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Monday, December 16, 2013, 6:30 am

Commercial Development Guide 2013: Wine deals fill Solano County industrial vacancy

Bottle supplier spurs 791,000sf Fairfield project

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    Following the lead of the southern Napa Valley industrial market, demand for newer large-scale warehousing with modern configurations and features to cost-effectively accommodate wine-related goods is driving the Solano County market too, along with expansion of other manufacturing.

    “About three years ago, owners were having a hard time giving away wine warehouse space,” said Eric Rehn, a Kennedy Wilson agent who is marketing space on Mare Island in Vallejo after having managed space there for 11 years. “We were looking at converting wine warehouses to produce warehouses. Now, wine warehouses are almost 100 percent leased, and developers are starting to build more.”

    Sales of higher-priced wine that the North Coast is known for have been growing at double-digit rates during that time.

    For the second consecutive quarter, the industrial market in Solano and Napa counties experienced significant vacancy decline, according to Colliers International’s Fairfield office, which covers Solano, Napa and parts of Contra Costa counties.

    The planned expansion of Encore Glass kick-started half of a 791,000-square-foot, two-building warehouse project in Fairfield.

    The vacancy rate dropped to 8.1 percent in the third quarter, a 1.3 percentage-point drop from the previous quarter and a 3.9 point drop from 2012.

    “Solano and Napa counties are both well-positioned to take advantage of this increase in demand for industrial growth,” the report said. “Solano and Napa counties have available clean, economical industrial land available for development. The greater economy’s overall recovery and strength in the wine industry are leading the recent demand, decline in vacancy and boom in construction.”

    In contrast, the office market in Solano and southern Napa counties was unable to continue the positive momentum from earlier in the year, according to Colliers. Vacancy was 22.9 percent in the third quarter, unchanged from mid-year.

    Large Fairfield warehouse project

    Major expansions by a wine-bottle suppliers from Benicia to Fairfield are freeing up warehouse space at the southern end of the county while spurring a giant project in the heart of Solano.

    The mammoth 791,000-square-foot, two-building Solano Logistics Center near the Busch industrial park of south Fairfield took just six months to go from land acquisition to construction.

    In July the Fairfield City Council approved a development agreement with The Buzz Oates Group of Companies, a commercial real estate developer and owner out of Sacramento, to purchase 46 acres of surplus city land on Cordelia Road south of the eastern junction of Interstate 80 and Highway 12 for $4.5 million, and the deal closed escrow in the fall.

    The $30 million project started with groundbreaking for the 318,000-square-foot came in May. That building is expected to be complete by the end of 2014. Encore Glass of Benicia is leasing the entire building in a planned expansion and move.

    The market for large distribution warehouse space has accelerated in Solano in the past year, according to Jon Quick, one of the Colliers International agents marketing the project.

    “There is a real lack for big distribution space with 30-foot-plus clear height,” he said.

    Colliers also markets Buzz Oates’ Vacaville portfolio, and little is left to lease in the existing 1.5 million square feet there, he said. Another 1 million square feet could be build on more than 75 acres of land there. Projects there could proceed this year.

    Construction on the second, 473,000-square-foot building in Fairfield could start in coming months for late 2014.

    Bruni Glass Packaging, Inc., which supplies the wine industry with bottles, capsules and closures, consolidated its Benicia warehouses and showroom to one larger facility in Fairfield this fall. It signed a seven-year, three-month lease for 88,000 square feet of warehouse and office space at 2750 Maxwell Way in Fairfield.

    Currently, the West Coast sales and distribution functions in Benicia are spread between three warehouses and a showroom, totaling 72,000 square feet. The goal is to bring those functions together under one roof by Nov. 1, according to Teri Kisle, operations manager.

    “It’s more central to the wine business,” Ms. Kisle said.

    Because of a rapid reduction in the amount of larger industrial spaces in Solano and southern Napa counties, the packaging company couldn’t find that much space in American Canyon, the desired first choice for its even closer proximity to wineries, or even in Benicia, according to the company.

    A few build-to-suit projects that are ready to go south of Napa and in Solano County couldn’t have space ready in time for the company’s needs, Ms. Kisle said.

    Bruni and Encore were part of more than 1 million square feet in leases signed in those markets just in the first half of this year, according to Brooks Pedder of Colliers International.

    Mare Island occupancy grows 6%

    The city of Vallejo and Lennar Mare Island’s ongoing redevelopment and leasing on the 650-acre former Navy shipyard and base had 200,000 square feet of new and expanded leasing through November compared with 2012, leaving 3.4 million square feet of drydocks, warehouses, manufacturing facilities and offices occupied, according to Jason Keadjian, spokesman for the developer. About 1 million more square feet is being renovated or redeveloped, and roughly 6 million square feet of commercial space is planned for full buildout.

    “LMI continues to see strong interest from industrial and marine-service industries,” he said.

    Minnesota-based Enclos, a specialty contractor for building facades, in early June leased Suite 300 in Building 126 for a 50,000-square-foot assembly plant employing 40 full time.

    “Our new Mare Island facility will be a hub for projects of all scopes and sizes generated through our network of offices across the country, which include locations in both Southern and Northern California, in addition to our Advanced Technology Studio in Los Angeles,” said spokesman Matt Elder.

    In April, the ferry authority committed to a new $22 million Mare Island terminal along the waterfront, set to be finished by 2015. Mare Island Brewing in summer leased space in the Ferry Terminal and plans a microbrewery and warehouse in a nearby building on the island.

    Blu Homes, which opened a 275,000-square-foot plant a year ago for its fold-out manufactured homes, expanded by 103,000 square feet, three-quarters for storage and the rest for engineering and professional staff. Maritime contractor Jerico Products expanded with Drydock No. 4, and packaging design and consulting firm PackagingArts doubled it’s office space to 16,000 square feet.

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