Industrial, Office Deals Rank Among Largest

[IMGCAP(2)]The Cypress industrial lease included a year of free rent, report David Bales and Don Smith of the South Bay office of Lee & Associates in Gardena. Bales and Smith represented Empire Warehouse in the five-year lease with landlord Colony Partners, which was represented by Cushman & Wakefield's Rick Ellison, Jeff Chiate, Randy Ellison and Peter Sowa. According to Bales, some creativity was needed to get the deal done. "For this particular deal, in order for the tenant to justify the move, the landlord needed to make a larger concession than what the market has previously experienced," Bales says. Empire Warehouse & Distribution plans to move into the space by October.

The Lee brokers say that the transaction reflects the significance of creativity in difficult market conditions. The uncertainty that both landlords and tenants are facing right now "is a common position in this market–there's no indicator of the economy either hitting bottom or recovering," Bales says. "As more deals get signed during these uncertain conditions, landlords are becoming more willing to make adjustments."

The Empire deal is one of the largest Orange County industrial leases reported on GlobeSt.com since Northgate Gonzalez Markets signed a 15-year, $69 million lease for a 375,000-square-foot build-to-suit office and distribution center in Anaheim earlier this year. A joint venture of Irvine-based Birtcher Development & Investments and Cornerstone Real Estate Advisers is developing the property for Northgate Gonzalez.

In the Corona office lease, new tenant ITT Educational Services is a provider of technology-oriented postsecondary degree programs and one of a number of education-oriented tenants that have signed significant leases in Southern California in the past several years. John Harty, a senior vice president in the commercial brokerage division of Voit Real Estate Services, points out that, "In the wake of today's rising unemployment, education providers are expanding as the work force is forced to go back to school in order to better equip itself for today's exceptionally competitive job market." Harty, Walter Frome and Bill Livesay, all based in Voit's Irvine office, represented the lessor, Dos Lagos Office LLC. ITT Educational, which is currently in the process of moving into the new space, was represented by Patrick O'Loughlin and Jeffrey Kernochan of Fischer & Co.

Lakeshore Plaza is a project composed of three class-A office towers in the mixed-use development of Dos Lagos. Harty says that Lakeshore Plaza "is becoming a popular destination for companies that are expanding in the current market due to the comparatively low lease rates and the well-located, high-quality office product offered at the project." The office project is within walking distance of The Promenade Shops at Dos Lagos, which features more than 625,000 square feet of retail and entertainment space, a new hotel and lakefront dining. The office project is the first commercial office LEED-certified project in Riverside and San Bernardino counties to be green-building certified.