[caption id="attachment_50692" align="alignleft" width="327" caption="Glen Dowling, Matt Bracco and Chris Neeb"][/caption]
SOLANO and NAPA COUNTIES -- The industrial real estate markets of Solano and Napa counties showed modest improvement in 2011 over 2010, as several significant leases were completed and some significant buildings sold.
The overall industrial vacancy rate in Napa and Solano counties dropped for the third consecutive quarter to 10.6 percent at the end of 2011, down from 13 percent a year before. Solano County vacancy decreased to 12.8 percent in fourth quarter from 15 percent in fourth quarter of 2010. The rate in neighboring Napa County dropped to 7.2 percent from 8.4 percent during the same time period.
Overall, transaction volume increased showing signs of continued improvement with more active requirements looking for space in the market. Napa County continued to remain stable, boasting single digit vacancy and some significant building sale activity.
There were several significant lease transactions in 2011, primarily in Napa and Fairfield. The largest Napa Valley leases included Biagi Bros.' lease of 115,000 square feet at 50-80 Technology Ct., Napa; Boisett Family Estates, 70,000 square feet at 677 Hanna Dr., American Canyon; Groskopf Warehouse & Logistics, 60,000 square feet at 801 Hanna Dr., American Canyon.
The largest Solano leases were to North Bay Distribution for 220,800 square feet at 2050 Cessna Dr., Vacaville; Tricor Braun, 126,187 square feet at 2280 Cordelia Rd., Fairfield; Updike Distribution Logistics, 127,665 square feet at 5200 Watt Ct., Fairfield; YLA Tencate, 64,861 square feet at 2450 Cordelia Rd., Fairfield. Frank-Lin Distillers finished construction of its 296,000-square-foot owned beverage plant at 2455 Huntington Dr., Fairfield.
Significant sales were Lowenberg Corp.'s purchase of 101,700-square-foot 801 Hanna Dr. in American Canyon and the purchase of 42,000-square-foot 560 Technology Way in Napa; ABCO Laboratories, 110,217-square-foot 2445 S. Watney Way, Fairfield; Westcore Properties, 256,669-square-foot, eight-building Napa Airport Centre, south Napa; and US Industrial REIT II, purchased 607,208-square-feet 5195 Fermi Drive in Fairfield, long-term leased to Owens-Illinois.
New construction was limited to owner-user building with no speculative industrial construction occurring in 2011.
With the economy continuing to show signs of improvement, we expect more consistent demand and activity in 2012. In Napa Valley, we expect industrial vacancy rates to continue to fall, while rental rates should be on the rise towards the latter half of the year. In Solano County, we also anticipate vacancy to continue to improve.
However, rental rates are expected to stagnate until more significant blocks of industrial space are absorbed in Vacaville and Benicia. Those areas currently have the highest vacancy. We do not expect any significant construction of speculative industrial buildings in 2012, but we expect that could very well change in 2013.