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Split Decision

May 1st, 2015

Furniture maker buys Rosemead portion of former Wham-O lot shared with San Gabriel home project.

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Moving In: San Gabriel side of former Wham-O and Huy Fong factories where Olson Co. is developing a residential project. Photo by Ringo Chiu.

When the Olson Co. picked up a nine-acre industrial site of the former Wham-O Inc. toy factory in Rosemead 2014, the plan was to go after the booming San Gabriel Valley housing market with a residential subdivision.

But after Olson bought the property for $17. 5 million from Sriracha maker Huy Fong Foods, which was decamping for a larger space in Irwindale, the company took a harder look. Not only was the site bisected by the Rubio Wash, a channel that forms the city line between Rosemead and San Gabriel, but the large industrial building was built across the waterway, kind of like a bridge.

Jeff Allred, city manager for Rosemead, said Olson had briefly entertained the idea of building housing on both sides, adding that the city of Rosemead wasn’t necessarily opposed to a residential development.

“Rosemead does not have large industrial areas,” Allred said. “The areas where there are industrial uses have adjacent residential communities, so there are no industrial parks. So a residential use is not out of the realm of possibility, as long as the residents support it.”

In the end, said Olson Chief Executive Scott Laurie, rather than seek entitlements in two municipalities and dealing with the environmental challenges of construction around the wash, the company subdivided the property, chopped the building in half and listed the Rosemead portion on the east side, where Huy Fong did most of its production, as an industrial property. The west side of the building was razed.

“From a planning standpoint, it was more effective for us to build (residential units) on the west side of the channel in the city of San Gabriel rather than trying to be in two cities at once,” Laurie said.

After several months on the market, Olson late last month struck a deal with Darlee Outdoor Living Inc., an Irwindale patio furniture manufacturer, to buy the vacant 77,000-square-foot industrial space at 5045 Earle Ave. for $5.5 million.

Darlee representatives declined to comment on the purchase, but industry sources said the company plans to use 30,000 square feet as a warehouse and lease out the rest.

Housing stock
The industrial property sits on the 2.5-acre portion of the site that sat in Rosemead. In 2014, Olson demolished the portion of the building that fell in the 6.5-acre San Gabriel site and is in the midst of construction of Mission Walk, a 92-unit townhome and single-family residential project that will begin pre-sales in May, though construction won’t be completed until early 2017.

The development includes 88 townhomes and four 1,719-square-foot single-family units. The three-story townhomes, which will range from roughly 1,300 to 2,200 square feet and have two to four bedrooms, will be listed next month for $400,000 to more than $600,000, Laurie said.

The homes would be priced in line with values in the region. According to February home sales data collected by Redfin, the median home in the San Gabriel ZIP code that houses Mission Walk sold for $391 a square foot.

Olson also is creating a pedestrian and bicycle trail that is to run about two-tenths of a mile south to Grand Avenue, a path that would cut through city-owned land adjacent to the development.

The trail, along with Olson-funded street paving, new sidewalks and other upgrades to the surrounding area, made the project attractive to the city, said Mark S. Gallatin, San Gabriel’s planning manager. The residential project signals positive change for the area, he noted.
“The Olson project is the largest residential project in San Gabriel in a generation, and it’s an indication that there is a demand for new housing in the neighborhood,” he said.

Laurie said Olson, based in Seal Beach, remains bullish on the San Gabriel Valley, with projects in Temple City, Pasadena, El Monte, Monterey Park and Walnut.
“There is limited competition and strong demand for new housing as the entitlements are challenging and opportunities are scarce,” he said.

Nod to history
Olson plans to hang a plaque somewhere in the Mission Walk project commemorating its industrial history, said John Reischl, director of development at the company.

Wham-O began manufacturing Hula Hoops and Frisbees on the site in the 1950s, and moved out in the early ’80s. Huy Fong set up shop there in 1986, and stayed until its move last year to Irwindale, where the company ran into some well-documented trouble.

Irwindale residents began complaining about a strong smell coming from the factory not long after the company moved in, saying fumes burned their eyes and throats. The city filed a lawsuit and public nuisance declaration against Huy Fong.

In response, Huy Fong founder David Tran began publicly discussing moving the factory out of Irwindale.

But the city and the condiment maker made peace in May 2014 when the Irwindale City Council dismissed the lawsuit and Tran made some changes to the plant’s filtration system.

By Hannah Miet  – Los Angeles Business Journal