Carlstadt, N.J.-based clothing distributor Empire Logistics and Warehousing Inc. has signed the largest industrial lease in Orange County in years.
The 234,763-square-foot deal in Cypress is for five years, with an option to extend another five years. It is said to be the only lease done in the county larger than 150,000 square feet since late 2007.
The value of the lease was undisclosed. Those familiar with the deal said it was lower than other comparable leases of late, which indicates a new benchmark for local industrial space, according to market watchers.
Los Angeles-based Colony Realty Partners owns the 30-year old building at 6550 Katella Ave. Cushman & Wakefield Inc. handled the transaction from its Irvine office.
Empire plans to combine operations from two Compton buildings,one 110,000 square feet, the other 50,000,at the Cypress building.
The company will keep its two warehouses in New Jersey, including one at its 600,000-square-foot headquarters.
Empire stores and packages apparel for a number of retailers that produce their own lines of clothes.
Customers include Nordstrom Inc., Macy’s Inc., J.C. Penney Co., Kohl’s Corp. and Wal-Mart Stores Inc. It also ships to more than 1,000 boutiques.
Empire is sharing the building with Vans Inc., a unit of Greensboro, N.C.-based VF Corp. Vans has about 105,000 square feet of space that it uses as its headquarters.
“The landlord gave us a good rate compared to some of the other rates we received from other areas and counties where the landlords seem oblivious of the present business scenario,which is tough,” said Hemant Makker, owner and president of Empire.
Landlords across OC are struggling to fill space as the industrial vacancy rate jumped to a five-year high of 5.6% and the availability rate rose to 11.2% in the second quarter, according to Colliers International.
The discounted lease rates attracted at least three other bidders for the space, according to a source close to the deal. Empire liked the cleanliness and attractiveness of the building after looking for other warehouses closer to its Compton location.
The company could bring about 50 jobs to Cypress.
Empire is eyeing expansion with potential plans to add sporting goods and electronic storage to its apparel-dominated warehouse, Makker said.
But that growth depends on a pickup in the economy.
For most retailers, especially those selling higher-priced clothes, less spending from buyers has led to cutbacks in workers as their bottom lines have shrunk or turned to losses.
Makker, who was born in India and worked in the garment manufacturing business there, declined to say how much Empire’s sales have fallen.
He said the key to making money is to watch the little things as he gets the new facility up and running.
The building’s original owner was Japanese consumer electronics maker Panasonic Corp., which used the warehouse as its Western hub for parts service and technical support.
In early 2006 the company reorganized by consolidating various brands and vacating excess space.
In 2006 Colony bought the building along with another warehouse for a total of 543,431 square feet from BKM Development Co. of Costa Mesa for an undisclosed amount.
Colony Realty buys and manages properties across the country from the two funds it operates.
