NORTH BAY -- The market for industrial properties in Napa and Sonoma counties is starting 2008 healthy, according to real estate experts.
More commercial buildings are set to rise in the industrial areas near Napa County Airport this year, while expanding Marin County companies are shopping Petaluma and other Sonoma County markets for available space.
“Next spring there is going to be an awful lot of construction here,” said Keegan & Coppin/ONCOR International’s Randy Wood, who markets Napa Valley Gateway Business Park in south Napa.
One of the boons to that activity is an easing of the city of American Canyon’s stance on providing water north of its boundary to the airport business parks, according to Michael Moffett of Coldwell Banker Commercial Brokers of the Valley and current president of the Napa Valley Economic Development Corp.
The city’s disagreement with Napa County over control of areas at the north end of the city led American Canyon in late 2006 to decline to supply water to certain projects and new businesses in the unincorporated area south of Napa, effectively creating a moratorium on construction.
The overall vacancy rate for the business parks around Napa County was 6 percent for 11.2 million square feet of industrial space, including smaller warehouses and flex space, which can have office and light-industrial uses suitable for startup companies, according to Keegan & Coppin. The 720,000 square feet of heavy- and light-industrial space at the former Napa Pipe property on Kaiser Road in south Napa isn’t included in that figure.
When warehouses larger than 30,000 square feet are considered, which accounts for many of the wine-related warehouses in south Napa Valley, less than 3 percent of the 9.8 million square feet of local industrial space is available, according to Chris Neeb of Cushman & Wakefield.
“Demand continues to be strong for warehouse space in the 10,000- to 100,000-square-foot range,” he said. “The market tends to be flat for spaces smaller than 10,000 square feet.”
A fresh example of that demand is the lease of 150,000 square feet of warehouse space at 880 Hanna Drive in the north American Canyon industrial area to wine hauler Western Wine Services. Textile maker Ramallah Inc. just finished shutting down in that space in November. A few other similarly sized deals are in the works, according to Mr. Neeb.
A significant lease about to be inked at press time was for a relatively major expansion of a wine processing business into 36,000 square feet in LBA Realty’s The Vines Business Center on Napa Valley Corporate Center Drive.
Wine sales increased nearly 7 percent last year, according to ACNielsen. Much of the growth is coming from ultrapremium wines, for which the North Coast is known. A cyclical increase in wine production brings with it a wave of demand for wine-storage and distribution space.
Along those lines, Illinois-based Scannell Properties is undertaking environmental review of a 650,000-square-foot wine warehouse in the Green Island Industrial Area of north American Canyon. The building would be leased to Napa-based wine specialist Biagi Bros. Transportation & Warehousing on 36.5 acres in the northwest region of the industrial area.
On Hanna Court in the southeast portion of that industrial area, Madera-based Stravinski Development has completed site work for 307,000- and 411,000-square-foot speculative wine warehouses and has a third of the slab for the larger building finished and is pursuing completion this summer.