Anaheim city officials plan to meet with Boeing Co. early this week to discuss the defense and aerospace company’s plans for getting rid of nearly 1.7 million square feet of industrial and office space it owns in the city.
A decision by Boeing on the direction it intends to take will go a long way to shaping the future of The Canyon, home to the biggest base of industrial space in Orange County.
Boeing said earlier this month it plans to shut down and sell its sprawling operations in Anaheim and move about 3,700 employees to its Huntington Beach operations during the next four years.
The city is pushing for medical device makers, precision manufacturing companies and other high-paying industrial businesses to take over some of Boeing’s buildings.
Others wonder whether a residential overhaul or other forms of redevelopment could make its way to parts of The Canyon, just as they have in Anaheim’s Platinum Triangle near Angel Stadium.
Anaheim has lost about 3 million square feet of industrial space in the past few years due to housing redevelopment. About 2 million square feet of the lost space is in the Platinum Triangle.
Those dislocated companies, along with other expanding manufacturing and distribution businesses, could find the Boeing sites enticing. Brokers said a lot of rehab work would be needed to ready the buildings for new tenants.
It won’t be the first time the city looks to pump new life into The Canyon. More than two years ago, Anaheim started marketing the complex as The Canyon in a bid to lure tech companies and other businesses there.
The Canyon has 2,645 acres of industrial land. Boeing owns 104 acres there, including about 18 industrial and office buildings. The company’s operations are the centerpiece of Anaheim’s industrial corridor along La Palma Avenue near the Riverside (91) Freeway.
“This is the best (industrial) property remaining in North County,” said Jeff Chiate, senior director for the Irvine office of Cushman & Wakefield Inc. “A lot of companies need to remain in the area, but they’re running out of land. Interested users will be circling the wagons pretty quickly.”
Irvine-based Boeing Realty Corp. is set to handle the sale of the buildings and land. The Boeing unit typically rezones sites before selling them.
“A lot of these buildings have been around for 40 or more years,” said Stephen Davis, spokesman for Boeing’s real estate division. “The city has grown up around them. It has made the buildings more valuable.”
Similar land sales by Boeing have taken place in Seal Beach and Huntington Beach.
Davis said the sale of each Anaheim building will depend on a few factors: the condition of the site, the local sales market and the preferences of the city.
Environmental studies are under way.
Real estate watchers said most of the Boeing land will stay zoned for industrial use.
“The location of the properties is triple-A,they are going to be in heavy demand,” said Jeff Read, senior vice president for the Anaheim office of Grubb & Ellis Co.
Vacancy Down, Rents Up
The vacancy rate for manufacturing and distribution space in the Anaheim area was 3.3% in the second quarter,near a record low, according to Grubb & Ellis. The average asking rental rate for that type of industrial space was 58 cents per square foot.
Similar Anaheim industrial buildings in the 80,000- to 100,000-square-foot range typically sell for $100 to $140 per square foot, brokers said.
Land set for residential development could go for more than twice as much, but the likelihood of Boeing getting entitlements for condos or apartments is seen as slim.
“I would never say never, but if you look at the properties, there would have to be a significant reassessment of the properties, and a lot of work would need to be done” to turn the sites into housing, said Ben Seybold, senior vice president for the Anaheim office of CB Richard Ellis Group Inc.
“I think the whole residential conversion (trend) has crested,” said Cushman’s Chiate.
Anaheim seems to be pushing for industrial redevelopment.
Irvine’s “Spectrum area has its own niche, and we want to have our own, too,” said Sheri Vander Dussen, Anaheim’s planning director.
