Mitsubishi Materials U.S.A. Corp., a manufacturer of cutting tools and other products for the metalworking industry, is planning to move its headquarters and manufacturing operations from Irvine to Fountain Valley by the end of the year.
The relocation’s noteworthy for more than the address change. Mitsubishi Materials will be moving into a new industrial building that’s beginning construction this month.
It’s the only sizable industrial building under construction in Orange County, according to real estate brokers.
Mitsubishi Materials last week held a groundbreaking ceremony for a 52,840-square-foot building that’s set to go up in Fountain Valley’s Southpark Business Park, a 140-acre industrial area that counts the headquarters of Kingston Technology Co. and SureFire LLC among its tenants, along with facilities for the Orange County Register.
The building’s going up at the southwest corner of Slater Avenue and Mount Herrmann Street, next to the headquarters of D-Link Systems Inc. The land previously was a strawberry field owned by the Sakioka family.
Mitsubishi Materials, a unit of Tokyo-based manufacturer Mitsubishi Materials Corp., signed a 10-year lease for the property, which is set to be completed by November.
Terms of the build-to-suit deal, which includes 15,000 square feet of office space, weren’t disclosed.
Irvine-based Snyder Langston is handling construction for the project, while DeRevere & Associates of Irvine is the architect.
Mitsubishi Materials is expanding from a roughly 44,000-square-foot building at 17401 Eastman St. in Irvine, just off Redhill Avenue. The company, which started operations here 25 years ago in Buena Park, counts about 65 local employees.
The project’s an anomaly for OC’s commercial real estate market, which has seen development of any type come to screeching halt during the past few quarters.
In the fourth quarter, no large industrial projects started work, and only 11 new industrial buildings,totaling about 231,000 square feet,finished construction, according to CB Richard Ellis Group Inc.
Nine of the finished buildings, totaling 207,265 square feet, were part of Fullerton’s Kimberly Business Center, developed by the Irvine office of Lowe Enterprises Real Estate Group. The other two buildings were in Santa Ana.
Other sectors of the commercial real estate world, which saw a boom in development in 2005 to 2007, now are seeing similarly modest levels of development.
There was about 250,000 square feet of office development under way here at the end of 2008, an 82% decrease from the end of 2007, according to brokerage data.
Likewise, there was less than 300,000 square feet of new retail space in the construction pipeline at the end of 2008, a 79% decline from the end of 2007.
With land prices increasing, industrial development took a back seat to other building types in the past few years. All told, there was about 500,000 square feet of industrial development completed in 2008,and only about 400,000 square feet completed in 2007.
The last big project completed here was in late 2006: Gardena-based Overton Moore Properties’ Pacific Gateway project in Seal Beach. That development, on land formerly owned by Boeing Co., totaled 10 buildings and about 830,000 square feet.
Not too much more industrial construction is expected to break ground in OC this year. There’s only about 300,000 square feet of new development in the county currently in the planning stage, according to CB Richard Ellis.
The Southpark property has space for more build-to-suit development, although none is currently planned, said CB Richard Ellis Senior Vice President Dave Desper, who handles leasing for the industrial park.
The lack of local development, and a vacancy rate that, while increasing nearly 2% during the past year, still runs at only about 5%, made it a challenge for Mitsubishi Materials to find a state-of-the-art location.
There were only two or three viable, existing alternatives for Mitsubishi Materials, said Desper, who along with CB Richard Ellis’ Chip Wright represented the tenant in the lease.
Fountain Valley in particular had limited options.
The city, whose industrial space totals 159 buildings and about 4.2 million square feet, counted a vacancy rate of just 1% at the end of 2008, according to CB Richard Ellis data.
