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North Bay Business Journal

Monday, December 30, 2013, 6:30 am

2014 Trends: North Bay enjoys surge in industrial construction

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    Continued growth of the North Coast wine industry largely is spurring developers to build at least 1.5 million square feet of industrial space in Napa and Solano counties.

    In Fairfield, Buzz Oates Group of Companies’ 330,000-square-foot first building at Solano Logistics Center for Encore Glass is nearing completion. A lease deal is pending for the second building, with 473,000 square feet, as well as a third warehouse, with 177,000 square feet, on nine acres recently purchased to the north of the Encore building, according to Phil Garrett, managing partner of Colliers International’s Fairfield office, which is marketing the $30 million project. Construction could start as soon as April.

    “It will be almost 1 million square feet for (Buzz Oates Group of Companies) within a year of building the first property,” Mr. Garrett said.

    A San Francisco-based investor for construction trade union pension funds is making a big statement on prospects for building wine warehouses in Napa Valley. MNCVAD-Ind Greenwood CA, managed by McMorgan & Company and New York Life Real Estate Investors, on July 30 purchased the 18-acre former Greenwood Commerce Center project at 1535 Airport Rd. near Napa County Airport from a lender for an undisclosed amount. An institutional investor on a speculative Napa Valley project is unusual, according to real estate agents involved in the deal.

    A pending lease could expand the Solano Logistics Center project in Fairfield to nearly 1 million sq. ft.

    The first phase would have 228,000-square-foot building and be finished next year. A second 75,000-square-foot building is planned. The projected cost of the project is more than $20 million.

    Construction is set to begin in spring on the larger building or both, according to Mr. Garrett, whose team is marketing the project.

    Sacramento-based Panattoni Development plans to start construction in early 2014 on a nearly 91,000-square-foot light-industrial building, with the goal of completion by fall, according to Chris Neeb of Cushman & Wakefield, which is marketing the project. It’s the first of seven light-industrial and high-cube warehouses, ranging in size from 20,000 square feet to nearly 300,000 square feet, approved for the Napa Airport Corporate Centre project at Devlin and South Kelly roads in American Canyon.

    Depending on how leasing progresses, the next building to be built at that project would be a 283,000-square-foot warehouse, he said.

    Napa Commerce Center Industrial Park, south of Devlin Road at South Kelly Road, American Canyon, was a 218-acre joint venture between Headwaters Development Co. and Deutsche Bank’s RREEF group to build up to 2 million square feet of commercial space in buildings ranging in size from 50,000 to 400,000 square feet.

    The first 646,000-square-foot warehouse was put on hold in 2010, but an overpass across the railroad tracks was completed and Devlin Road was extended onto the property. A draft environmental impact report was circulated for comments in 2012, and city officials started negotiating a development agreement early this year.

    A developer is in escrow to purchase the property and start construction, according to Mr. Garrett, whose team has marketed the project. The sale is set to close in three months.

    E&P Properties, led by Dennis Pauley, owner of Benicia-based Metropolitan Van & Storage, in early September broke ground on a second 103,000-square-foot warehouse, going up on 5.8 acres of vacant land on Technology Way at Airpark Road in Napa Valley Gateway Business Park. Completion is set for March.

    E&P built the first warehouse, finished in spring 2012 at 1560 Airport Rd., to accommodate growth of Metropolitan Van & Storage.

    Stravinski Development Group is set to seek approval from the American Canyon City Council on Jan. 14 for two 150,000-square-foot warehouses to be built in a joint venture with Hess Development.

    “Pretty soon we’ll have a decent supply of larger buildings out there,” Mr. Neeb said. “It’s what the market can handle at this point in time.”

    Major industrial conversion project

    The county of Napa said it completed its acquisition of the 25-acre former Dey Laboratories, which will be renovated for a new base of operations for county health services that are expanding because of health care reform and state responsibilities shifting to the county. 

    County government completed the purchase of 350,000-square-foot campus from Pittsburgh-based Mylan Inc. for $25 million in cash and has started a six- to nine-month design process for a $15 million transform of 150,000 square feet into offices for the county’s Health and Human Services Agency by mid- to late 2015, according to Steve Lederer, Public Works Department director.

    “Between the Affordable Care Act and other Health & Human Services programs being evolved from state responsibility to county responsibility, there is an increase in head count that is going to happen whether the county purchased the campus or not,” Mr. Lederer said.

    TLCD Architecture of Santa Rosa is developing plans for the tenant improvements of 150,000 square feet the county agency is set to occupy at the campus, located on Napa Valley Corporate Drive at Napa Valley Corporate Way. Construction is envisioned to start late next year and be complete by early 2015.

    The remaining 200,000 square feet of the campus is available for lease. Available are 150,000 square feet in two high-clear-height warehouses, of the type in high demand in southern Napa Valley these days, and a 50,000-square-foot manufacturing “minicampus.” That building had labs, offices as well as storage and shipping capabilities, such as truck docks. Colliers International is marketing the space.

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