Prologis Snaps Up Orange County Office Campus For $96M
A five-building office campus in Lake Forest has sold to the largest owner of distribution centers worldwide, the latest in a recent wave of industrially zoned office properties in Orange County selling to industrial developers.
C&W did not disclose the identity of the seller, but public records indicate that it was Drawbridge Realty. The San Francisco-based office investor purchased the property in 2017 for $76.2M, according to Reonomy. The approximately 322K SF, 23-acre campus is 100% leased, according to Drawbridge’s website.
Prologis’ plans for the site aren’t yet known, but an industrial redevelopment is likely as the company has frequently used that strategy before.
The property is across the street from the former Panasonic headquarters, where a cluster of buildings also owned by Drawbridge were sold off last year in two sales to Black Creek Group and Western RealCo, the Orange County Business Journal reported at the time. Industrial uses are in the cards there as well, with the two developers planning to demolish the offices and replace them with three industrial buildings totaling about 380K SF.
Cole told Bisnow the Prologis sale is similar to the ones across the street in that all are office properties zoned for industrial uses, making a redevelopment process simpler.
“This is a continuation of the story for infill markets like Orange County,” Cole said.
Demand for last-mile facilities is far outpacing the supply of available land in OC, and in many other markets across the country, as distribution companies look to increase their footprint in dense population centers.
Orange County’s industrial vacancy in Q4 was 1.5%, according to a Cushman & Wakefield report. “Orange County remains one of the tightest industrial markets in the nation,” the report said.
The five-building campus that Prologis picked up has tenants whose leases are up in less than a year, as well as longer-term tenants who could stick around for seven or eight years. Buyers of industrially zoned offices are increasingly willing to wait leases out, Cole said.
On an earnings call late last year, Prologis executives described a frenzied market for warehouse and last-mile space.
“As demand surges, having the right logistics real estate in the right locations has never been more critical to our customers,” Prologis Chief Financial Officer Thomas Olinger said.