Add Aliso Viejo-based Shea Properties to the growing list of local and national developers eyeing older Orange County commercial sites for new industrial projects.
The commercial real estate developer just closed on the purchase of a largely vacant site along Gothard Street in Huntington Beach, where it plans to build a two-building, 144,460-square-foot industrial center.
The larger of the two buildings would run about 92,600 square feet and include about 8,800 square feet of office space, according to marketing materials for the site.
The project will be going up at the former home of the Randall Lumber Co. on a 6.5-acre site about 1 ½ miles west of the San Diego (405) Freeway, between Slater and Warner avenues.
A time frame for construction hasn’t been disclosed, but Shea officials said the high-end project—to be called Shea Center Huntington Beach—will be constructed to environmentally friendly standards and accommodate above-average parking requirements, among other features.
The project looks to be the first office or industrial project Shea Properties has built in OC in several years. It has long been one of the area’s more active commercial developers.
Largely Quiet
Shea has remained active in other markets—including San Diego, Oxnard and Denver—but been largely quiet in OC since 2010, when it opted not to move ahead on the 820-acre redevelopment of the former Marine helicopter base in Tustin.
Shea executives said the privately held company, a unit of Walnut-based J.F. Shea Co., now has its eyes on more projects in the region.
“This acquisition kicks off Shea Properties’ program to significantly increase its industrial portfolio through new development and acquisitions of value add opportunities,” said Jon Marchiorlatti, the company’s vice president of industrial acquisitions and development.
“Over the last few months we have been looking for the right properties on which to develop,” Marchiorlatti said.
The Huntington Beach purchase “signals our intent to continue the search for suitable sites on which to build even more industrial product,” he said.
Shea Properties isn’t alone.
On the Lookout
There are more industrial developers on the lookout for land in OC than at any time in the past six or so years, according to Kurt Strasmann, senior managing director for the OC operations of CBRE Group Inc.
“It’s the most we’ve seen in a long, long time,” said Strasmann, whose brokerage company represented Shea in the Huntington Beach sale and is working with the developer to market the property to prospective users. “There’s a lot of potential development; developers have re-emerged, very aggressively.”
There are nearly 15 potential industrial sites across OC that are either in escrow, just sold, or in the early stages of development, according to Strasmann.
Those deals, combined with a couple of transactions just over the county line in Los Angeles, represent nearly 300 acres of potential development.
Vacancy Rate
You can thank the county’s tight industrial market for much of the new activity. OC now has a vacancy rate of less than 5% for its 244-million-square-foot base of industrial buildings, according to data from the Irvine office of Voit Real Estate Services Inc.
Vacancy rates are now below prerecession levels for several key markets in the northern and central parts of the county.
Other large OC industrial projects in the planning process include a 33-acre site in Cypress at the northeast corner of Katella Avenue and Enterprise Drive.
San Francisco-based Prologis Inc., the world’s largest owner of distribution facilities, bought the land late last year for undisclosed terms.
The company has proposed a three-building project at the site totaling about 725,000 square feet. It is believed to be the second-largest industrial project on the books for OC right now, behind Sacramento-based Panattoni Development Co.’s 1.6-million-square-foot Anaheim Concourse project.
The Prologis plan has received some criticism from local communities over its size and potential for truck traffic in the area; the developer is said to be reworking plans, which could result in a scaled-back project later this month.
Newport Beach-based Western Realco, which recently completed an 83,000-square-foot facility in Brea, is moving ahead on additional projects in Anaheim and Irvine. Other area developers also said to have plans in the works here include Irvine-based Sares-Regis Group and Greenlaw Partners in Newport Beach.
Terms of Shea Properties’ purchase in Huntington Beach were not disclosed.
In general, land slated for midsize and larger industrial projects in OC has been trading for about $25 to $30 per square foot, according to Strasmann.
The midpoint of that range would equate to a roughly $7.5 million price for the Huntington Beach site.
A couple of years ago, the same type of land was selling for $18 to $20 per square foot, Strasmann said
Brokerage data show the building being sold by family members affiliated with Randall Lumber.
Mike Bouma and Mitch Zehner of Voit Real Estate Services represented the seller of the 6.5-acre lot, while Bob Goodmanson and Chris Bates of CBRE Group represented Shea Properties and will continue to represent Shea on the marketing of the property.
