The O’Donnell Group has broken ground on a 192,000-square-foot Anaheim industrial building with the hopes of luring big distributors to the sprawling site.
The Newport Beach-based developer plans to build a subdividable warehouse on Lemon Street near the Riverside (91) Freeway, according to Brian Corrigan of Voit Commercial Brokerage, who, along with Jeff Kernochan of Fischer & Co., is marketing the property.
Distributors of food, plastics and dry storage of consumer goods are in talks for the site, according to Corrigan. The developer and brokers are touting the project’s freeway location in between Los Angeles County and the Inland Empire. “It’s kind of a piggy in the middle,that’s a British term,” said Corrigan, himself a Briton.
O’Donnell bought the land from German chemical maker BASF AG late last year for around $3 million. Details on construction costs weren’t disclosed.
The eight-acre infill site has sat undeveloped within Anaheim’s industrial corridor. A 1.2 million-square-foot industrial facility lies across the freeway from the project site.
The development, called Anaheim Gateway, comes as the long-tight industrial market is showing some signs of slowing.
A CB Richard Ellis Services Inc. study found the industrial sector saw its first quarter of negative net absorption in the first three months of the year.
A lack of developable land and high rents in OC have pushed industrial tenants to the Inland Empire, analysts say.
In OC, “land is extremely limited or too expensive to support industrial construction,” said Clyde Stauff, senior vice president with Colliers Seeley International in Anaheim.
That is what has O’Donnell and the Anaheim Gateway brokers betting their property will find a tenant, even with the slower economy.
“We still see a lot of companies looking for quality,” Corrigan said. “Much of what is on the market is good, but is what we call second-generation material.”
The few industrial properties that come on the market either are older, outdated buildings or too small for large users, observers say.
At the end of the first quarter, nearly 80% of vacant industrial space was in small plots,50,000 square feet or less.
And large-scale users need more size than the 24-foot truck clearance afforded by most of existing buildings, according to Corrigan. The O’Donnell building calls for a 30-foot clearance, he said.
The O’Donnell Group intends to manage one to three tenants and own the building, Corrigan said. n
