments—if not the largest—to go up in Southern California in 2013.
A total of 15 buildings, running from about 46,500 square feet to nearly 350,000 square feet, will be built by Panattoni at the site, in three phases starting next year. The first two phases of the project, a mix of for-sale and for-lease buildings, should start construction in the first quarter, according to Stephen Batcheller, a partner in Panattoni’s Newport Beach office
The eight buildings planned for the first two phases will total 865,000 square feet and should be completed by the end of next year, Batcheller said. The project’s third phase, which will include the largest building planned at the Anaheim Concourse, should see work begin later in the year.
All of the buildings are being built on a speculative basis, but the developer expects to complete some sales and leases prior to their completion, thanks in part to Orange County’s tight industrial market, which counts a vacancy rate of less than 5%.
For new, high-end industrial buildings, available space is even harder to find in the region. There hasn’t been an industrial development larger than 830,000 square feet to break ground in OC in over a decade. Less than 100,000 square feet of new industrial space is expected to be completed in the county this year.
“There’s no class A product like this in the whole (OC) market,” Batcheller said.
The developer already has a prospect list of potential users that are looking for more than 2 million square feet of space on a combined basis, and one letter of intent has already been signed, according to Jacob LeBlanc, senior development manager for Panattoni.
“Demand has been really strong,” despite the company just beginning to market the project, LeBlanc said.
The company held an initial broker open house for the project earlier this month. The event included the demolition of an older Boeing structure on the site.
Long Process
Development of the Anaheim Concourse—a stretch of land near La Palma Avenue in the Anaheim Canyon business corridor along the Riverside (91) Freeway—has been a few years coming.
Panattoni and financial partner Clarion Partners, part of ING Group NV, acquired the first 60 acres of the site from Boeing in 2007 and later bought an additional 60 acres of nearby land and property in deals with the defense and aerospace giant and with Pacific Sunwear of California Inc., which has its headquarters next to the site.
The economic downturn put a halt to any immediate development at the land, which initially called for more traditional office space to be built, along with industrial buildings.
“2008 and 2009 were tough years,” Batcheller said. “It’s nice to still be here and to be able to move forward (on development).”
An existing industrial property at the site that’s leased to Panasonic Corporation of North America was sold by Panattoni last year for a reported $30 million, and last year the developer also sold off a pair of buildings along Miraloma Avenue to Eastside Christian Church in a deal said to be worth $20 million. That site was recently renovated into Eastside’s new church campus.
The 1.6 million square feet of industrial buildings now planned to go up next year represents the last of Panattoni’s holdings at the site. Panattoni earlier had said it would build 900,000 square feet of industrial properties in this round of development, but that got boosted after Boeing—which had been leasing back some existing buildings at the site—moved to vacate the properties.
Now, the developer is working with the city of Anaheim to revise its initial plans. In the process, it aims to make the buildings appealing to a variety of users, Batcheller said.
The latest designs show modern-looking industrial properties more in the mold of Irvine Spectrum than traditional warehouse space. The new renderings show buildings with numerous windows, large lobbies, and plenty of office space.
Batcheller said he expects the buildings to get plenty of interest from companies looking to have their regional or corporate headquarters at the site, and not just tenants looking for a large distribution building.
Some of the smaller, for-sale buildings planned could be built to include refrigerated space for food-related companies.
The site’s location in a state-designated Enterprise Zone—which allows companies in the zone to earn up to $37,440 in tax credits for each employee it has—is expected to entice a number of companies to move, LeBlanc said.
Sales and lease rates for the buildings are still being worked on, according to the developer.
Brad Bierbaum, Brian DeRevere and Ryan Peterson, brokers with the Orange office of CBRE Group Inc., have the listing for the Anaheim Concourse development.
