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Bandai Namco Inks Fullerton Lease

BNEA, which counts popular titles including Pac-Man, Dragon Ball and Mobile Suit Gundam, brings the 1.5 million-square-foot industrial campus to full occupancy ahead of its completion.

Bandai Namco Entertainment America Inc. (BNEA), the U.S. video game and entertainment division of Japan-based publisher Bandai Namco Holdings Inc., has inked one of the largest local industrial deals in recent months, signing a 173,000-square-foot lease for the final building at Fullerton’s new Goodman Logistics Center.

BNEA, which counts popular titles including Pac-Man, Dragon Ball and Mobile Suit Gundam, brings the 1.5 million-square-foot industrial campus to full occupancy ahead of its completion.

Goodman North America, the Irvine-based national entity of Australia’s Goodman Group, began construction in 2021 on the former Kimberly-Clark tissue paper manufacturing site.

The project has been OC’s largest new industrial development underway ever since.

The other two tenants at the project include Samsung Electronics, which occupies north of 1 million square feet, and grocer Sprouts Farmers Market, which occupies 337,000 square feet at another building at the center for a new distribution center.

BNEA will use the space for warehouse and office operations for its gaming division and its toy and hobby business, Bandai Namco Toys & Collectibles America Inc., and may also provide distribution services for third-party logistics companies from the site, sources tell the Business Journal.

“We are very proud of this signature project, and the lineup of customers we have,” Lang Cottrell, regional director of the southwest region for Goodman Group US, told the Business Journal. “It speaks to the quality and location of the development.”

Fullerton HQ

The building will be Bandai’s largest in the U.S. and could serve as its national headquarters, sources indicate.

BNEA in 2021 moved its North American base from Santa Clara to Irvine when it struck a deal to occupy the entirety of the Source H2O, a newly built, 65,000-square-foot creative office project in the Spectrum area of the city, near the intersection of Sand Canyon Avenue and Waterworks Way.

The company’s toy division was previously based in Anaheim and El Segundo. The company’s various business units in prior years also had a presence in Cypress, where it owned a 77,000-square-foot steel and glass office along Katella Avenue. It sold that building some seven years ago.

Building 4 at the Goodman Logistics Center—located at 2362 Kimberly Ave.—is expected to bring much of BNEA’s operations under one roof. It will house approximately 50 employees there with up to 10,000 square feet of office space.

The company hasn’t disclosed its plans for the Irvine campus, which has been open for operations for less than a year. There’s no indication that the Source H2O building is up for sublease.

New Records

Bandai reported sales grew 20% to a record $6 billion in fiscal 2022, driven by strong sales of toys and collectible products for adults, as well as new and existing video games, such as “Elden Ring,” a role-playing video game that launched about a year ago and has since sold 20 million copies worldwide.

The fantasy action video game, with ties to “Game of Thrones” writer George R. R. Martin, is reported to be the fastest-selling game in Bandai’s history, outpacing Pac-Man and its offshoots from the heyday of the video arcade era.

The Americas comprised of about 11% of Bandai’s sales for the 2022 fiscal year ended March 31, roughly $650 million, according to the company’s financials. Japan made up about 70% of the sales.

Bandai announced plans a year ago to double its North and South American sales to $7 billion by 2025.

Top Deals

CBRE has handled leasing on behalf of Goodman.

Bandai’s lease is the largest new industrial deal for OC since September, when Samsung inked its two deals for 2099 and 2289 E Orangethorpe Ave. totaling 538,226 square feet and 487,036 square feet, respectively.

That deal spans more than 10 years and is estimated to have a value in the $250 million range, based on going rents for high-end industrial spaces in the area, which are about $2 per square foot, on a monthly basis.

The 1.03 million-square-foot Samsung deal is the largest reported new industrial lease for Orange County since the end of 2019, when logistics company Unis Co. inked a deal totaling nearly 1.1 million square feet for the entirety of the CenterPoint SoCal Logistics Center in Buena Park, formerly a distribution center for JC Penney.

