Los Angeles, CA (May 15, 2023) — Kearny Real Estate Company (“Kearny”) and Dune Real Estate Partners (“Dune”) have announced plans to develop Harbor Logistics Center, a new 163,000-square-foot state-of-the-art industrial facility to replace a recently renovated office campus in Santa Ana, CA conveniently located near U.S. Interstate 405 and California State Route 55.
With construction projected to begin in the first quarter of 2024, the development underscores the demand for quality industrial assets against a backdrop of a further weakening post-pandemic office market.
Kearny acquired the eight-acre office campus at 3130 and 3100 S Harbor Boulevard in 2018, returning it to market a year later after completing a multi-million dollar renovation and rebranding it as Elevate@Harbor. The office campus, which will be razed to accommodate the construction of the Harbor Logistics Center, features two mid-rise office buildings, outdoor amenity space, indoor/outdoor fitness facility with showers and locker rooms, on-site café, conference center and nearly one acre of open space.
“We were well on our way to stabilizing the campus when the pandemic hit,” said Assistant Vice President Dan Broder, who is overseeing the redevelopment for Kearny. “Taking into account the ongoing weakness in the Orange County office sector, our analysis showed that, despite what we’ve already invested, the optimal long-term use for the property was industrial. When completed in 2025, the new facility will be a welcome relief for local companies that are struggling to find industrial space in such a tight market.”
A scarcity of developable land, particularly in Orange County, has led to a severe undersupply of modern industrial space, resulting in record low vacancy in the region. According to CBRE, the 68 million-square-foot Greater Airport Area industrial submarket in which the property is located is experiencing a vacancy rate of 0.7% with leasing rates that have increased more than 18% from the prior year.
This demand for industrial space is in sharp contrast to a weakening Orange County office market, where post pandemic work-from-home trends have led to a vacancy rate of 14.3% at the end of 2022, the highest the market has experienced in the past decade according to a report by Avison Young.
Harbor Logistics Center, will feature 36’ clear heights, 18 dock high doors, ESFR sprinklers, and ample truck parking with the potential for trailer storage behind the truck court. There will be 7,000 square-feet of built out office space that could be expanded if requested by a tenant and parking stalls with EV charging for the tenants.
The site is located less than two miles from the U.S. Interstate 405 and four miles from the California State Route 55 providing excellent access to the surrounding region and the approximately 20 million people living within the combined statistical area of Orange County, Los Angeles County, San Diego County and the Inland Empire. It is also served by the Ports of Los Angeles and Long Beach and John Wayne International Airport, providing a future tenant domestic and global distribution. Area amenities include a wide variety of shopping, dining and entertainment options including the 2.8 million-square-foot South Coast Plaza, one of the largest shopping centers in the United States and SOCO/OC Mix, a 300,000-square foot destination culinary, fashion and lifestyle center.
Aaron Greeno, Dune Real Estate Partners’ Head of West Coast, stated “We believe strongly in the industrial fundamentals of Orange County and are excited to be able to acquire and develop such a well-located site in partnership with a best-in-class development partner.”
Kearny has developed and managed more than 12,500,000 square feet of industrial product in Southern California, including two state-of-the-art projects totaling 1.2 million square feet in Torrance, CA and Corona, CA to be completed in the next 30 days. The company redeveloped the 2.6 million square foot Century Business Center in Hawthorne, CA which is home to SpaceX. Kearny is also the master developer of the 311-acre Otay Crossings Commerce Park, one of the largest contiguous master-planned industrial developments in San Diego County.
“The City of Santa Ana has been very supportive of our plans. With the property already zoned for industrial use we anticipate a smooth approval process and look forward bringing a well located modern industrial product to a market experiencing an extreme lack of supply,” Broder added.
About Kearny Real Estate Company.
Kearny Real Estate Company is a vertically integrated operating company specializing in the acquisition, development, asset management and property management of office, industrial and land assets in Southern California. It currently has $1.9 billion AUM.
About Dune Real Estate Partners.
Dune Real Estate Partners is a New York City-based real estate investment firm executing a strategy focused on high yielding real estate equity investments resulting from capital market dislocation, primarily in the United States. Dune manages the Dune Real Estate Funds, which were launched by Mr. Daniel M. Neidich in 2005, and have raised approximately $4 billion of equity capital to date. Dune invests on behalf of pension funds, sovereign wealth funds, endowments and other large institutions and individuals.