Newcastle-RREEF JV Acquires Former Boeing Land in Long Beach for $350M Project
- Aug 06, 2008
Despite economic woes that have caused delays or outright cancellation of many projects, Newcastle Partners Inc., and RREEF Alternative Investments have purchased 54.5 acres at the former Boeing aircraft manufacturing site in Long Beach, Calif., with plans for a 4 million-square-foot mixed-use business park with an estimated value of $350 million at build out. The project, named Douglas Park, will consist of 261 acres upon completion. The first two phases of development will be on the 54.5 acres recently acquired. The Boeing site is the largest piece of developable land in Long Beach. Plans for the project include 4 million square feet of office, industrial, retail and hotel space, plus 10 acres of parks. Phase I will include both office (pictured) and industrial facilities. “Nothing of this type has been constructed for more than 10 years in this area,” Dennis Higgs, president & CEO of Newcastle, told CPN. “We are doing it in three or four separate phases with the first phase already under construction. It will have 242,000 square feet of industrial, which is still in strong demand. There will also be 175,000 square feet of office, so the first phase is not all that large relative to the size of the market.” The industrial project will be located toward the existing Boeing facility which will continue to be industrial, Higgs said. There are nine separate buildings for office space and some are smaller single stand-alone sites offered for sale or for lease. “In terms of the business community in Long Beach, they’ve never been offered the opportunity to purchase an office building of this size. Three of the nine buildings are in escrow prior to construction,” Higgs said. “We have purchased 60 acres from Boeing. They continue to own the balance, although we have some options for the balance of the space. We love the location for obvious reasons. It is adjacent to the airport and within a stone’s throw to the 405 corridor which is of vital importance for most people in the area, It isn’t in Downtown Long Beach, so it doesn’t suffer that congestion. This is a brand new business community. It is probably not the best macro economic time, but there is still demand.” Additionally, Higgs said, the project will also have a 200-room hotel as part of Phase II. He said he can’t disclose the name yet, but acknowledged that it is a “household name.” Phase II will also office and retail space. There is potential for build-to-suit projects, allowing ownership within Douglas Park. Construction on the Phase I office site began in June with completion anticipated in May 2009. Construction on the industrial portion is scheduled to begin before the end of summer. The Class A buildings will be Leadership in Energy & Environmental Design (LEED) Certified. While this new project is under construction, currently, there is nearly 4.5 million square feet of sublease space available throughout Los Angeles, most of it approximately 25 percent lower in price than direct space, according to a second quarter report by Grubb & Ellis Co. The outlook for the market in terms of rents over the next several quarters should be one of flattening, and in many cases, lowering of asking rates, the report added. Rickey Warner, Gregg Kirkpatrick, Brian DeRevere and John Schumacher of CB Richard Ellis Inc. are in charge of marketing the project on behalf of Newcastle Partners and RREEF.Newcastle is a commercial real estate company focused on acquiring and developing industrial, office and business park properties in California, concentrating on the Los Angeles Basin and the San Francisco Bay Area. Newcastle Partners has offices in Irvine and San Francisco and currently owns or has recently developed in partnerships more than $528 million of properties. Headquartered in New York, RREEF Alternative Investments is the global alternative investment management business of Deutsche Bank’s Asset Management division. RREEF Alternative Investments consists of three businesses: real estate, infrastructure and private equity.