Developer Western Realco is close to selling all of Beckman Business Center, the largest new industrial project in Orange County in four years, after completing a multibuilding deal with the country’s largest owner of warehouse and distribution properties.
The Newport Beach-based industrial developer, which in December finished the bulk of construction work at the eight-building, 1-million-square-foot project in Fullerton, this month completed a deal that saw San Francisco-based Prologis Inc. pay about $124 million for the three largest buildings at the development, property records indicate.
By total price, it’s one of the four largest industrial transactions seen in Orange County the past five years, according to CoStar Group Inc. records.
The Prologis deal is for a trio of building totaling close to 663,000 square feet.
The company (NYSE: PLD), which already owns about 50 industrial buildings in Orange County, has taken over leasing activity for the properties, which are unoccupied.
At nearly $186 per square foot, the deal is among the priciest on a per-square-foot basis for a larger-sized, unoccupied industrial building in Orange County.
The deal for the buildings nearly pays for the entire development at Beckman Business Center, a 44-acre site at the intersection of Harbor Boulevard and Lambert Road, near the Fullerton and La Habra city lines.
Western Realco bought the site—the former home of Beckman Coulter Inc.—in late 2015 and early 2016 in a pair of transactions.
After taking about a year and a half to get the necessary entitlements, it began construction work in the later part of 2017. Buildings at the site range from 42,000 to 309,000 square feet.
They were initially offered for sale and lease. The company opted to go with a sales-first strategy last year after seeing strong investor interest, officials said.
The entire development’s cost was roughly $130 million, according to Gary Edwards, principal for the privately held developer, who oversaw the project with Jeremy Mape, the company’s director of acquisitions.
“We’ve exceeded our [expected] pricing,” Edwards said.
$150M+ of Sales
The Prologis deal comes on the heels of other deals completed by Western Realco around the end of 2018 for a trio of midsized industrial buildings at the Fullerton project.
An affiliate of Bukewihge Properties, a private investor that property records indicate is based in Newport Beach, bought a pair of buildings along Lambert Road that total about 88,000 square feet. They sold for $21.1 million, or $241 per square foot, records show.
As with Prologis, Bukewihge plans to lease out the two buildings to individual tenants.
Only one building at the park—a 42,000-square-foot building at 4300 N. Harbor Blvd.—has been bought by an owner-user. A.J. Kirkwood & Associates, an electrical contracting firm based in Tustin, paid about $5.2 million for that building for its own use.
The 4300 N. Harbor building is the only stand-alone office at the development. It previously served as Beckman’s headquarters and was the only property at the site not to be torn down during construction, but instead was rehabbed.
Beckman, a maker of medical testing and research equipment, moved its operations from Fullerton to Brea in 2009. Beckman was subsequently sold in 2011 for $6.8 billion by Washington, D.C.-based conglomerate Danaher Corp., but still maintains local operations in Brea, where it occupies about 576,000 square feet.
The Fullerton campus remained unused until Western Realco bought the site. Prior developers had considered housing and retail uses for portions of the land.
At least one more building at Beckman Business Center is in line to have an owner-user. Western Realco executives said last week that Achem Industries America Inc., a Cerritos-based maker of tape and other packaging products, was about to close the purchase of a 105,322-square-foot building.
Terms of that imminent deal were undisclosed. The deal with Achem leaves just one building not spoken for, a nearly 79,000-square-foot building at 4320 N. Harbor Blvd.
The eight buildings were marketed for sale by Voit Real Estate Services’ Mitch Zehner, Seth Davenport, and Michael Heffner. That group will continue to market the three buildings for lease bought by Prologis.
“It is the biggest development in Orange County in recent history,” said Davenport, who noted that the sales pace for the project—one of the few new industrial developments of late marketed for sale—“outpaced our expectations.”
Sales at Beckman Business Center have totaled about $150 million, not counting the forthcoming Achem deal, which looks likely to trade in the $20 million range.
Sales have been averaging $195 per square foot, Mape said.
The last large industrial development in OC, the Anaheim Concourse project that was completed about four years ago, saw a seven-building collection of its buildings sell in 2016 for about $195 per square foot.
Those buildings, though, were largely leased prior to sale by its developer, Newport Beach-based Panattoni Development Co. Additional buildings at the project were sold to owner-users for about $150 per square foot, according to brokerage data.
Busy in Brea
Beckman Business Center is the largest project in Orange County for Western Realco, one of the most active builders of industrial properties in the county since the last recession. Its work in the region over the past 10 years includes a dozen projects totaling close to 3 million square feet.
It has built multiple properties in Brea, as well as other buildings nearby in Fullerton.
With Southern California’s industrial market near record levels for occupancy rates, lease rates and pricing, “it’s been our time in the sun,” said Edwards.
Figuring out the company’s next steps is still a work in progress, officials said. It now only has a handful of smaller projects in its local pipeline.
Potential deals now are “being priced to perfection,” with little wiggle room for developers in the event of a downturn in the market, Edwards said.
Whereas industrial-zoned land in OC had prices under $20 per square foot coming out of the recession, deals now are trading hands closer to $60 or more per square foot, according to Mape.
Executives said they’re still looking at area deals, but are seeing increased competition.
The firm—like nearly every major industrial developer in the region—remains active in the Inland Empire. It has about 1.5 million square feet in the works now in Perris, Fontana, and Rialto.
