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Prologis Buys 12-Acre Site in Anaheim

With empty land scarce for industrial developers in Southern California, San Francisco-based Prologis Inc. is taking a new approach: converting sites now used by retailers into warehouses.

The country’s largest industrial property owner (NYSE: PLD) with a market value of about $53 billion, recently bought a 12-acre property along La Palma Avenue in Anaheim. The site is just north of the Riverside (91) Freeway, and near one of Orange County’s busier industrial corridors.

The site currently holds a 144,214-square-foot showroom and warehouse used by Fry’s Electronics.

The electronics retailer at 3370 E. La Palma Ave., is slated to stay on as a tenant for the short-term, while a larger site redevelopment is worked on.

Prologis expects the site will ultimately hold more traditional industrial uses; it is touting the expected project as the first major retail to industrial conversion in Southern California.

It’s likely to ultimately market the site to a single industrial tenant that specializes in last touch distribution centers for e-commerce companies, sources tell the Business Journal.

“We’ve had our eyes on various retail conversion opportunities, and this one has many benefits: easy access to the highway, gateway frontage and it’s in a central jurisdiction with zoning that is supportive of industrial use,” said Darren Kenney, Prologis’ vice president.

Redevelopment Ahead

San Jose-based Endeavor Ltd., which paid $5.5 million for the site in 1995, sold the property for $40 million, or roughly $182 per square foot.

Bob Steinbock from CBRE Group Inc.’s Northern California division brokered the off-market deal on behalf of Prologis, whose local commercial portfolio totals about 6.7 million square feet.

It’s spent in excess of $170 million on OC property buys this year, including larger, newly built facilities in Fullerton and a business park in Westminster.

Its local activity this year gives evidence to the area’s healthy industrial market, according to a recent CBRE report, which said the average asking sale price for warehouse and distribution buildings locally rose 5.7% year-over-year to $229 per square foot.

“Although sales activity was down due to a lack of buildings for sale, demand is still present,” said the report. “If buyers can find the right building they will seize the opportunity.”

New construction is tops for investors, and “has been leasing quickly illustrating robust demand for Class A space.”

Prologis said it plans to continue to target unique reuse projects to combat the lack of available industrial space locally.

“As land becomes scarcer, we will continue to look for entrepreneurial ways to meet the surging demand for industrial business,” said Kenney.

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