A prominent Irvine industrial building near John Wayne Airport that was caught up in an international caper featuring federal allegations of illegal commodities trading a few years ago has a new business plan: becoming Orange County’s first big coworking site for warehouse users.
Whether that plan takes hold is another mystery for a warehouse that’s had its share of them the past decade.
CubeWork, a shared space warehouse operator whose website lists about 40 existing and soon-to-open locations, about half of those in Southern California, recently posted for-lease signs at 2323 Main St., a 260,850-square-foot facility at one of Irvine’s busier intersections: Main Street and Von Karman Avenue.
The facility has short-term availabilities from as small as 300 square feet to as large as 50,000 square feet, according to CubeWork’s marketing materials for the property, which had been on the market for more traditional, long-term warehouse users over the course of the past year and a half, but remains largely vacant.
That vacancy—coming despite area occupancy rates for industrial space hovering around 98%—was largely due to legal issues surrounding 2323 Main, which kept prospective long-term tenants wary from signing deals at the building, according to real estate sources familiar with it.
The site is the first Orange County location for CubeWork, which state records show to be based in City of Industry, and headed by William Chang, who previously worked at a small e-commerce company, according to news reports. Chang couldn’t be reached for comment.
Last week, CubeWork’s website added a trio of new OC locations to its collection, for buildings in Anaheim, Garden Grove and Placentia.
Company marketing materials say CubeWork specializes in “standard and customizable commercial and warehousing space,” available for immediate use and offering spaces ranging from a few hundred square feet to 10,000 square feet and more that are “suitable for general warehousing to production/light manufacturing.”
The company leases each of its locations from the property’s owner and builds out “cubes” within them for smaller users to sublease and use.
Like OC’s fast-growing contingent of coworking office spaces, whose cumulative totals in the area are quickly approaching 3 million square feet, the industrial landlord’s subleases are offered for short periods of time and allow tenants to take more space if their own growth requires it. Utilities, small offices, and amenities like internet access also are provided.
CubeWork has been in business for about a year, and last year filed registration documents pertaining to a $7 million round of funding, according to regulatory filings.
Several of the company’s locations in Los Angeles County—currently its biggest base—are tied to facilities used by a China-backed provider of third-party logistics services, according to brokerage data.
There were no noticeable tenants in the warehouse section of 2323 Main as of last week.
DOJ Cases
The Irvine building is one of four Southern California locations listed on CubeWork’s website that are tied to a different overseas ownership group; China Zhongwang Holdings Ltd., a large aluminum company allegedly controlled by one of China’s wealthiest people, Liu Zhongtian.
The other three large industrial facilities with ties to China Zhongwang are in Ontario, Fontana and Riverside.
Each of those four properties has been under scrutiny in recent years from the U.S. Department of Justice, which in 2017 made moves to seize ownership of them, alleging the buildings were used by the property’s owners as part of a plot to smuggle aluminum into the U.S. and avoid paying hefty tariffs.
The Business Journal first reported on the site’s apparent ties to the scheme in 2016, after a line of freight trucks began queuing up to load or unload shipments of what appeared to be aluminum pallets.
By size, it’s one of the largest real estate forfeiture actions the DOJ has taken up in the region, government officials told the Business Journal in 2017.
The civil forfeiture actions were stayed last year; the DOJ said in legal filings late last year that the cases were put on hold while larger related criminal actions played out.
Aluminum Storage
CubeWork’s involvement is the latest notable chapter for 2323 Main—the headquarters of athletic shoemaker American Sporting Goods Corp. more than a decade ago.
A few company signs were posted at the front of the property shortly after its 2009 sale to the China-backed ownership group, giving it the outward appearance of being occupied.
Numerous brokers familiar with the property said the 260,850-square-foot building had in fact sat largely unoccupied since the sale, despite its prominent location and a remarkably tight local market for industrial space.
It saw a flurry of activity in 2016, when the Business Journal reported on a frenzied amount of freight traffic taking place at the building over a period of a few days, with lines of trucks spilling out to Main Street.
A bulk of the trucks bore the name of Wan Hai Lines Ltd., a Taiwan-based shipping firm with a presence at the Port of Long Beach.
Photos taken around that time showed it to be partially full with what appeared to be aluminum pallets and aluminum rods.
The DOJ has alleged that those aluminum pallets—much heavier than traditional pallets typically used for shipping—were brought into the country by China Zhongwang-related affiliates for the purpose of being melted for other uses, and as such illegally avoided some $1.5 billion in tariffs.
Forbes has estimated Zhongtian to have a $2.7 billion fortune.
The Wall Street Journal reported in 2016 that Zhongtian-related affiliates, among other tariff-avoiding schemes, were hiding a reported 6% of the world’s aluminum in a Mexican desert.
His firms have denied those charges, and the owners of the Irvine and trio of Inland Empire buildings have contested the DOJ’s asset seizure actions.
