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Amazon’s Industrial Push Spreads to Anaheim

Amazon’s rapid expansion into Orange County’s industrial market in the latter part of 2019 continues.

The e-commerce giant (Nasdaq: AMZN) recently signed deals to lease two full distribution buildings in Anaheim that total nearly 300,000 square feet, adding to its quickly growing collection of properties here, real estate sources tell the Business Journal.

Those two new deals, representing Amazon’s first sizeable locations in Anaheim, bring its reported leasing activity in OC since the end of September close to 1 million square feet, far and away the single largest total of any area industrial tenant in the area over that period.

Prior to the recent flurry of deals, Amazon occupied less than 450,000 square feet of industrial space in the county.

The moves come amid increasing demand from e-commerce providers for last-mile distribution sites in highly populated areas, according to area industrial brokers and developers.

Previously, Amazon served much of OC through its Inland Empire facilities, which total nearly 15 million square feet.

Magnolia Avenue

In the first of the two new Anaheim leases, Amazon plans to occupy all of Goodman Industrial Center Anaheim, a two-building property on Magnolia Avenue, near the intersection of the Santa Ana (5) and Riverside (91) freeways, sources told the Business Journal.

Goodman North America bought the site last year for a reported $36 million—the first OC investment for the firm, which is based in Irvine—and has since invested in upgrades.

The property currently runs 143,000 square feet but could be expanded to some 200,000 square feet, according to the owner’s website.

In a prior statement around the time the property was purchased, Goodman described the site, at 1256 N. Magnolia, as “ideal for e-commerce or retail customers focusing on improving last mile logistics.”

Goodman Bets

Goodman, whose Australian-based parent company Goodman Group is among the world’s largest industrial property owners, is like Amazon betting big on the growing need for e-commerce facilities in OC.

The company last month bought the former Kimberly-Clark Corp. facility in Fullerton, a 1.2-million-square-foot building that’s among the largest industrial buildings in OC.

The Business Journal was first to report that Goodman paid about $202 million for the site. The new owners plan to redevelop it into a logistics hub that will include multiple buildings and could run nearly 1.5 million square feet. At that size, it will be the largest industrial project in OC in over seven years.

Goodman said last month, at the time of the Kimberly-Clark deal, that e-commerce growth “is driving strong demand for logistics sites located close to large urban populations.”

Prologis Property

Eight miles east of the Magnolia Avenue property on the other side of the city, Amazon is also reported to have leased 3370 E. La Palma Ave., a 12-acre site just north of the (91) Freeway that was long home to a 144,000-square-foot showroom and warehouse that held a Fry’s Electronics.

Real estate sources tell the Business Journal that Amazon is expected to occupy the entire site, which was bought in September by San Francisco-based Prologis Inc.

The country’s largest industrial property owner (NYSE: PLD) with a market value of $53 billion, paid about $40 million for the site.

Prologis is expected to convert the site into a warehouse, a project which it previously touted as the first major retail-to-industrial conversion in Southern California.

At the time of the sale, Darren Kenney, a Prologis vice president, said the company “will continue to look for entrepreneurial ways to meet the surging demand for industrial business” as land grows scarce.

“We’ve had our eyes on various retail conversion opportunities, and this one has many benefits: easy access to the highway, gateway frontage and it’s in a central jurisdiction with zoning that is supportive of industrial use,” he said.

A time frame for Amazon moving into either of the two Anaheim buildings hasn’t been disclosed and neither the company nor building landlords have commented on the leases.

Prior Deals

Anaheim is OC’s largest industrial market: the city’s 44 million square feet of space represents nearly 20% of the county’s total base.

Amazon’s entry into the city comes as the $875 billion-valued company appears to be spreading out its distribution facilities to serve customers in south, central and northern OC.

The company struck its first reported sizeable industrial deal in Orange County in 2016 when it snapped up nearly half of Irvine Crossings, a 396,000-square-foot data center and industrial property on Von Karman Avenue, a little more than a mile from the airport.

In 2017, Amazon agreed to take all of 6400 Valley View St., a 238,000-square-foot building in Buena Park.

Since October

The new wave of local leases kicked off in October, when Amazon signed its largest-ever lease in Orange County, for a recently renovated industrial building running about 414,000 square feet in Santa Ana.

The 18-acre site at 515 E. Dyer is a warehouse facility a few blocks from the Costa Mesa (55) Freeway and about 4 miles from John Wayne Airport.

Houston-based Hines paid about $57 million for the building near the end of 2017 and has since spent millions more upgrading it.

About a month later, Amazon confirmed plans to open a distribution center hub in Mission Viejo, its first major deal in South County.

It will lease all of 25725 Jeronimo, a 322,000-square-foot building for what it calls a “California Delivery Station” to improve last-mile delivery capabilities in South OC.

The 27-acre site is a mile north of the San Diego (5) Freeway at a site previously home to Unisys Corp. technology work.

The building is owned by a Newport Beach affiliate of real estate investor and coin collector John Saunders.

The site now serves as recreational vehicle storage, holding more than 1,000 RVs and 600 self-storage units.

The 10-year lease begins next April, according to Saunders, who told the Business Journal he hopes to relocate the current users to another storage facility his company owns in Irvine.

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