While the market for office space in Solano County continues to be soft, deals for industrial and retail space -- including a large sale of Benicia warehouses -- are whittling away at high vacancy rates.
"We are seeing a significant increase in activity and deal flow from the prior two years," said Phil Garrett, managing partner of Colliers International's Fairfield office.
Industrial vacancy was 13.8 percent for Solano in the third quarter, and net absorption of space was 700,000 square feet in the first nine months of 2012, according to Colliers International.
One of the biggest 2012 Solano commercial real estate deals is the acquisition of 1.3 million square feet of industrial space in Benicia. Those 19 buildings and 9.9 acres of yard space -- in Benicia Commerce Center I and II on Stone and Getty roads and in Benicia Industrial Park on Industrial Court and Industrial Way -- were part of a 23.3 million-square-foot industrial portfolio Walton Street Capital purchased in California, Washington, Oregon and Texas in 2007 from CalWest Industrial Holdings.
IndCor Properties, a Chicago-based subsidiary of investment giant The Blackstone Group, LP (NYSE: BX), in June it acquired a West Coast portfolio of that size and now lists those Benicia properties in its portfolio. Chicago-based Walton Street Capital turned the portfolio over to a special servicer in early June as $2.45 billion in debt on it came due and was talking with Blackstone about acquiring the properties.
Solano’s industrial real estate market is on track for its strongest occupancy growth in more than five years, but the number of square feet involved in deals is has been lower, according to Garrick Brown, research director for Cassidy Turley. In the first half of this year, 430,000-plus more square feet were leased than put back on the market. Leases totaled 390,000 square feet in the second quarter of this year. That’s way down from 978,000 square feet of deals a year before, yet total occupancy actually fell by 346,000 square feet at that time.
“The big difference is that leasing activity at that time was dominated by space user consolidations, tenant renewals and relocations,” Mr. Brown said.
In the first half of this year, there have been several sizable industrial deals in Solano. Bebe Studio Realty, the real estate arm for the Bebe store chain, purchased 240,000 square feet of distribution space at 4901-4995 Industrial Way in Benicia in May, according to Colliers.
Fresh from its relocation from Benicia to 126,200 square feet in Fairfield early this year, TricorBraun WinePak expanded again, moving its Northern California distribution facility to a larger, automated distribution facility in Fairfield in January. The company leased a 126,200-square-foot former Meyer Corp. warehouse at 2280 Cordelia Road in Fairfield, . The wine division of St. Louis-based packaging supplier TricorBraun leased nearly 93,000 square feet at 5200 Watt Ct. in Fairfield.
TricorBraun WinePak acquired Trilogy Glass & Packaging of Santa Rosa in January.