Two Orange County-based companies are joining forces in one of the biggest leasing deals in the United States in recent years.
Newport Beach-based CT Realty is developing a 5-million-square-foot complex near Columbus, Ohio, for Costa Mesa-based Anduril Industries.
Anduril will invest more than $900 million in the project called Arsenal-1. CT will spend an equivalent amount, Managing Partner James “Watty” Watson told the Business Journal.
“This is one of the largest ever constructed in the history of our business,” said Watson, a 45-year veteran of the commercial real estate industry.
“We are really proud to have been selected by Anduril to execute a project of this magnitude.”
CT Realty is a well-known developer that has acquired and managed more than $8 billion in industrial and office properties since its inception 31 years ago.
In 2016, CT Realty, under the direction of Partner Rob Huthnance, steadily bought land around Columbus’ Rickenbacker International Airport and now has about 900 acres in total.
It owns the 382-acre Rickenbacker Logistics Park, which already has 4 million square feet of Class A Logistics buildings.
The $1.8 billion Arsenal-1 project will be on 500 acres adjacent to the logistics park.
Arsenal-1, with the site announced in January, is the largest new project in Ohio’s history by number of employees, creating over 4,000 jobs, the state said.
The project “represents the future of defense manufacturing—a centralized campus designed to flexibly reallocate resources, integrate software-defined production processes and enable unprecedented scalability,” CT Realty said in a statement.
CT, Anduril Collaboration at Site
It is one of the biggest lease deals in the U.S. in years. A comparable lease may be another Orange County company, Irvine-based Rivian Automotive Inc.’s plan to lease a 9-million-square-foot factory near Atlanta.
Anduril narrowed the field down to five finalist cities.
“Watty’s relentless determination, coupled with strong support from Ohio leadership, was the differentiator and really helped us land the business,” CT Realty Managing Partner Carter Ewing told the Business Journal.
The state of Ohio has approved $452 million in tax breaks over 30 years for the Arsenal-1 facility. The state also plans to spend $70 million on a taxiway and other improvements at Rickenbacker International Airport to accommodate the company, The Columbus Dispatch reported. The airport features two 12,000-foot runways to help guarantee access and supply routes.
The Anduril Edge
Arsenal-1 is designed to eventually produce tens of thousands of weapons each year. The factory comes at a time when military experts are increasingly sounding the alarm about the lagging U.S. defense industry.
Anduril says its edge is using artificial intelligence and off-the-shelf components to build less expensive weapons guided by the company’s signature Lattice software platform
Anduril says the site will have a “software-driven approach to manufacturing” and will manufacture and produce most of Anduril’s autonomous weapons, sensors and systems at full rate production.
“Anduril is transforming the manufacturing processes in America,” Watson said.
Anduril, which aims to start production at the site next year, will initially focus on high-profile products such as the fighter-like unmanned drone Fury, the reusable drone Roadrunner and the Barracuda cruise missiles.
Founded in 2017, Anduril is on a hot streak.
Last August it raised $1.5 billion in a funding round that valued the company at $14 billion.
For this achievement, the Business Journal in January named co-founders Palmer Luckey and Chief Executive Brian Schimpf as Businesspeople of the Year in the tech sector.
Then last month, it was reported that Anduril was close to a new funding round that would push its valuation to $28 billion, with a major chunk of the capital coming from Silicon Valley billionaire Peter Thiel’s Founders Fund.
The G Round of up to $2.5 billion could put the 8-year-old startup on the brink of a public listing to further shake up the military.
Anduril is challenging such behemoths as Lockheed Martin (NYSE: LMT), RTX Corp. (NYSE: RTX, formerly Raytheon) and Northrop Grumman (NYSE: NOC).
Anduril is hoping for a boom in business under President Donald Trump. However, the increase may be tempered by the Pentagon’s edict to cut defense costs in many areas. So far, the Trump administration has publicly shown more interest in nuclear modernization questions, missile defense and Virginia-class attack submarines.
Up to 10 Buildings at Ohio Site
CT says it will put up 10 new buildings to reach the 5-million-square-foot goal. The development will also include roads and other infrastructure.
The first phase of Arsenal-1 is a 775,000-square-foot building that will be completed this year.
“Construction of the second phase, consisting of a 915,000-square-foot manufacturing facility and a 250,000-square-foot showcase and office building, is to commence immediately,” said Huthnance, who will be in charge of the construction.
CT is confident about meeting the accelerated time schedule.
“We should have them in a couple million square feet in ’26,” according to Watson.
CT’s $900 million investment in 5 million square feet of industrial works out to $180 per square foot for the bare bones of the 10 buildings, which is in line with what a higher-end, large industrial building costs to build.
If Anduril pays $1.25 per square foot lease, that would equate to about $75 million a year, enabling CT to make its money back in 12 years, also roughly in line with industry averages.
CT Realty’s Connections to Koll
Since its establishment in 1994, CT Realty has completed over 300 transactions valued at more than $8 billion.
“We’re a real estate investor and developer. We buy real estate, and we build from the ground up,” said CT Realty Managing Partner James Watson, who is known among his colleagues as “Watty.”
Its three managing partners – Watson, Dominic Petrucci and Carter Ewing – all have connections to The Koll Co., which is well known in Orange County for developing or acquiring more than 75 million square feet of office, industrial and retail properties during its history.
Before Watson joined CT in 2010, he was president of Koll. Ewing was the managing regional partner in charge of Koll’s Denver office from 1996-2001, having overseen 3 million square feet of institutional developments in the Rocky Mountain region on behalf of several investors, including Prudential, UBS and Bank of America. Prior to joining CT, Petrucci served in senior executive and partner positions at Koll, Buchanan Street Partners, Cornerstone and Kitchell Corporation.
Watson was an investor in CT when he was asked to step in as CEO in 2009 when founder Bob Campbell contracted cancer.
“Previously, CT sponsored and managed 13 CT Funds. which owned 6,000 multifamily units, office buildings, industrial parks, self storage facilities and other real estate types,” Watson said.
At that time, Ewing and Petrucci joined as well. They bought out the other shareholders and took the company in a new and focused strategy dedicated to the industrial sector in major markets around the U.S. by partnering with large institutional investors. Its investors are well known in business circles, including Carlyle, Harvard Management Co. and Diamond Realty Investments, a subsidiary of Mitsubishi Corp.
CT, which has about $3 billion in projects under development, is primarily focused on Class A industrial logistics developments throughout the U.S., having acquired 3,000 acres of industrial land since 2010 that will support 50 million square feet of logistics buildings upon completion.
Its projects include the Florida Gateway Logistics Park in Jacksonville, Florida, and Industry Center in the City of Industry.
Another institutional investor is PGIM, which has about $1.4 trillion in assets under management as the global investment management business of Prudential Financial Inc. PGIM has invested in two big CT Realty projects: a 4-million-square-foot complex called Agua Mansa Commerce Park in the Inland Empire, which is being finished this year with a value estimated at $1.2 billion; and the Garden State Logistics project in Pennsville, New Jersey, with 1.8 million square feet and a value around $500 million.
The institutional investor backing CTs Ohio investments is Walton Street Capital, a Chicago-based private equity real estate investment firm that has raised nearly $17 billion of capital commitments from global institutional investors and has acquired, financed, managed and sold more than $55 billion of real estate.
About 20 CT employees are in Newport Beach with seven in Dallas, plus a few that work out of Chicago and elsewhere, according to Ewing.
The mammoth Anduril Arsenal-1 project near Columbus, Ohio, will be managed out of the CT offices in Dallas and Chicago, led by Eastern U.S. Partner Rob Huthnance and Rolf Anderson.
