L’Oreal Makes Big Exit From L.A.
The international firm is moves its distribution facility to Tejon Ranch Commerce Center, thanks to availability of quality space and an attractive tax incentive program.
“This is the first adoption or implementation of an application to the Advance Kern program. L’Oreal is now the initial applicant on the incentive program. We think this is a very significant announcement and hopefully a foreshadowing of future growth plans for other companies,” Joe Rentfro EVP of real estate at Tejon Ranch Co., tells GlobeSt.com. “The San Fernando Valley and the Santa Clarita area are at historically low vacancy rates, and as often happens with low supply, you start to get pricing pressures. This is a great opportunity for Tejon Ranch Commerce Center, as proximate as we are to the L.A. Basin.”
L’Oreal signed a 240,000-square-foot lease at Tejon Commerce Center, filling the remainder of a 480,000-square-foot building. “They are currently operating in the Valencia area, and this is an expansion opportunity for them to move up from Valencia to the Tejon Ranch Commerce Center,” says Rentfro. “They will be working throughout the end of this year and into early 2019. They will have some operations in Valencia in early 2019, and they will be fully phased up here by mid 2019.”
The Los Angeles area has limited industrial supply with historically low vacancy rates, and as a result, rental rates have reached record levels. These dynamics put pressure on some industrial users, especially expanding companies like L’Oreal. Tejon Ranch, which is entitled for 20 million square feet of industrial space, offers future growth opportunities as well. “L’Oreal not only comes up here and finds an immediate growth need, but they also have room to expand in the future as the company continues to grow,” explains Rentfro. “That was a big reason why the firm chose Tejon Ranch. We are entitled for 20 million square feet and we are only a quarter of the way built out. Companies realize that they are able to grow without moving again. L’Oreal is the first logistical move, but other people have been looking in the area and I think that this will be a catalyst for those other companies.”
Kern County is only 40 minutes from the San Fernando Valley and less the two hours to the ports and LAX airport, making it attractive to industrial users looking for alternatives to the Greater L.A. area.
The Advance Kern program will only help to incentivize users to relocate. “Advance Kern was enacted by the Kern County Board of Supervisors, and the impetus was a collaborative effort to make the county more competitive and to give us additional marketing tools that are tangible and valuable to prospective businesses,” says Rentfro. “This was a way to provide prospective businesses an incentive to relocate and create jobs in Kern County.” L’Oreal was the first applicant under the program, and The Kern County Board of Supervisors approved a $2.3 million economic incentive package for the firm. The package was based on 155 new jobs, 45 jobs in supporting services and $8 million in sales in the local economy.