Contact Us

'Their Appetite Is Voracious': Amazon Gobbling Up Industrial Space In Orange County

Last month, Amazon dropped $63.2M to snap up the old Orange County Register printing plant in Santa Ana, the Orange County Register reported. The price tag raised some eyebrows. 

“It’s a lot [of money] for industrialized land today, but it’s 5 Freeway frontage, and they couldn’t get a more central last-mile property,” Lee & Associates principal Jack Haley told the Register. “In an infill, densely populated market area, they can zip through that part of Orange County to get to their customers ... It checks all the boxes you want to check off.”

Haley and other brokers out of Lee & Associates’ Orange County office who worked on the deal declined to comment for this story.

In total, Amazon purchased the 16.5 acres around the Register's old office building. The printing plant will be bulldozed as part of a plan to put a 112.5K SF last-mile facility on the vacant parcel behind it. Plans filed with the city of Santa Ana indicate the space around the facility will be parking, the Register said. 

It was the latest and most expensive in a string of transactions Amazon has made to expand its footprint in Orange County over the last 12 months. 

Amazon didn't buy the orange-hued Orange County Register office building, but did buy the printing plant next to it.

The printing plant sale was an interesting move for Amazon, Stream Realty Managing Director Chase MacLeod said. “Most of what they’re doing is leasing property, so it was interesting to see them purchasing property,” MacLeod said. "What they’re doing is investing in different ways than they usually do."

Amazon has made some big leasing moves in Orange County since September 2019, CoStar data shows. A year ago, Amazon signed a lease in Santa Ana for a 414K SF renovated industrial building; the lease had a February 2020 start date, according to CoStar Market Analyst Katerina Cheok. In December 2019, Amazon inked a lease for 143.3K SF in Anaheim, again in an existing building, this time with a June 2020 start date.

Amazon isn't just taking up existing space. It's also converting an RV storage site in Mission Viejo into a 300K SF fulfillment hub, Cheok said. In its Q4 2019 industrial market summary, Lee & Associates, which handled the Santa Ana and Mission Viejo deals, indicated that Amazon was still on the hunt for even more space for last-mile locations. 

Demand for industrial warehouse space has grown across the board as e-commerce becomes increasingly more popular with consumers and the coronavirus pandemic accelerates online shopping trends that were already in motion, but some brokers in Orange County say that Amazon’s presence dominates. 

Jeff Read, executive managing director at Newmark’s Orange County office, said that Amazon is the main driver of industrial demand in the area. “Their appetite is voracious,” Read said.  

That’s true for Amazon across the country. An Oct. 14 chart published by CoStar analyzed leases inked since the start of the year in an attempt to see which companies are driving the accelerated demand for industrial space across the country. CoStar found that, by far, Amazon is behind the most leases nationwide, having signed on to at least 59.7M SF this year. In a distant second was Walmart, with claims on just 5.1M SF of industrial space. 

Orange County may not have the huge swaths of land that the Inland Empire can offer for million-plus SF warehouses, but it is still a target for last-mile facilities, the smaller warehouses that are the last stop for products before they hit consumers’ hands. 

“It seems to be that everywhere Amazon grows, they’re laser-focused on dense populations," Stream Realty's MacLeod said. 

It's not just Amazon. “Due to the pandemic, the dense population in Orange County has been generating an even higher demand for fulfillment and distribution centers for last-mile logistics providers,” said Chris Smith, a senior associate in the capital markets group at Avison Young’s Orange County office. 

JLL's Q3 industrial report shows that industrial leasing and demand saw a spike in the three-month period. Leasing activity hit its highest level since 2014. Because of the tight quarters here, investors, developers and would-be tenants are getting creative.

“Adaptive reuse or complete teardown for new development strategies are becoming increasingly commonplace,” Smith said.

Amazon has also joined that trend. In addition to the Orange County Register’s former plant, Amazon is planning a last-mile facility at Mitsubishi’s old headquarters at 6400 West Katella Ave. in Cypress.

The office campus sold for $57.5M in October 2019, according to commercial real estate data site Reonomy. In June a notice went out alerting Cypress residents that new owners Duke Realty plan to preserve a warehouse and office building, demolish any other auxiliary buildings on the site and repurpose the warehouse as an Amazon facility, according to a city website for the project. 

A representative for Amazon told Bisnow that they do not comment on the company's road map or specific operations, but it seems like they aren't done with Orange County yet. One broker who spoke to Bisnow said Amazon had done or had in progress between seven and nine deals for space in the last 12 months. So far, we only know of five.


Related Topics: Amazon, ecommerce, Orange County, CA