[caption id="attachment_101920" align="aligncenter" width="500"] Draft architectural rendering of the main entrance to Cader Corporate Center[/caption]
PETALUMA - As the options for businesses seeking large amounts of Petaluma warehouse space have dwindled with business expansion and lack of new such space, a San Francisco-based investor for construction trade union pension funds made its second major investment in North Bay commercial property and plans to rapidly fill that need.
Northern California Value Add/Development Fund on Oct. 24 purchased 20.4 acres on Cader Lane off Lakeville Highway in the industrial area at the city’s southern entrance. The buyer plans to bring about 250,000 square feet of industrial space to market next year in a $25 million-plus project.
“We saw the 8 percent vacancy in the submarkets around Petaluma and the lack of available space in the 50,000-square-foot-plus range,” said Brian Seaman, senior director for asset management in the San Francisco office of New York Life Real Estate Investors, which is co-managing the fund with McMorgan & Company. “We have qualified letters of intent and think a good portion will be tied up - under lease - before we break ground.”
At least four undisclosed local food companies are in negotiations for space in the forthcoming project, according to Steven Leonard, part of the Cassidy Turley team marketing the project.
He said a big plus for the property at 1466 Cader Ln. was it had a city-approved project and infrastructure such as parking lots. That could allow the new owners to have building permits secured in time for construction to start in four to six months.
The previous owner, an entity of San Francisco-based RNM Properties, had put those improvements in eight years ago to keep the project shovel-ready. RNM Cader, LLC, bought the property from Sola Optical in 2001, and the city approved the project that year. But that’s when the tech-driven economic recession sent Petaluma industrial vacancy soaring to more than double the rate of today, exasperated by the local and global shocks to the economy in 2006 and 2008.
That led to scant new large warehouses rising in Petaluma for about a decade, Mr. Leonard said.
The sale of Cader Corporate Center project follows recent RNM sales of North Bay holdings. Napa-based PB&J Acquisitions, LLC, and Investcorp International Inc. of New York in February 2012 purchased RNM’s entire 842,000-square-foot North Bay portfolio of existing buildings, in Petaluma and Rohnert Park. RNM retained 34 acres of land, approved for 580,000 square feet in seven buildings.
RNM has been working to sell about 12 acres across Cader Lane from the project to another developer in recent months. RNM first started buying south Petaluma commercial land in the mid-1990s.
Cader is the fourth deal for the investment group since it launched in June of last year with $91 million from a half-dozen pension funds. Other funds have joined the group, pushing the total raised to $140 million.
The first deal was the purchase an 18-acre approved project in south Napa in July 2013. Construction started this summer on a 228,000-square-foot warehouse, the first phase of the estimated $20 million Greenwood Corporate Center project. The second phase would have a 75,000-square-foot warehouse.
The fund’s next two deals were “value-add lease-up” plays - properties with significant vacancy and renovation potential - buying an industrial complex in San Jose and a mix of industrial and office space in San Ramon’s Bishop Ranch development, Mr. Seaman said.
“San Ramon and San Jose are more office and tech-focused,” he said. “Sonoma County is more about regional distribution, and Napa is more about the wine industry.”
North Bay markets don’t have the leasing demand the fund managers look for in potential value-add properties. But they aren’t done scouting for local acquisitions.
“We have a lot of confidence in the North Bay,” Mr. Seaman said.
Cader Corporate Center project designer Vitae Architecture Planning Interiors was originally involved with the project.
Mr. Leonard represented RNM Cader in the sale. Trevor Buck, Brian Foster and he are marketing the project for lease. Buying entity MNCVAD-Ind Petaluma CA, LLC, represented itself.
