The Irvine facilities of Teva Pharmaceuticals Industries Ltd. are being marketed for sale, four months after the drugmaker decided to permanently shutter its manufacturing site in the city after contamination concerns from the Food and Drug Administration.
JLL has the listing for the nearly 6.7-acre site, located near the southern edge of the Great Park and Albertsons’ massive distribution hub in Irvine.
The brokerage is advertising the property as “a rare opportunity to redevelop the site with brand new, state-of-the-art industrial to meet the strong tenant demand.”
The property’s asking price is about $50 million, sources tell the Business Journal, or roughly $7.6 million an acre.
The industrial-zoned site along Hughes Avenue includes three existing industrial and R&D buildings totaling about 186,000 square feet, the largest being Teva’s main, 88,000-square-foot facility at 19 Hughes.
All three buildings are owned and were previously occupied by Teva Pharmaceuticals (NYSE: TEVA), which had been the second-largest drugmaker in Orange County with about 300 workers here. Its headquarters are in Tel Aviv.
Teva acquired the facilities in 2007 for an undisclosed price. It has looked to sell the campus in the past.
Teva was forced to close some of its local facilities last October after an FDA inspection reportedly found the company hadn’t repaired water damage at the site and hadn’t maintained procedures to keep factory workers from spreading mold and bacteria.
The company also failed to make sure equipment it installed more than two decades ago to test for sterility and harmful organisms worked properly, a Bloomberg report from late last year said.
The closures were expected to potentially impact approximately 25 pharmaceutical injectables that were manufactured at the plant, including five essential medications where Teva supplied greater than 15% of the market in the last year.
In March, Teva announced plans to permanently cease manufacturing operations at the site, and transfer products to other sites. It took a $54 million write-off as a result of the move, according to regulatory filings.
The site is near the 5 and 405 freeway interchange with “ground-zero access to SoCal’s 23+ million residents,” brokerage materials indicate.
Conceptual redevelopment plans listed by the broker include two industrial buildings totaling nearly 133,000 square feet, including a 72,882-square-foot building and a second 59,980-square-foot building.
The industrially zoned site appears to be in line with what developers are looking for in the tight Orange County market, where underused offices and hotels have been traded as land plays for future logistics sites.
Rent Increases Slow
The region counts nearly 207.8 million square feet of total industrial inventory, JLL indicates.
The vacancy rate dropped 10 basis points during the second quarter to 1%, a new low, according to a CBRE Group Inc. report released last month.
Rental rates are still climbing, albeit at a slower clip when compared with prior quarters. Rents rose 4.7% to $1.54 during the second quarter, compared with the 7.3% surge seen between Q4 2021 and Q1 2022.
CBRE attributes that slowdown to market uncertainty, rising gas prices and continued supply chain backlogs.
Still, rent prices are up a whopping 36% year-over-year.
“The market continues to favor landlords as availability remained low and demand was as strong as ever,” the report said. “Tenants continued to be more likely to renew due to the low amounts of available space.”