Steiner Investments Acquires Tesla-Leased Building in Irvine

Irvine, California –

Steiner Investments, a Costa Mesa-based real estate investment firm, has acquired a 35,500-square-foot building in Irvine, fully leased to Tesla Inc., for $21 million. This transaction, which closed on May 28, reflects a price of $592 per square foot, making it a notable sale within the region’s industrial real estate market.

North Palisade Partners, a Los Angeles-based company specializing in real estate development and investment, was the seller of the property located at 18011 Mitchell S.. Steiner Investments was drawn to the property by its long-term lease with Tesla and the advantageous triple-net lease structure, which requires the tenant to pay for all property expenses including taxes, insurance, and maintenance.

The single-story facility, which was built in 1976, is currently utilized by Tesla as a collision repair center. The building sits on a 2.4-acre parcel in the Irvine Business Complex, strategically located approximately two miles from John Wayne Airport. Planned renovations set for 2024 include a new roof and an office build-out, which indicate Steiner’s commitment to enhancing the property.

Details of the Transaction

This acquisition by Steiner Investments is significant because it sold above many other comparable industrial properties that have recently transacted for less than $21 million. For example, similar properties such as a 60,000-square-foot facility in Fullerton sold for only $12.5 million.

The average asking price for industrial properties in Orange County is currently at $378 per square foot, down from $389 the previous quarter, representing a 7.84% decline in average sales price year-over-year. This decline is attributed to high mortgage interest rates that are hindering potential buyers in the current market, making this transaction particularly noteworthy.

Property Background

North Palisade Partners acquired the building from The Warmington Group of Companies last year for $11 million. After the acquisition, Tesla moved into the facility to establish a collision repair center. The building has 14-foot ceilings and designated areas for research and development, aligning well with Tesla’s operational needs as it focuses on its popular electric vehicles. In California, Tesla’s Model Y and Model 3 were reported as the top-selling vehicles in the previous year.

Tidemark Real Estate Services Executive Director Pat Lacey represented Steiner Investments during the transaction, while the seller was represented by Topside Real Estate President Rob Rader and Senior Vice President Patrick Weibel from SRS Real Estate Partners. This collaboration among real estate professionals showcases the dynamic nature of the current market environment.

Tesla’s Financial Context

Tesla, which currently has a market valuation nearing $1 trillion, reported a sales increase of less than 1%, totaling $97.7 billion in 2024. This financial backdrop provides context for the long-term lease arrangement that likely influenced Steiner Investments’ interest in acquiring the property.

The transaction highlights the ongoing demand for industrial properties in key locations like Irvine, even amidst economic shifts and rising interest rates. Such deals are essential indicators of market trends, reflecting how investors are navigating the complexities of current real estate dynamics.