So much for the doom and gloom pronouncements about the blow to the local economy from Nissan Motor Corp.’s decision to relocate its North American headquarters from the South Bay to Nashville.
Last week’s announcement that Los Angeles-based Kearny Real Estate Co.’s offer of at least $80 million beat out 30 other bids for the rights to develop Nissan’s 41-acre campus near the junction of the San Diego (405) and Harbor (110) freeways signaled the enduring strength of the South Bay economy.
Kearny is banking on the very tight industrial market with vacancy rates under 2 percent and a tightening office market to be able to fill the site with a mix of new, albeit smaller, companies. Currently, the campus contains 14 buildings with just over 700,000 total square feet of space.
The fact that 30 other developers bid on the site and that a sale was agreed to within four months is a sign of just how much interest there is when a large parcel comes on the market.
“Other areas of the country may suffer lingering effects from the departure of a major corporate headquarters like Nissan. But the South Bay is pretty well built out, so this opportunity to get substantial new acreage back into play is a chance to lend a really good impetus to the economy,” said Joseph Maggadino, chairman of the Economic Department at California State University Long Beach.
Kearny vice president Tony Nobiyuki said the company was still evaluating just how it was going to develop the site, which was home to Nissan for nearly 40 years. He said a preliminary site plan would be ready in the next few months.
Nobiyuki said part of the plan will likely include some industrial tenants, noting that “the industrial market right now is on fire down here.” He also said that with tightening office vacancy rates on L.A.’s Westside, this site could easily be positioned to draw tenants looking for cheaper office space a short freeway ride from Los Angeles International Airport and to Downtown.
When Nissan made the relocation announcement nearly a year ago that it was relocating to Nashville because it was a less costly place to do business, it refocused attention on what business advocates said was the region’s reputation as a hostile place to do business.
But, with the passage of time and the intense interest in redeveloping the site, a more nuanced view of the move has emerged.
“Sure, the loss of a major corporate citizen like Nissan is a blow. But the South Bay has consistently lost large employers, from U.S. Steel to Martin Marietta to Nissan. Yet we always seem to rise to the occasion and reconfigure these properties and go on about our business,” said Jim Biondi, senior vice president with Grubb & Ellis Co.’s South Bay office.
