A vacant property near John Wayne Airport in Orange County looks set to go from plans for a hotel to an industrial development under its new owner.
Black Creek Group bought the property at 18582 Teller Avenue in Irvine from WGE Capital Group, formerly HJ Capital Group, for $38.6 million, according to Bisnow.
WGE Capital Group was in default on a loan tied to the property. The deal with Black Creek–a Denver-based unit of Ares Management in Los Angeles–closed days before a scheduled trustee sale slated for Nov. 1.
Irvine-based WGE Capital Group bought the property two years ago for $33.3 million and planned to build a 700,000-square-foot mixed-use development with a 258-room hotel, with more than 140,000 square feet of office space, a medical office building, parking, a gym and a food hall.
That project was approved in 2019; WGE was set to break ground in early 2020.
Black Creek hasn’t yet filed plans for the industrial project, but is said to be planning a 140,000-square-foot facility. It’s unclear what specifically the facility will be geared towards, but demand is currently strongest for logistics space in the John Wayne Airport-area market, which includes portions of the municipalities of Santa Ana, Irvine, Costa Mesa and Newport Beach. Black Creek is pursuing office-to-industrial conversions elsewhere in Southern California as well, according to Bisnow.
The pivot to industrial on its latest deal is another sign of the industrial market’s strength.
The sector is booming throughout Southern California and nationally, thanks in large part to demand from e-commerce tenants. Inflation and pandemic-related supply chain constraints are also contributing to a hot market.
Southern California is overall one of the tightest and most expensive markets in the country.
Last-mile warehousing is particularly sought-after nationally. Most of those facilities are under 100,000 square feet. Rents were up 7.1 percent in the third quarter year-over-year and vacancy hit a record low of 4.3 percent.
Orange County was even tighter — industrial vacancy was at 1.7 percent in the third quarter and less than 1 percent in the area around the airport.
[Bisnow] — Dennis Lynch
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