Solaris Paper Inc., a Santa Fe Springs-based maker of paper towels, toilet paper, tissues and napkins, is expanding its operations into Orange County.
The company, which sells and distributes its paper products under the Livi brand name as well as under private label deals, has inked a big lease for space at a Buena Park industrial park at 6700 Artesia Blvd.
Solaris is subleasing 274,088 square feet of space at the 447,055-square-foot building, which is owned by Denver-based ProLogis.
It’s one of OC’s largest industrial deals of the year, and it’s a rare case of the county gaining a big industrial tenant after years of seeing scores of businesses look for more affordable deals in Los Angeles and the Inland Empire.
The ProLogis building, part of its Mid Cities Distribution Center, is a few blocks away from the Santa Ana (I-5) Freeway. It’s also a few miles away from Solaris’ headquarters across the county line.
Solaris is said to be consolidating some of its distribution operations outside of OC into the Buena Park space, according to brokers. The company reportedly had signed a 109,000-square-foot lease in Cerritos early last year.
The company’s also opting to lease more of its own space for distribution, rather than rely on third-party logistics providers, according to brokers. The new space in Buena Park should bring about 50 jobs to OC.
The deal’s a sublease of space that was vacated in May by Expo Design Center, the defunct home improvement affiliate of Home Depot Inc. The lease expires in 2013.
In 2004, Home Depot had signed a lease to occupy the entire 447,055-square-foot building, which it used as a hub for its Western U.S. operations. It dropped nearly half the space when it renewed the lease in 2007.
Three Expo Design Centers in OC and 12 stores in California closed shop this year, following Home Depot’s announcement in January it was exiting that line of business.
Terms of Solaris’ lease were not disclosed. Home Depot is losing some money on the deal, but it got much more favorable terms compared to other big leases signed in OC of late, according to Rick Gill, senior vice president with Newport Beach-based brokerage Collins Commercial Corp.
The average monthly rent for an industrial property in OC is about 62 cents per square foot, according to the most recent data from Newport Beach-based Voit Real Estate Services. That’s down about 23% from the highs of the market, seen in the middle of 2008.
For buildings larger than 200,000 square feet, monthly lease rates ran about 56 cents per square foot at the end of the second quarter, according to Voit’s data.
Along with a reasonable lease rate, the quality and location of the building, which is less than 10 years old, were key reasons for the property getting released in a market where several other big buildings have remained empty, said Collins Commercial Senior Vice President R.L. “Biff” Smith, who along with Gill represented Home Depot in the sublease.
Solaris was represented by David Ellis, Rick McGeagh, Josh Bonwell and Mark Baranick from the local offices of CB Richard Ellis Group Inc.
Migrating to OC
Solaris is the one of several companies to set up shop in OC of late after signing a big industrial lease, spurred in large part by more favorable lease terms and lots of opportunities for larger buildings.
Among other notable recent OC industrial deals, New Jersey-based clothing distributor Empire Logistics and Warehousing Inc. early this summer signed a 234,763-square-foot deal in Cypress.
Empire’s five-year lease, at 6550 Katella Ave., was said to be for about $6 million and included one year of free rent, according to brokers involved in the deal. Factoring in concessions, the lease works out to a monthly rent of about 35 cents per square foot.
That’s one of the most generous deals the industrial market’s seen of late, according to local brokers.
Also, Gardena-based landlord Overton Moore Properties signed Seattle-based drug maker Dendreon Corp. to an 184,000-square-foot lease at its recently built Pacific Gateway Business Center in Seal Beach.
The 10.5-year lease, which included two five-year renewal options, is valued at $13.6 million, according to filings made by Dendreon with the Securities and Exchange Commission. That places the monthly lease rate at about 59 cents per square foot.
Dendreon has the option to buy the building during the next three years.
Solaris is no stranger to big leases. It opened its headquarters in 2007 in Santa Fe Springs’ Golden Springs Business Center.
The seven-year lease for the building, which totals about 200,000 square feet, was valued at more than $12 million, according to the Los Angeles Business Journal.
The company plans to open three more facilities in North America, according to the company’s Web site.
