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Tuesday, Jul 23, 2024

Samsung Electronics Boosting OC Presence

1M-SF lease in Fullerton; estimated $250M value

Samsung Electronics has inked a lease topping 1 million square feet to occupy the two largest buildings at the Goodman Logistics Center Fullerton, the former Kimberly-Clark Corp. manufacturing site that’s being redeveloped into a 1.5 million-square-foot logistics campus.

Real estate sources tell the Business Journal that Samsung’s technology distribution division will be the tenant of two of four industrial buildings totaling 1.03 million square feet at the campus, marking the largest industrial lease in the county in nearly three years.

The project, just north of the Riverside (91) Freeway along Orangethorpe Avenue, is the largest new industrial project built in the county in several years and is expected to deliver next month.

The campus is nearly full. Grocer Sprouts Farmers Market was reported have struck a 337,000-square-foot lease at another building at the center in July, for a new Southern California distribution hub.

Slipping Demand

CBRE is handling leasing on behalf of Goodman; Cushman & Wakefield represented Samsung in the recent deal.

The South Korean-based electronics giant is expected to use the site for local hardware distribution, such as mobile phones, memory chips, 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 occupies a few office spaces in the Irvine area, including a nearly 7,500-square-foot office at the Von Karman Towers complex.

The notable lease bucks prior reports from the firm of slipping demand for electronic devices and hardware, with the company posting its first profit decline in three years during the third quarter.

Preliminary results estimate third-quarter profit for Samsung to be at around $7.7 billion, down from $11 billion last year and off about 8.5% from analyst estimates.

Samsung is expected to deliver detailed earnings on Oct. 27.

$250M Value

Samsung’s deal is for Building 2 at 2099 E. Orangethorpe Ave. and Building 3 at 2289 E. Orangethorpe Ave., running 487,036 square feet and 538,226 square feet, respectively.

The 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 deal is the largest reported new 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.

Other buildings at the 65-acre Goodman campus include a 337,000-square-foot facility that Sprouts was reported to have taken, and a 173,925-square-foot property that’s reported to still be available for lease.

Delivering Soon
The Irvine-based developer, the North American division of Australian industrial giant Goodman Group, paid $202 million for the former Kimberly-Clark site in 2019 and kicked off construction last year.

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 redevelopment is set to wrap by next quarter, brokerage materials indicate.

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