Boeing Corp. has put one of its largest area properties on the market for sale.
But market watchers don’t anticipate a new owner of the eight-story office in Huntington Beach to spend much time looking for long-term tenants if the aerospace and defense giant sells and vacates it.
The general consensus of developers and brokers familiar with Huntington Gateway is that the nearly 30-year-old building is likely to be razed by a new owner to make way for a multibuilding industrial project.
The 285,000-square-foot office near the intersection of Bolsa Chica Street and Bolsa Avenue is surrounded by a large surface parking area. Boeing uses the 30-acre property for its defense, space and security divisions.
The site is apparently big enough for more than 400,000 square feet of warehouse and distribution space, though any development plans would require city approvals.
A project that size would be the largest industrial development in West Orange County in over a decade.
The 14500 Bolsa Chica St. property’s listed for sale by the local capital markets team of Newmark Knight Frank; an asking price hasn’t been disclosed.
A price in excess of $60 million would appear likely, based on current land prices.
A buyer has yet to be selected, according to sources familiar with the property.
Rare Development
Commercial brokers expect a strong reception from potential users of an industrial project there.
“It’s a great site for user-owner product in the 25,000- to 100,000-square-foot range,” said Clyde Stauff, senior executive vice president at the Irvine office of Colliers International and one of the area’s top industrial brokers.
“There’s lots of demand for that type of product, and there’s only one new project being built now (in OC),” he said, referring to Beckman Business Center in Fullerton.
The eight-building Fullerton project, which is being developed by Newport Beach-based Western Realco, is on 44 acres and will hold nearly 1 million square feet of space.
Industrial development has recently been a rarity in OC in general, and around Huntington Beach in particular. Beckman Business Center is bigger than the combined size of all other industrial projects under construction here, none of which are in West OC.
The city’s industrial base encompasses about 14.5 million square feet and has vacancy rates of less than 4%, in line with the tight OC industrial market.
Aliso Viejo-based Shea Properties did the last big industrial project in Surf City, a two-building, 144,000-square-foot development on Gothard Street that opened in 2015.
Before that, the last sizable project in the vicinity was just over the city line in Seal Beach, when Gardena-based Overton Moore Properties built the 895,000-square-foot, 10-building Pacific Gateway Business Center.
Overton Moore bought the 50.3-acre site in 2006 from the real estate division of Chicago-based Boeing Corp., which was offloading surplus area property.
Boeing also sold nearly 80 acres in Anaheim in 2007, bringing about Newport Beach-based Panattoni Development Co.’s Anaheim Concourse, a multibuilding industrial project completed a few years ago.
A similar move appears to be in the cards now.
Boeing announced in 2016 that it would move about 2,400 jobs out of its Huntington Beach facilities over four years, cutting local employment in half. It’s reported eliminating a few hundred jobs there over the past nine months, according to state records.
Workers at Huntington Gateway would likely be moved to nearby Boeing facilities if a sale occurs.
Boeing’s largest area facility, a multibuilding complex on Bolsa Avenue of nearly 2 million square feet, sits next to Huntington Gateway.
As of 2016, its Huntington Beach facilities reportedly totaled 28 buildings on 178 acres.
Few Opportunities
OC’s industrial footprint has steadily shrunk over the past decade from nearly 250 million square feet in 2008 to about 230 million square feet today, based on area brokerage data.
Apartment projects, especially, have replaced numerous older industrial buildings, particularly near John Wayne Airport.
Development opportunities for warehouse and distribution space have been limited.
“Even though the market is craving new Class A product, there is simply an inadequate amount of available land for industrial development,” notes a recent quarterly market report by Newport Beach-based brokerage Voit Real Estate Services.
Infill parcels under consideration for development are approaching as much as $50 per square foot, according to Voit.
Rising sales prices for existing facilities, in some cases approaching or topping per-square-foot prices for offices, could prompt more speculative development, said Jeff Chiate, executive managing director of the Irvine office of brokerage Cushman & Wakefield.
Chiate’s team has explored selling a large retail property in San Bernardino County to a developer who could raze it for an industrial development. He said similar conversions of nonindustrial sites to industrial in OC, as is being considered in Huntington Beach, are basically unheard of these days.
