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."North Bay Commercial Leasing and Development GuideMarket reports
Marin County office vacancies fall, rents rise
Rebounded wine business drives new Napa County construction
Wine deals fill Solano County industrial vacancy
Retail, industrial lead Sonoma County marketLeasing guide
Download a PDF of the 2013 Commercial Development and Leasing Guide.
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.
[caption id="attachment_84897" align="alignleft" width="360"] The planned expansion of Encore Glass kick-started half of a 791,000-square-foot, two-building warehouse project in Fairfield.[/caption]
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.