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Industrial projects surge in Irvine, OC’s fastest-growing city
Nearly 2M sf of warehouses are under development in the “very durable” asset class
Irvine, the fastest-growing city in Orange County, is seeing a rebound of industrial projects after decades of limited development.
Nearly 2 million square feet of large industrial projects are either under construction or in the planning stage, the Orange County Business Journal reported. Proposals range from development on unused land to conversion of outdated buildings into distribution warehouses.
The surge in industrial development marks a departure from before the pandemic, especially near John Wayne Airport, where older industrial buildings were replaced with housing.
The Irvine City Council, recognizing the growing interest in industrial product, voted against an ordinance that would have increased oversight of large warehouse developments.
One addition to Irvine’s industrial base is the conversion of Inwood Park, a 160,000-square-foot office complex at 17300 Red Hill Avenue, into the Red Hill Logistics Center, a 156,632-square-foot warehouse with 18 dock-high doors.
The project is developed by Iowa-based Principal Financial Services, which bought the office complex in August for $44 million. Its conversion is expected to be completed late this year.
Irvine’s industrial boom also includes a project by Reno-based Dermody Properties to build Irvine LogistiCenters, a 225,000-square-foot distribution facility in two warehouses on more than 10 acres at Alton Parkway and Muirlands Boulevard, and at 2 Sterling.
Dermody bought two parcels that make up the site in 2022 for a combined $49.4 million. Its warehouses are slated to finish construction this year.
Compared to other real estate sectors, “industrial assets have proven to be very durable,” Matt Mexia, a Dermody partner in Irvine, told the Business Journal. “They’re supported by the historic rental rate growth we saw in previous years, high barriers to entry for new development and the continuing changes in consumer behavior bolstering e-commerce.”
Late this year, a joint venture between Tishman Speyer and Mitsui Fudosan expects to break ground on a 600,000-square-foot industrial campus containing four buildings at Bake Parkway and the 5 Freeway. They bought the 31.9-acre site from FivePoint for $145.9 million.
Of the three other large Irvine industrial projects set to complete this year, two are expected to wrap up this month, according to the Business Journal.
An unidentified developer is completing a 120,700-square-foot warehouse at 1062 McGaw Avenue, near the 55 Freeway. Los Angeles-based Ares Management is redeveloping a 136,600-square-foot warehouse at 18582 Teller Avenue, near Jamboree Road and the 405 Freeway.
Manhattan Beach-based 9th St. Partners is also redeveloping an industrial property into a 137,700-square-foot warehouse at 17451 Von Karman Avenue, next to Amazon.com’s first fulfillment center in Orange County. Three years ago, the developer bought the site for $26 million.
— Dana Bartholomew