A commercial complex consisting of three buildings in Santa Ana is set to be demolished and replaced by a distribution facility, adding to the growing number of logistics buildings along the southern stretch of the 55 freeway.
Terreno Realty Corp. has acquired the property at 1720 E Garry Ave. for $14.8 million and plans to invest $40.6 million in transforming it into a 91,500-square-foot distribution building with rear-loading access.
The existing buildings, which have a combined area of 105,558 square feet, are located on the southeast side of the freeway, near the Dyer Road exit. The complex is currently leased to various tenants.
Also see: Owners of empty Southern California offices pivoting to apartments, warehouses
Terreno, which owns properties in the Los Angeles area and five other coastal metros, has already secured a single tenant for the new warehouse. The tenant is described as “a provider of temperature-controlled life sciences supply chain solutions.”
The redevelopment project will include 145 parking spaces and is scheduled for completion by early 2025.
The industrial conversion trend is gaining momentum in Santa Ana, where many older office and commercial campuses are struggling to retain tenants. In May, we reported that the owner of a two-building campus in Santa Ana plans to demolish the recently renovated Elevate@Harbor, the headquarters of Optima Tax Relief.
Kearny Real Estate Co. and Dune Real Estate Partners are collaborating on a 163,000-square-foot distribution facility to replace the mid-rise Elevate@Harbor located at 3130 and 3100 S. Harbor Blvd. Kearny acquired the campus for $34.8 million in 2018 and invested in a multimillion-dollar renovation that lasted a year.
Also see: Southern California’s empty offices surge 67% in pandemic era
According to Kevin Bender, executive managing director at JLL in Los Angeles, tenants are downsizing their space requirements or vacating altogether, leading to increased office vacancies. Property owners are selling their stakes to industrial developers like Kearny and Dermody Properties. Dermody recently purchased the vacant Ricoh campus along the 55 freeway for a reported $88 million and is nearing completion of the LogistiCenter at 55, which includes two tilt-up warehouses spanning a combined 311,770 square feet.
Also see: Ricoh Electronics in Tustin relocating inland to Rialto
J.C. Casillas, managing director of research at NAI Capital, believes the conversion trend makes sense as office rents decline due to the shift toward remote work. He noted Santa Ana’s connectivity to Los Angeles through major freeways like I-5, CA 55, and I-405, making it an attractive location for logistics businesses.
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According to U.S. Census data, Orange and Los Angeles counties have seen a significant decrease in commuters since the start of the pandemic, as more employees continue working from home. Casillas also revealed that the industrial vacancy rate in Santa Ana for the third quarter is currently a low 1.9%.
Industry people
Luis Porrello has been promoted to California district leader at WSP, an engineering firm. Based in the Irvine office, Porrello will oversee the firm’s business performance and client engagement in the state. He previously served as WSP’s West region development director. The company specializes in designing for buildings, transportation, energy, water, and environment markets.
Real estate transactions, leases and new projects, industry hires, new ventures, and upcoming events are compiled from press releases by contributing writer Karen Levin. Submit items and high-resolution photos via email to Business Editor Samantha Gowen at [email protected]. Please allow at least a week for publication. All items are subject to editing for clarity and length.
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