A Tustin-based distributor of Budweiser beer has signed a big lease in Anaheim where it plans to consolidate its local operations early next year.
Straub Distributing Co., which distributes beer and other beverages for Anheuser-Busch InBev SA NV, leased 281,548 square feet of space on La Palma Avenue in Anaheim’s industrial corridor.
The company signed a 15-year lease for the warehouse and distribution building in a deal valued at $37.5 million, according to owner Sares-Regis Group of Irvine.
Straub, which has distributed Anheuser-Busch beverages since 1948, is set to move its headquarters and two other local operations to Anaheim starting in April, when the lease begins.
Refrigeration and other upgrades are set to be added before Straub moves in. The deal adds about 70,000 square feet of space to Straub’s local operations.
The company, which employs about 330 people locally, now has three buildings here totaling 211,586 square feet.
Straub’s existing buildings in Tustin, Orange and Irvine are up for sale or lease, according to Paul Julian of Lake Forest’s Advanced Real Estate Services, which represented the company in the Anaheim lease.
The buildings range from 60,000 to 78,000 square feet.
Straub’s Anaheim lease starts at about 62 cents per square foot a month and calls for 2.5% annual increases.
The building last was home to Galleria Inc., an Anaheim-based importer of lawn, garden and other household products.
Two affiliated companies of Galleria filed for Chapter 11 bankruptcy protection about a year ago, burdened in part by some real estate deals as well as the soft market for lawn and housing-related products.
Galleria paid a reported $20 million in 2002 for the Anaheim building.
When the company opted to expand operations to the Inland Empire a few years later, it sold the building to Sares-Regis for $28.5 million. It then leased back the building.
In 2008, Galleria bought back the building from Sares-Regis, paying a reported $38 million.
After the bankruptcy filings, Sares-Regis in June paid a special servicer $20 million, or about $71 per square foot, for the debt on the building and shortly after took it over through foreclosure.
The acquisition is believed to be the most expensive sale of a North County industrial building so far this year and the most expensive distressed industrial property in the county to change hands this year, according to market tracker CoStar Group Inc.
The building, put up in 2001, earlier was the site of a local campus for Minnesota medical device maker Medtronic Inc.
Sares-Regis
The Straub lease is a coup for Sares-Regis, which has been one of the most active industrial landlords here of late with nearly $50 million worth of sales and lease transactions in Anaheim in the past few weeks.
The lease follows on the heels of sales of industrial buildings Sares-Regis recently built along East Miraloma Avenue, near the headquarters of clothing retailer Pacific Sunwear of California Inc. The two sales totaled nearly $12 million.
In one of the sales, HSJQ, a Chinese cabinet and tile distributor, bought a 57,593-square-foot building for $7.4 million, or about $128 per square foot.
The company is moving operations from City of Industry and wanted to be closer to Anaheim’s Tile Mile on State College Boulevard, according to brokers.
Woongjin Chemical America Inc., a South Korean maker of water purification equipment, bought the second, 32,554-square-foot building on Miraloma for $4.5 million, or about $138 per square foot.
Woongjin previously had an office in the area and plans to do manufacturing at the building.
The sales validate Sares-Regis’ decision to put up industrial buildings at a time when few others here were considering speculative development, said Larry Lukanish, vice president for the company’s commercial investment division.
“We thought (the project) was a diamond in the rough,” he said.
Sares-Regis paid Pacific Sunwear a little more than $4 million, or about $14 per square foot, in mid-2009 for a 6.3-acre plot of land next to the company’s headquarters on East Miraloma and Miller Street.
Pacific Sunwear is believed to have initially paid close to $33 per square foot for the land in 2006.
“We bought the land at a great price,” Lukanish said.
Construction Costs
Sares-Regis opted to go ahead and build three industrial buildings totaling 120,000 square feet at the site. The project broke ground in January.
“Construction prices were affordable—it made sense (for us) even though we couldn’t get a construction loan,” Lukanish said.
While larger, older industrial space in the area was having trouble filling up, there was little in the way of newer space in the 30,000- to 60,000-square-foot range, according to Lukanish.
The buildings were certified as environmentally friendly, according to the developer. They’re the first speculative industrial buildings in the county to get the U.S. Green Building Council’s Leadership in Energy and Environmental Design designation.
The third new building at the project, called Canyon Point, is about 32,000 square feet and is up for sale. Sares-Regis is expecting another company to buy it to house operations.
