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Guess Who's Coming to OC

WASHINGTON DC 06.15.2017

MID-ATLANTIC HEALTHCARE REAL ESTATE FORUM

Development, Leasing, Design and the Impact of Regulatory Reform

Paula Crowley -- Anchor Health Properties
Gill Wylie -- Johns Hopkins Medical Management Corporation
Charles Weinstein -- ​Children's National Medical Center
Guess Who's Coming to OC
One of the linchpins of the US economic recovery (as bumpy as it's been) has been manufacturing, but that sector's growth has been slow to translate into real estate activity in SoCal. That might be changing as manufacturers here feel the need to expand or relocate within the region.
Robert Ritschel
Newport Beach-based Saywitz Co SVP Robert Ritschel tells us that he expects to see more industrial transactions involving manufacturing companies in SoCal. These deals are likely to involve relocations and expansions of existing companies, rather than new companies coming into the area, because SoCal is an expensive place for manufacturers to do business. (Haven't you seen an episode of The Real Manufacturing Companies of Orange County?)Companies that found it cost-effective to relocate from SoCal have for the most part already left. But those manufacturing companies that need to be here for business purposes, or which are owned by SoCal entrepreneurs, will continue to operate here, Robert says.
Pacific Urethanes and Precision Foam
The Saywitz Co recently repped Pacific Urethanes and Precision Foam in securing a facility for the company's West Coast operations. The manufacturer took 193k SF in Ontario, Calif., in the recently renovated 1671 Champagne Ave, where it will make foam for the bedding industry. Robert says that many newer buildings provide for greater ceiling height, increased power and more functional layouts than older manufacturing buildings. "We're working on a number of transactions in which companies find it more cost-effective to be in a newer building," he says. "And we expect to see more of these transactions. A recovering economy will create an additional need for better and bigger manufacturing real estate."
Seth Davenport, Mitch Zehner
Yet sometimes that new space can prove elusive, says Voit SVP Seth Davenport, especially in Orange County (right, pictured with EVP Mitch Zehner). In fact, many buyers and tenants find that they're competing for opportunities in the market, and that the current low vacancy rate for suitable industrial space—which is about 4.5%—is curtailing the ability to find exactly what they need, obliging them to be more flexible in their site-selection process.
100 E. La Palma Ave
Seth and Mitch recently repped DG Performance, a manufacturer of aftermarket motorcycle exhaust pipes (for those hogs that need to be louder), in its purchase of 100 E. La Palma Ave, a 26k SF building in Anaheim. Industrial inventory is low in Anaheim, Seth says, but by drawing on local resources they managed to identify the property, which meets DG Performance's manufacturing needs, while staying within their the area. Ashwill Associates' Derek Paul repped the seller.
1240 N. Red Gum St
The duo also recently repped the seller in a $2.9M sale of the 28k SF 1240 N. Red Gum St, another Anaheim industrial building. The buyer, a nutraceuticals company, plans to expand its manufacturing operations there. In this case, the buyer needed to be flexible, Seth tells us. The building includes about 13k of office space, which the buyer wasn't originally in the market for, but ended up taking for future expansion. Lee & Associates' Scott Seal repped the buyer.