Royalty Carpet Signs Big Santa Ana Lease
By MATHEW PADILLA
Royalty Carpet Mills Inc. has signed one of the biggest industrial leases of the year, taking 268,000 square feet in Santa Ana, with an option to add another 104,000 square feet.
The Irvine-based carpet maker signed a 12-year lease for more than two-thirds of a 372,000-square-foot building at 515 E. Dyer Road, according to Royalty’s broker Bryon Ward of Grubb & Ellis Co.
“To my knowledge, this certainly is one of the largest,if not the largest,industrial lease transactions in Orange County,” Ward said.
Ward represented Royalty and San Francisco-based landlord RREEF. The value of the deal wasn’t disclosed.
Royalty’s lease marks an expansion. The company doesn’t plan to close any of its Irvine facilities, Ward said. Mike Derderian, Royalty’s founder and president, wasn’t available for comment last week.
Chicago-based Smurfit-Stone Container Corp. previously leased the Santa Ana space, according to Ward. Royalty is upgrading the building and is set to occupy it in early October, he said.
Royalty already has 975,000 square feet of space, mostly in Irvine, according to its Web page. The company sells carpet to retailers such as Home Depot Inc. and homebuilders including J.F. Shea Co.’s Shea Homes, Taylor Woodrow PLC and D.R. Horton Inc.
The company’s yearly sales are about $250 million, according to industry publication Flooring Magazine.
So far this year, Royalty’s Santa Ana lease ranks second only to tile distributor Larry Bedrosian’s deal in Tustin. He bought a 500,000-square-foot building formerly occupied by Steelcase Inc. and leased it to his tile company Bedrosians.
Royalty’s building is in Santa Ana’s enterprise zone. In 1993, the state designated 7,100 acres of Santa Ana as a special zone where business can get tax credits for workers and machinery.
“These types of programs are extremely important if we are going to keep our business base here,” said Patti Nunn, Santa Ana’s economic development manager.
Santa Ana has the only state-backed enterprise zone in the county, Nunn said.
The zone “is providing employment for our residents and it enables businesses to operate profitably, given that it’s expensive in Orange County,” Nunn said.
Derderian started Royalty more than 30 years ago and still sits at the helm of the company. The business began as a carpet distributor in a small warehouse in Commerce with 10 workers.
Royalty now employs about 750 and owns or leases five buildings in Irvine.
The company is set to use the Santa Ana building for production and storage of carpet and raw materials, Ward said.
