The property already acquired holds 14 office and factory buildings containing 1.5 million sf. Boeing has leased back most of that space and is tentatively scheduled to give back the first chunk of it--about 15 acres--for renovation or redevelopment this summer.
"That first chunk includes buildings that we can and have anticipated renovating, but our actions ultimately will be driven by demand factors," McCann says. "We are currently talking with folks interested in leasing renovated space but we also are evaluating a plan to tear down that space and build new industrial in these early phases."
The cost of the acquisition and the value of the lease back were not immediately available. McCann declined comment, citing a confidentiality agreement, and Boeing has not yet disclosed the information in any SEC filings.
Generally speaking, McCann says the cost of the land was such that it could be profitably used for industrial or office in part because the allowed density for either is .5 sf of building area for every 1 sf of land area. As well, he says the cost to lease industrial warehouse space in the area has risen 50% over the last two years and now stands in the mid $0.60s NNN for larger box space and more for smaller chunks. "North Orange County is a very healthy industrial market," he says.
The current plan calls for the renovation of 450,000 sf of existing buildings and 1.2 million sf of modern, LEED-certified office, warehouse and retail facilities. The current expectation is that the industrial that ING and Panattoni plan to develop on the site will be smaller (20,000- to 40,000-sf) for-sale product, "but if the market stays healthy (and rents continue to grow), in two years time renting the space may work as well."
Despite there being a schedule for Boeing vacating the property, it can delay any of those plans and can even call off the sale of the remainder of the property. But based on the company's plans to consolidate operations in Huntington Beach, McCann says he expects Boeing to eventually follow through on both counts.
"There was tremendous competition for this site in the development community," says Panattoni principal Stephen Batcheller. "Our partnership with ING Clarion was instrumental in fulfilling Boeing's desire for an expedited transaction… ."
The Boeing site is located on East La Palma Avenue just north of the Riverside (SR-91) Freeway between both the Orange (SR-57) Freeway and the Costa Mesa (SR-55) Freeway. The property is situated at the center of a 2,300 acre zone designated by the city as the "Anaheim Canyon Business Center," which is scheduled for major redevelopment.
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