Carl's Jr. building new offices in Anaheim

REAL ESTATE: Karcher Partners leasing 90,000-square-foot building

Redevelopment plans are moving ahead at one of Anaheim's business landmarks, the office and warehouse campus of CKE Restaurants Inc.'s Carl's Jr.

Builders are preparing to break ground there on a 90,000-square-foot administrative office building for the Carpinteria-based fast food company.

Construction on the three-story building, which will be occupied by CKE employees, is slated to begin in earnest in early 2008, and should be completed by year's end.

Demolition work at the 17-acre Carl's Jr. site, running alongside the Riverside (91) Freeway and Harbor Boulevard, has been under way for several months. The campus has been home to Carl's Jr. operations for the past 30 years.

The company has torn down an outdated 103,000-square-foot distribution center, which had taken up about half of the property.

First Phase

The new building-one of the larger office projects to break ground in the Anaheim area in years-is the first phase of a planned multi-use development. The site could eventually include up to 90,000 square feet of shopping, as well as medical offices alongside the new office building.

The site currently counts an older, 78,000square-foot office building that CKE uses, as well as a Carl's Jr. Restaurant.

Retired founder Carl Karcher and his family own the land and are financing the new office project under the name Karcher Partners LP.

The Karchers plan to foot the bill for the building and then lease it to CKE, which moved its corporate headquarters in 2002 from Anaheim to the Santa Barbara area.

The company, which also runs the Hardee's, Green Burrito and La Salsa restaurant chains, kept a sizable part of its operations in Anaheim after the move, including its finance, accounting and technology departments.

The company's Anaheim distribution operations and about 200 workers moved to an Ontario facility last year. About 350 workers remain at the old office.

The lease for the new Anaheim office is slated to run for 15 years. The lease agreement includes options for CKE to extend the lease for two additional five-year terms.

A three-year, $31 million construction loan for the project was announced earlier this month by the Irvine office of Holliday Fenoglio Fowler LP, which arranged the loan for Karcher Partners.

Loan proceeds will pay off existing debt on the property and fund the construction of the new building, according to Holliday Fenoglio Fowler officials.

Newport Beach-based Professional Real Estate Services, a real estate developer and brokerage, is working as the development consultant.

Other Projects

Additional big office developments are in the early stage of planning in Anaheim, especially around Angel Stadium of Anaheim.

Plans for about 1 million square feet of office space in the Platinum Triangle area have been approved by the city of Anaheim, while the City Council has green lighted zoning plans that would allow for up to another 16 million square feet of office space in the area.

Big plans in the works include a 20-story, 590,000-square-foot tower along East Orangewood Avenue, by Newport Beachbased developer Steadfast Cos., and 100,000 square feet of office space on State College Boulevard, to be built alongside condominium towers by San Francisco's AMB Property LP.

Time frames for construction to begin on these projects-which unlike the Karcher office likely would not be built with a specific tenant in mind-are unclear as developers try to gauge when leasing will pick up.

Office rents for the best offices in the Anaheim area run about 15% less than their counterparts in Irvine and Costa Mesa, which could make new speculative office development an even bigger challenge for commercial builders eyeing Anaheim.


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