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Kroger Inks $207M, 30-Year Deal at Birtcher Center



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$207 million and 30 years.

Those aren’t the particulars of Alex Rodriguez’s new contract with the Yankees (made with or without local super-agent Scott Boras), but rather the terms of what many believe is Southern California’s biggest-ever industrial lease.

The Los Angeles-based deal includes a number of OC participants. Irvine-based Birtcher Development & Investments and partner Cornerstone Real Estate Advisers LLC of Hartford, Conn., signed supermarket operator Kroger Co. earlier this month in the record-setting lease.

Cincinnati-based Kroger will be the sole occupant of Birtcher Distribution Center at Paramount, an under-development warehouse and distribution center set to total 551,897 square feet. The building is expected to be completed later next year, at a cost of $50 million.

Both Ralphs and Food 4 Less, two Kroger-owned supermarkets, will use the warehouses to store dry-goods for their Southern California stores.

The lease likely represents a new national high for a single industrial deal, Birtcher officials said.

The high price begs the question as to why Kroger didn’t build its own warehouses on its own land.

“They would have, if they could have found the land,” said Bob Crenshaw of Grubb & Ellis Co.’s Anaheim office, who, along with colleague Steve Sprenger, represented Birtcher in the deal. Los Angeles County’s industrial market counts vacancy rates of less than 2%.

Birtcher bought the 26-acre site on Garfield Ave. in 2005 after a two-year bidding process, and has since restored the brownfield site,located about 2 miles from the 91, 105 and 710 freeways,to commercial use.

David Norrie and Art Rasmussen of CB Richard Ellis Group Inc.’s Los Angeles office represented Kroger in the lease.


Morgan Sells

Gothard Distribution Center, a recently built, 103,248-square-foot industrial building in Huntington Beach, has traded hands again.

AMB Property Corp. of San Francisco is the latest owner of the building, at 16350 Gothard Ave. The seller, Morgan Holdings LLC, an offshoot of Huntington Beach-based Morgan Sheet Metal Inc., bought the building for $11.2 million in 2005.

It’s estimated the property sold for $14 million to $16 million this time around.

Chuck Wilson of Colliers International’s Irvine office represented AMB Property in the latest sale, while Collier’s Wayne Lambert represented Morgan Holdings.

Half of the building was originally used by Morgan Sheet Metal, which provides sheet metal to homebuilders. The company has since moved elsewhere in the city, to an 80,000-square-foot building on Skylab Road, Lambert said.

The Gothard warehouse now has two tenants.

Munro’s Furniture, furniture company, rents 52,351 square feet of the property, housing its office headquarters and warehouse and distribution operations. Munro’s Furniture owns and operates stores in Santa Ana, Costa Mesa and Long Beach.

Last year, it signed a seven-year lease for the property, valued at $3.5 million.

The remaining 50,897 square feet is occupied by Santa Ana-based Melmarc Products Inc., one of the county’s larger apparel companies. Melmarc, which makes T-shirts for surfwear companies, uses the space for distribution.


Davis Grabs TA Business

Davis Partners LLC, a Newport Beach-based manager and developer of industrial and office buildings, just added a big chunk of space to its property management portfolio.

The company was just given five property management contracts from Boston-based TA Associates Realty, totaling about 750,000 square feet of office space in Orange County.

Properties include: 4400 MacArthur Blvd., a 152,316-square-foot office building in Newport Beach; 200 & 201 East Sandpointe, two eight-story buildings in Santa Ana totaling 304,343 square feet; Carlota Plaza, a 113,488-square-foot, six-story office building in Laguna Hills; and Irvine’s Jamboree Business Center, which totals 155,484 square feet.

Davis Partners, which counts about 60 employees, now manages about 18.5 million square feet of space in Southern California, according to Bob Thiergartner, the company’s chief operating officer.


RESIDENTIAL

In September, I wrote about a competition being held by Newport Beach-based luxury real estate broker John McMonigle of Coldwell Banker Previews International to find the next agent for his real estate team.

The winner of the contest,modeled after TV’s “The Apprentice”,was recently announced. He’s Paul Benec, who had been practicing real estate in South OC for Coldwell Banker Laguna Beach. Four other agents in the competition were offered jobs elsewhere with Coldwell Banker. McMonigle says he plans to hold another competition next year.

Earlier this month, the Wall Street Journal cited McMonigle’s group as the top sales team in the country, based on dollar volume, with $432 million in sales last year.

Editor’s Note

In the Nov. 19 commercial real estate quarterly update, you might have noticed a little something different about the buildings in the largest office leases special report,that they looked like industrial buildings. The information about the third-quarter leases was correct, but the pictures weren’t.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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