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Kearny Real Estate Co. has begun the demolition of Elevate @ Harbor, a two-building, 197,370-square-foot office campus at 3100 and 3130 S. Harbor Blvd. in Santa Ana, Calif.
At the site, the firm plans to build the Harbor Logistics Center, a 163,000-square-foot Class A warehouse and distribution complex. According to Kearny the new facility is expected to be operational in early 2025.
Planning for the demolition and new development dates to May of 2023, Kearny purchased the larger 9.6-acre site in February of last year, with the intent to redevelop the property. According to REBusinessOnline, Kearny bought the buildings back in 2018, and invested $15 million in renovating the campus’ architectural finishes, floorplans and amenity spaces. The same source found that the developer is working with Dune Real Estate Partners for the redevelopment.
For Kearny Vice President Dan Broder, the renovations were a sunk cost in approaching the best possible use of the space. “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,” Broder told Commercial Property Executive.
The decision was in part motivated by strong demand for industrial space, too. “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,” Broder added.
Still, the conversions were short-lived. The Orange County Business Journal reported that the demolition was largely the effect of a distressed office market that resulted from high vacancy rates, with several other properties in the area slated for demolition to make way for industrial sites.
Ampco North Inc. is handling the demolition process, while Millie and Severson will build the Harbor Logistics Center. Leasing at the new facility will be spearheaded by CBRE Executive Vice Presidents Ben Seybold and Sean Ward, alongside Senior Vice President Keith Greer.
Adding to Orange County’s inventory
Upon completion, the Harbor Logistics Center will feature 36-foot clear heights and 17 dock-high loading doors, rooftop solar panels, 7,000 square feet of expandable office space and parking spaces with electric vehicle charging stations.
With an onramp to the Interstate 405 sitting one mile south of the development site along South Harbor Boulevard, the facility will have shipping access to much of Orange County and the Los Angeles metro, while John Wayne Airport lies roughly 4 miles to the southeast. On the opposite end, the Port of Long Beach sits approximately 17 miles westward.
READ ALSO: How Reshoring Is Driving Industrial Real Estate Demand
In contrast to its office market, Orange County boasts a healthy industrial market, with Cushman & Wakefield reporting a 2.7 percent vacancy rate, two times lower than the Inland Empire’s 5.4 percent.
Rent growth around the smallest SoCal market is strong too, according to CommercialEdge. As of November of last year, rents around the market grew by 11.6 percent, in line with the double digit growth in Los Angeles and the Inland Empire.
In 2023, Orange County’s industrial market saw the addition of 3.2 million square feet of new construction. The inventory is set to increase further, with the launch of new projects such as Tishman Speyer and Mitsui Fudosan America’s joint development of a four-building campus in Irvine, Calif.
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