1730 South Anaheim Way benefits from its proximity to the I-5, as well as Disneyland, the Honda Center, Angel Stadium, and the Platinum Triangle. | Courtesy NKF Capital Markets

Industrial Assets in a Near-0 Percent Vacancy Market

Carrie Rossenfeld Industrial

As SoCal Real Estate recently reported, a joint venture between Batcheller Equities and Panattoni Development has sold 1730 South Anaheim Way, a newly developed 143,930-square-foot industrial building in Anaheim, California, to American Realty Advisors. NKF Capital Markets co-head of U.S. capital markets Kevin Shannon; executive managing directors Bret Hardy, Jeff Read, and Scott Read; and managing directors Scott Schumacher and Greg Osborne represented the seller and developer.

Few industrial assets of any size are on the sale block these days, especially in Orange County, where the industrial vacancy rate for large buildings with desirable industrial attributes like 1730 South Anaheim Way is hovering near 0 percent. We spoke with Scott Anderson, director of the investment group at American Realty Advisors, about his firm’s plans for the property, as well as its strategy with larger OC industrial assets and the advantages they have over those in the Inland Empire.

SoCal Real Estate: What are your plans for 1730 S. Anaheim Way?
Anderson:
This asset meets the very definition of core and is contemplated as a long-term hold.

What is your company’s view and strategy with larger Orange County industrial assets like this one?
Orange County industrial has historically outperformed national averages and is considered by many to be among the top-five industrial markets in the nation. When you break this down further and look at buildings that meet the current market standard of 32-foot-plus clear heights with ESFR, you discover that these buildings represent less than 4 percent of the greater Orange County industrial inventory. The Anaheim submarket exhibits an even stronger vacancy profile at approximately 1.8 percent. This manifests itself in a vacancy rate that drops from 2.5 percent at the market level to 0 percent when adjusted for the aforementioned submarket, clear height, and ESFR attributes. We believe that this asset represents one of the top industrial buildings within one of the top industrial markets in the nation.

What advantages do industrial assets in Orange County have over those in the Inland Empire?
Orange County industrial assets benefit primarily from proximity and access to customers and executives. Whereas the Inland Empire is more generally known for large-scale distribution warehouses, Orange County is a smaller-tenant market that caters to a combination of entrepreneurial businesses and last-mile and regional distribution, as well as benefitting from proximity to executive housing. With increasing traffic, population and demand for same-day delivery, we view infill Orange County industrial assets as an essential component of our portfolio success.

What else should our readers know about this transaction?
While the physical aspects of the asset are self-evident, we were also drawn to a number of less-apparent attributes. Not only does it offer convenient access to Interstate 5, with major on- and off ramps feeding directly into the property, but the building also provides excellent visibility and signage to the more-than-275,000 cars that pass by each day. We also believe proximity to the economic engines of Disneyland, the Honda Center, and Angel Stadium, as well as to the increasing residential density within the Platinum Triangle, will help diversify demand for the asset from a business-servicing and last-mile perspective.