The South Korean-based electronics giant is using the site to store and distribute items like dishwashers, refrigerators, televisions and other home electronics.

It’s the first major local industrial base for Samsung, whose best-selling products include the Galaxy smartphone and The Frame television. Units of the company occupy a few office spaces in the Irvine area, including a nearly 7,500-square-foot office at the Von Karman Towers complex.

Samsung will employ about 180 employees at each building for a total nearing 400 employees.

Both Samsung and BNEA have moved into their spaces, while Sprouts “is finalizing its refrigeration system and should be live by the end of April,” notes Cottrell, adding the project is about 98% complete.

Sprouts was the first tenant to sign on to the campus when it inked its 337,000-square-foot deal in July. The warehouse will serve as its Southern California distribution base, serving 90 stores within a 250-mile radius, with expectations to grow that figure to 120 stores over the next few years.

It’s the largest industrial warehouse in Sprouts’ portfolio by a wide margin, according to regulatory filings. As of early January, the largest of its seven national distribution centers ran 135,000 square feet.

“The grocery sector continues to expand,” Cottrell said. “We had additional refrigerated users interested in the buildings, and we’re seeing that business continue to look for space in our portfolio.”

Sprouts will employ 110 individuals at the site.

“The proximity to our stores also means lower transportation-related carbon emissions, decreasing approximately 725,000 miles annually from our current routes,” Joe Hurley, chief supply chain officer of Sprouts, said in a statement.

“This facility also features ripening room capabilities for bananas and avocados that continues to help better serve our communities with fresh produce.”

ESG Focus

Goodman paid $202 million for the former Kimberly-Clark site in 2019. Previously spanning 1.2 million square feet, the site was long home to the paper goods manufacturer before it announced plans in 2018 to shutter the tissue-making facility, which at its peak employed close to 300 people.

The Irving, Texas-based maker of Kleenex and other related products (NYSE: KMB) sold the property for about $155 per square foot.

The new, sprawling logistics facility will deliver in full later this month.

The location is less than a mile from the 91 and 57 Freeways, and 20 miles from the Port of Los Angeles and Long Beach, with direct access to 20 million consumers, Goodman notes.

Sustainability has been at the forefront of the campus’ design, Cottrell said, with each of the buildings achieving LEED certification with features like white buildings to reduce heat, electric vehicle charging stations and solar panels.

“We have tried to offset our carbon impact as we built out the project,” Cottrell said. “It helps with entitlements, but it’s really more about doing the right thing.”

Goodman Scouts Future OC Opportunities

Goodman North America “would love to build more in Orange County” as it prepares to deliver its trophy property in Fullerton, the Goodman Logistics Center, notes Lang Cottrell, regional director of the southwest region for Goodman Group US, which is based in Irvine.

Future opportunities will be few and far between, with the region facing a growing dearth of available land, prompting industrial developers to scout redevelopment opportunities.

“Projects of these scope typically come from a larger corporate seller that no longer needs their location,” Cottrell said, as was the case with the Fullerton campus, which was repurposed from the Kimberly-Clark tissue production site.

Goodman is making headway on a smaller project underway in the region.

In Cypress, the company is building two new industrial buildings totaling 400,000 square feet on the site of one of the largest business parks in the city.

In 2021, Goodman paid $128.3 million for the Cypress Technology Center; it’s currently demolishing a 330,000-square-foot warehouse at the site to make way for the new buildings.

More recently, Goodman last year closed on the purchase of 1236 N. Magnolia Ave., a roughly 30,000-square-foot medical office property in Anaheim, near the intersection of the Santa Ana (5) and Riverside (91) freeways.

It paid $13.5 million for the 2.5-acre site, located next to the Goodman Industrial Center Anaheim, which sits just south of the 5 Freeway at 1256 N. Magnolia Ave. Amazon leases that property, which now runs some 208,000 square feet.

Cottrell expects some industrial developers to slow their activity this year amidst the high cost of financing.

“Customers are being very careful about making decisions,” Cottrell said. “I expect rental growth to continue this year but not at the same clip as last year.”

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