A third-party logistics company is going big for its first Orange County location, inking an industrial lease in Brea running 127,000 square feet.
Knight-Swift Warehousing & Fulfillment, a logistics affiliate of Phoenix-based Knight-Swift Transportation Holdings Inc. (NYSE: KNX), is setting up a local base at the Imperial Distribution Center, a 367,194-square-foot facility along Imperial Boulevard that was built in 2016.
It’s the largest new industrial lease for the city in three years, records indicate.
“The pandemic brought about a huge increase for demand for e-commerce, and even with the uncertainty in the market we are seeing right now, we are still seeing large deals take place in the region,” JLL Vice President Garrett McClelland, who represented Knight-Swift in the deal, told the Business Journal.
The deal is the ninth industrial lease totaling more than 100,000 square feet over the past six months in OC, brokerage data indicates.
Long Beach-based industrial developer Pacific Industrial, in a venture with Clarion Partners LLC, a New York-based real estate investment manager, developed the Brea building at 1225 W. Imperial Blvd.
Cushman & Wakefield represented Clarion in the lease.
Knight-Swift is taking over the space from Atosa Catering Equipment Inc., a manufacturer of commercial refrigeration and other kitchen products, which signed a lease at the building shortly after it opened in 2016.
The building previously served as Atosa’s Southern California headquarters, which had been in Walnut. It vacated the space last year, moving elsewhere in Brea.
The remainder of the building is occupied by Newark-based WorldPac Inc., which inked a 240,000-square-foot lease at the building in 2017.
The Imperial Distribution Center is on a roughly 17-acre site, about 2 miles west of the Orange (57) Freeway and near the intersection of Imperial Boulevard and Puente Street.
The site previously held an RV storage facility.
A venture between Irvine-based Greenlaw Partners and New York-based Westbrook Partners LLC paid a reported $18 million for the site in 2013 and got the land entitled for the industrial project.
That venture sold the land to Pacific Industrial and Clarion in 2015 for an undisclosed price; sources not involved in the deal estimated at the time that the land traded for about $26 million.
The new development features 55 dock-high doors, 36-foot minimum clearance, and 4,976 square feet of two-story office space, according to the developers.
The Brea location is the first in OC for Knight-Swift, which counts several other Southern California locations in Los Angeles and the Inland Empire.
Demand, Supply Shift
Local brokers are still touting OC’s strong industrial market, with shrinking availability and rising rents, though that may change in the next few years amidst increasing inventory and changing market conditions.
Nearly 4 million square feet of industrial inventory is expected to come online by the end of next year, according to a third-quarter report from JLL.
“The question is whether landlords will be able to backfill these spaces,” JLL’s McClelland said. “We’ve been operating in a market where demand has outpaced supply, and we don’t want that to shift.”