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FivePoint Plots 700K SF Of Industrial in Irvine

Five Point Holdings LLC (NYSE: FPH) has submitted plans for two industrial projects on commercial land it owns at Irvine’s Great Park Neighborhoods, with plans for five buildings totaling north of 700,000 square feet.

Together, the pair of proposals mark the largest industrial projects on the books for Irvine, and the largest industrial development in South OC in well over a decade.

The proposals are for a 31.8-acre parcel at the southeast corner of Bake Parkway and the Santa Ana (5) Freeway, and a 6-acre parcel at the southeast corner of Alton Parkway and Muirlands Boulevard, representing the remaining commercial land sites currently up for sale from the Irvine-based master developer.

The projects could bring in well over $200 million for the developer. FivePoint sold another 42-acre parcel early this year for $240 million to Irvine-based quantitative investment management firm TGS Management LLC; development plans for that site haven’t been disclosed.

In an October earnings call, FivePoint CEO Dan Hedigan hinted the firm is nearing the close of the sale of the two parcels to industrial developers, who would then spearhead the projects currently under review by the city at the Great Park Neighborhoods, the FivePoint-controlled land that largely surrounds the city-run Great Park.

The proposals, filed with Irvine’s planning commission late last month, call for four industrial buildings on the larger parcel totaling 599,949 square feet and a 133,320-square-foot warehouse on the smaller, 6-acre parcel.

Together, the pair of proposals would be the largest under construction in Orange County since the delivery of the 1.5-million-square-foot Goodman Logistics Center Fullerton, which has been fully leased since delivering this year.

$200M+ Sale Potential

In the Oct. 19 earnings call, Hedigan noted the firm expects the sale of the sites, totaling nearly 40 acres, “to be closed at the end of this year.”

“It does take some actions by the city, which means it could slip a little bit. But right now, we’re still on track with that,” Hedigan said.

It’s unclear who the buyers are, or if tenants have signed on to the project.

FivePoint is spearheading the approval process for the larger site, while an affiliate of Reno, Nev.-based industrial developer Dermody Properties is heading the smaller project, city filings indicate.

Dermody, which has a local office in Irvine, also has a pair of industrial projects under development in Tustin along the Costa Mesa (55) Freeway, totaling about 311,000 square feet.

The sale of the two parcels would close out the first round of commercial land offerings in Great Park Neighborhoods, and jumpstart a second sales process of 100 additional acres of commercial land.

“We still also have another 100 acres of commercial land that we are only marketing on a kind of a lot-by-lot basis,” Hedigan said. “It’s not all on the market, but we’re actually looking at, as we close on this last 40 acres, of moving another group, another section of land into the market.”

Hedigan did not provide details on projected pricing; if the parcels sold near the price of the TGS parcel, FivePoint could expect a sale in the $215 million range.

FivePoint has been working with CBRE Group Inc. in the sale of the commercial parcels.

31.8-Acre Parcel

FivePoint is looking for city development approvals prior to the close of the sale of the nearly 40 acres.

It submitted a conditional use permit for the development of 599,949 square feet of industrial uses across four buildings including warehouse, office and light manufacturing on the 31.8-acre site, currently an undeveloped agricultural site near the Irvine Auto Center.

A maximum of 150,000 square feet may be used for light manufacturing uses, while a maximum of 61,560 square feet may be dedicated toward office purposes. The remaining space will be used for warehouses.

The proposed sizes for the buildings are 202,831 square feet, 176,337 square feet, 147,965 square feet and 72,816 square feet.

6-Acre Parcel

FivePoint’s conditional use permit for the smaller parcel calls for a 133,320-aquare-foot warehouse building with 15,700 square feet of light manufacturing use and 10,000 square feet of office space.

The lot is currently vacant, with surrounding uses including the FivePoint Gateway office campus and agricultural land to the north and west.

It’s near TGS’s site, which is located off Barranca Parkway, near the intersection of the San Diego (405) and Santa Ana (5) freeways, also south of the 1-million-square-foot office campus that now holds the growing Irvine medical campus of City of Hope, where work is now well underway for a new cancer-focused hospital.

TGS hasn’t started any development work for the site.

The three commercial land parcels—totaling nearly 80 acres—represent roughly half of the total land available for commercial development in the Great Park Neighborhoods.

42-Acre Parcel

TGS, under a venture called Barranca Properties LLC, paid about $5.7 million per acre for the parcel in a deal that closed in late December.

The sale marked the first commercial transaction disclosed by the Irvine master developer since CEO Hedigan first shared information for “planned commercial opportunities” for its Great Park Neighborhoods division last year.

“In many instances, we have the only entitled and ready developed commercial and industrial land of its kind in the market,” Hedigan said during a call earlier this year following the release of its first-quarter results (for more on the firm’s third quarter, see story, page 10).

TGS’s site could accommodate nine buildings totaling 721,308 square feet, according to a site plan obtained by the Journal.

Those buildings, as initially designed by Irvine architecture firm Ware Malcomb, could range in size from 26,700 to 131,086 square feet.

Commercial Boost

FivePoint officials previously said it expects to maintain strong pricing for the two remaining commercial sites now being sold, driven in large part by demand from industrial investors.

Sources previously told the Business Journal that several industrial developers put in bids to acquire both the 31.8-acre site and the 6-acre site that FivePoint owns.

“We continue to have historic low vacancy rates in the industrial market, coupled with continued rent growth which we expect will continue to drive demand in this preferred asset class,” Hedigan said in January.

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