Their acquisitions help nourish county’s hot industrial real estate market.
Many Orange County residents enjoy wantons, azuki-filled pastries and other Asian foods. And that’s helping to fuel a rebound in the industrial real estate market.
Even as some traditional manufacturers have closed plants and moved out of the area in recent years, a number of large Asian food companies have purchased industrial properties in Orange County to expand their local operations. Among the growing companies are CJ America Inc., the South Korean maker of Annie Chun’s packaged food, which acquired industrial property in Fullerton, and Imuraya USA, a Japanese dessert company, which bought a plant in Irvine.
Allen Buchanan, a principal with Lee & Associates who helped broker the CJ America deal, sees a trend. “We have seen a few examples of food companies backfilling industrial buildings formerly occupied by companies that vacated O.C.”
Buchanan noted that the area’s large and growing Asian American population and the need for food production to be close to consumers are factors in the rising interest among Asian food companies for manufacturing space.
The vacancy rate in Orange County’s industrial market was below 4.7 percent at the end of 2012, down from nearly 6 percent two years earlier and among the lowest levels since the beginning of the recession, according to new data from Voit Real Estate Services in Newport Beach. Over that same span, average lease rates rose 6 percent to 57 cents per square foot and sale prices climbed 15 percent to about $149 per square foot.
“The numbers have been positive,” said Jerry Holdner, Voit’s vice president of market research. “The industrial market has performed very well since 2010.”
The vacancy rate increased slightly in the fourth quarter, but Holdner said that was partially due to a dwindling supply of choice properties in the local industrial market. Some companies that want to expand have struggled to find the space or land to do so.
CJ America, which was looking for a space that could accommodate growth, bought a 68,466-square-foot facility that sits on nearly 7 acres of land. The company paid $8.2 million for the property, a former commercial refrigeration manufacturing plant at 500 S. State College Blvd.
In July, a Taiwanese bakery chain called 85 [degrees]C cafe paid more than $5.6 million for a 70,492-square-foot property in Brea that will be a commercial kitchen supplying its growing operations. The company, which opened its first U.S. location in 2008, has three local stores and expects to open five this year.
“We have plans to continue our expansion,” said Stephanie Peng, project manager for 85 [degrees]C. “Ever since we opened the store in Irvine, there’s been a huge demand for our products.”
Peng said the company’s products have become more popular with non-Asian-American customers, which has helped accelerate the company’s growth.
Darren Tristano, executive vice president of food industry consulting firm Technomic, said many menus reflect a trend toward Asian-food flavors, which have become more popular among mainstream consumers in the United States.
“What’s happening is that American consumers, especially millennials, are developing more adventurous taste palates. You can see it in the emergence of Japanese, Korean and Vietnamese, in addition to Thai, restaurants,” he said. “Those organizations that already produce those products internationally are opening production facilities in the U.S.”
Robert Socci, an executive vice president with Voit who specializes in industrial properties, said he has noticed more interest from Asian food companies, but he said there are larger factors influencing the market’s rebound, including an improving economy and limited supply of space.
“It’s recovered very quickly,” he said. “Everybody’s looking for land, there’s a very big demand for sale product, prices are increasing very quickly … and business overall is doing better. It’s a convergence of a lot of different factors that are contributing to a very hot market.”