MAGELLAN STORAGE, COSTA MESA, CA
In 2002, Magellan acquired a two-building industrial property with approximately 124,229 SF of rentable space and four acres of excess land located at 3190 Pullman Street in Costa Mesa, California. The property had an excellent location but its environmental history and the short term lease of the tenant at the property presented challenges.
The initial business objective was to negotiate a long-term lease with the existing tenant and sell the property. After successfully negotiating a new 10 year lease, however, the tenant declared Chapter 11 in the wake of the slow down after September 11, 2001. During the negotiations of the settlement with the tenant over an extended period, Magellan identified a higher and better use for the property: a combination of self-storage and RV storage. The local demographics in the surrounding communities of Newport Beach, Irvine and Costa Mesa, the site’s exposure to over 500,000 vehicles per day at the intersection of the 405 and 55 freeways, and the flexibility provided by 4 acres of excess land, all suggested that a multipurpose storage facility would offer an excellent market opportunity.
Building upon its success with Magellan Storage in Torrance and Irvine, the Magellan team was able to successfully secure entitlements, recapitalize the project and successfully complete the conversion in 2005. The conversion involved adding a second story to the existing 60,000 SF building to create 1,251 self-storage units and 107,036 total rentable SF of self-storage. Capitalizing on the affluence of the area, Magellan added 1,000 SF of wine storage and converted the second industrial building into 55,000 SF of indoor RV, boat, and vehicle storage. To leverage the property’s excess land, Magellan added an additional 35,238 SF of outdoor RV storage and 10,000 SF of traditional drive-up storage. Magellan also found a tenant for a remnant of the industrial office space to fully optimize the site.
The project reached stabilization and was refinanced for a long-term hold. In 2015 Magellan secured additional entitlements to convert the existing RV storage building into approximately 90,000 SF of additional self-storage and add additional drive-up units on the excess land. In early 2016, the project was sold.