J.C. Penney Co. has put its massive logistics and distribution facility in Buena Park on the market and plans to relocate operations to a smaller site in the Inland Empire.
The Plano, Texas-based department store operator recently listed for sale a roughly 41-acre site it owns at 6800 Valley View St., a few blocks north of the Artesia (91) Freeway and about 3 miles northwest of the Knott’s Berry Farm theme park.
The site holds nearly 1.1 million square feet of warehouse and logistics space, making it one of the largest buildings in Orange County. It’s one of just five industrial facilities in OC larger than 1 million square feet, according to CoStar Group Inc. records.
The local market of large industrial properties, like the industrial market at large, remains one of the tightest in the country for available space.
There are 51 industrial buildings larger than 300,000 square feet for lease here with a combined availability rate of less than 5%, according to the latest quarterly data from Newport Beach-based Voit Real Estate Services.
The Buena Park property’s size, redevelopment potential, and enviable location near the Los Angeles-Orange County line should generate substantial interest from potential buyers and users, according to Clyde Stauff, senior executive vice president for the Irvine office of brokerage Colliers International.
“It’s certainly one of the largest buildings in the L.A.-Orange County submarket,” said Stauff, one of the busiest industrial brokers in the Mid-Counties region. “Its centrality will certainly appeal to e-commerce users.”
The property’s being marketed to potential users and investors who could keep it largely as-is, outside of minor refurbishments, and to developers who could knock down the facility to make way for one or more modern industrial buildings, according to officials at area real estate companies looking to buy the site.
The sources say a sales price topping $125 million, or about $115 per square foot, is possible.
OC industrial buildings of all sizes have traded in recent months for about $234 per square foot on average, while new larger industrial buildings have sold for a little under $200 per square foot.
Brokers with the Castle Pines, Colo., office of NAI Global Corporate Solutions have the property listing with NAI Capital’s Ontario office, but declined to comment on the sale’s status.
West Coast Hub
The property is one of eight industrial facilities J.C. Penney owns in the U.S. bigger than 1 million square feet. It’s also the only large industrial facility it owns in California, according to the company’s latest annual report.
The property, built in 1967, is used as a merchandise distribution center for West Coast J.C. Penney stores, as well as a regional warehouse and a furniture distribution center, according to the annual report.
The company plans to relocate its Buena Park facilities to a newer, more efficient facility in the Inland Empire, according to real estate sources familiar with the plans. A specific location and time frame for the move hasn’t been disclosed.
Real estate sources said J.C. Penney will likely occupy about 700,000 square feet, if not less, at the new facility.
The company, whose market value is about $2.6 billion, operated 1,021 department stores in the U.S. as of January, including seven in Orange County. It reported $12.6 billion in sales in its last fiscal year.
A new, modern logistics space would fall in line with recent efforts to improve its e-commerce platform.
The company has been working to boost its online shopping presence to compete with e-commerce companies like Amazon. It’s been expanding its same-day, in-store pickup for online buyers, for instance.
Officials said that strategy reduces shipping costs and brings in customers who buy additional products while they’re in the store.
A leaseback of the Buena Park facility of 12 to 18 months likely will be part of the planned property sale, according to real estate sources. That scenario could put it in competition with at least one other sizeable Mid-Cities property in the quest for a large occupant, Stauff said.
In June, the Irvine office of Australia-based industrial developer Goodman Group bought a 56-acre site in Santa Fe Springs from Albertsons Cos. Inc. as part of a larger $250 million portfolio deal. The site, about 3 miles from the J.C. Penney property, includes about a million square feet of industrial space.
Goodman officials said that once the grocery chain vacates the property following a short-term leaseback, it will market it to “food users, last-mile logistics and e-commerce companies,” the company said at the time of the purchase.
