A pair of developers known for innovative real estate transformations in California has been hired to create a new plan for one of the largest parcels of industrial land to become available near the Port of Los Angeles in years.
Oil giant Phillips 66 has hired Catellus Development and Deca to advise on redevelopment plans for its 650-acre Los Angeles Refinery complex, slated to close by the end of next year. Phillips 66 said last week it's shutting the longtime production hub — representing two connected facilities spread across five miles in Carson and Wilmington, California — because of market concerns.
“These firms bring strong track records of solving complex redevelopment challenges," a spokesperson for the company, based in Houston, told CoStar News in an email. They will "collaborate with Phillips 66 in an advisory role to advance potential commercial development options."
Catellus and Deca did not respond to CoStar News' requests to comment, but their past projects provide a window into potential uses for the Phillips 66 sites.
Catellus redeveloped the 200-acre former Pacific Refinery Co. near San Francisco into a residential subdivision called Victoria by the Bay in 2003, a process that involved the removal of contaminants. Deca, meanwhile, has experience transforming outdated sites to accommodate new technologies. Its 800 Cesar Chavez project in San Francisco converted a C-class warehouse into what it calls the world’s largest electronic vehicle charging and maintenance facility, opened in 2018.
The likely new uses for the Los Angeles sites are an industrial campus featuring smaller logistics warehouses, or residential uses to help meet California's lofty housing goals and address affordability concerns, real estate professionals tell CoStar News. Due to there being two sites, with one leaning more industrial and the other more suburban, both options are a possibility.
Warehouses to homes
The Carson facility at 1520 E Sepulveda Blvd. serves as the front end of the refinery by processing crude oil. The Wilmington facility at 1660 W Anaheim St. serves as the back end for the Carson site by upgrading the oil to finished products such as fuel-grade petroleum coke, a cheaper alternative to coal.
The Carson site's close proximity to the port of Los Angeles makes it better suited for industrial than residential, according to Jesse Gundersheim, CoStar Group's senior director of market analytics.
"We could certainly use more housing in coastal California, but the Carson site, five miles north of the port and surrounded by other refineries and port container yards, may be best suited for redevelopment into industrial logistics use," Gundersheim said.
Parts of the 406-acre Wilmington site may better lend itself to housing, Gundersheim notes. The site is bordered to the north by golf courses and the Los Angeles Harbor College, and to the east by federally-owned land and residential neighborhoods across Interstate 110.
Developers have added more than 20 apartment buildings within a 3-mile radius of the refinery over the past four years, according to CoStar data. The 1,400 units developed since 2010 expanded the apartment supply in the area by nearly 10%, Gundersheim said.
Any new homes added to the Wilmington site would need to be higher-end to make financial sense, Gundersheim said.
“To maximize returns on investment, developers are typically building higher-end, Class-A apartments," he said, noting apartment rents range from $2,900 for a one-bedroom to over $4,600 for three bedrooms.
But on the side of the Wilmington property closest to the port, industrial development would be an obvious choice, Gundersheim said. Only two industrial buildings have been developed within a three-mile radius of the site in the past four years, according to CoStar data. The latest, a 174,000-square-foot building developed in 2023, was vacant for nearly a year before fully leasing to K2 Aerospace.
Local market participants expect demand for industrial space to rebound in the years ahead, Gundersheim said.
“Consumer spending growth has picked up, and monthly imports to the twin ports of Los Angeles and Long Beach returned toward all-time highs over the summer," he said.
Remixed refineries
There’s no definitive timeline for any redevelopment project since plans are still in the early stages, according to a Phillips 66 spokesperson.
In a similar project nearby, officials in Huntington Beach last month gave the green light to Shopoff Realty Investments’ proposed redevelopment of a former oil field known as Magnolia Tank Farm into a mixed-use complex, CoStar News reported.
The 29-acre site has been remediated to remove contaminated soil and will include 200 single-family homes; a 50-unit affordable multifamily community; a 215-key boutique hotel; and 19,000 square feet of retail. One of the concessions the development team made to gain support from local constituents: a program that will dedicate 50% of the project's affordable housing to hotel workers. Shopoff plans to break ground on the project by fall 2025 with homes to begin opening two years later.
Outside of California, in Baltimore, Greystar and Griffin Capital won a 2023 CoStar Impact Award for their work on The Lucie, a 500-unit residential anchor for a mixed-use project that opened in 2022 as part of developer 28 Walker’s larger mixed-use development called the Collective at Canton. The development’s 12-acre site previously served as a refinery for ExxonMobil.
And south of Philadelphia, HRP is developing The Bellwether District, a 14 million-square-foot e-commerce and logistics campus on the site of the 1,300-acre former Philadelphia Energy Solutions refinery. The site will include 250 acres of innovation space and 750 acres for industrial facilities.
For the record
Mike Condon Jr. and Don Schmidt of Cushman & Wakefield represented Phillips 66 in the search for a development advisor