Distributor Makes Big Buy at Former Medtronic Campus
By DANIEL D. WILLIAMS
A 281,000-square-foot building erected at Medtronic Inc.’s former Anaheim campus has sold for more than $20 million in what brokers say is the largest building sale by square footage so far this year.
Placentia-based Galleria Inc., an importer of lawn, garden and other household products, is consolidating several North County warehouses at the new building at 4633 E. La Palma Ave.
The move, which is under way, doubles Galleria’s space, according to brokers. Galleria’s Placentia headquarters included a 60,000 square foot warehouse.
The building, with 31 docks, will house Galleria’s storage and distribution operations. A 32,000-square-foot office area will be used for the company’s headquarters. There’s also a 16,000-square-foot showroom.
The Galleria deal is notable because demand for large-scale industrial buildings has petered out in the past year. Distributors and other tenants have put off real estate moves or gone to the Inland Empire, where big spaces are plentiful and cheap.
Galleria, which is headed by President Sheri Fu, wanted to stay in OC, according to brokers.
“All the executives live in Orange County and they have a name in the area,” said Pat Delaney, a broker with the Orange office of Irvine-based Lee & Associates Commercial Real Estate Services Inc. “They limited their search to North Orange County.”
Delaney said he worked with Galleria for more than 20 months on finding land in North County.
“There weren’t any buildings of this magnitude on the market, so we needed to build,” he said. “We had to pull together enough land to accommodate a building of this size.”
In late 2000, Monterey-based deRegt Development Inc. bought the land for $7 million.
Just a few months earlier, Minneapolis-based Med-tronic closed its plant on the 12-acre site and shifted work to Minnesota and Mexico.
DeRegt initially weighed a couple of options: fix up the existing 100,000 square feet of industrial buildings for multiple users or build anew on speculation.
When the market turned, he took a third route,finding a buyer for a build-to-suit facility.
Construction began last summer. Tustin-based Handley Engineering provided architectural design. Orange-based DSA Development served as a consultant, while Irvine-based W.L. Butler Construction Inc. was the general contractor.
Nearby companies include YKK Zipper, a division of Japan’s YKK Corp.; Anaheim-based OCIP, a plastics manufacturer and distributor; and Skokie, Ill.-based Anixter Inc., a distributor of data communication products and electrical wire and cable.
Jim deRegt, brother of deRegt Development’s Tom deRegt and a broker with Lee & Associates, said there was other interest in the site, but Galleria presented “hard money.”
Galleria has plans to expand its workforce, according to Jim deRegt.
“They were employing somewhere between 60 to 80 people,” he said. “But once they move, they’ll bring their workforce up to 120.”
The building sale is in line with a recent trend away from leasing, according to broker Delaney.
“We’ve seen a 40-year low in interest rates, which has piqued activity and interest,” he said. “There seems to be a lot of people looking to buy right now. We’re in the final stages of closing another 60,000-square-foot industrial sale in Corona.”
