[caption id="attachment_94040" align="aligncenter" width="500"] Lowenberg Corp. made its first Sonoma County purchase with this 186,000-square-foot Petaluma building. (credit: Todd Quam)[/caption]

PETALUMA -- Lowenberg Corp., which already has one of the largest North Bay industrial real estate portfolios, purchased a 186,000-square-foot Petaluma complex, the San Francisco-based investor's first in Sonoma County.

Lowenberg & Associates, LP, purchased 2200--2240 S. McDowell Blvd. Extension, previously known as Cypress Center, for an undisclosed amount. Before the May 23 sale, Lowenberg owned 1.1 million square feet in 15 buildings in Napa and Solano counties, according to Glen Dowling, who oversees the San Rafael-based Cushman & Wakefield team who brokered the sale.

"She's excited to be in Sonoma County and is pursuing other opportunities there in the future," he said. Susan Lowenberg is president of the commercial property investment company her father, William Lowenberg, started six decades ago.

The seller, 2200--2240 South McDowell, LLC, is an affiliate of PB&J Acquisitions and Investcorp. Together they purchased the property in February 2012 from RNM Properties as part of a $65 million, 14-building portfolio.

[caption id="attachment_94039" align="alignleft" width="350"] This south Petaluma property at 2200--2240 S. McDowell Blvd. was three-fourths leased at the time of sale in late May 2014. (credit: Todd Quam)[/caption]

Key to Lowenberg's purchase of the 11.2-acre property were a high level of occupancy, long-term commitments from the tenants and building features, Mr. Dowling said. The buidling is three-quarters leased to Thermo Fisher Scientific, occupying nearly 90,000 square feet, and Dr. Pepper Snapple Group, almost 50,000 square feet.

The building has 16 dock and grade-level truck doors, 4,000 amps of power serving the building and 24-foot-high ceiling clearance.

Thermo Fisher signed a 10-year lease for the space in 2009 and spent $3.5 million the following year to transform the former Advanced Fibre Communications and Tellabs space into a high-technology injection-molding facility for the Massachusetts-based medical supply giant. It consolidated operations from four nearby buildings into the space.

Dr. Pepper Snapple in 2010 signed a lease to consolidate its North Bay distribution facilities to the building.

The remainder of the building -- 46,400 square feet -- had been occupied by courier DHL until the company closed its North Bay hub a few years ago amid ending U.S. deliveries. Now in "shell" condition, the available space has two each of truck dock and grade-level doors and can be divided as small as 20,000 square feet.Industrial property demand increasing

The property was purchased through a Section 1031 tax-deferred exchange, which generally calls for properties to be purchased within six months of the sale whose capital gains are to be deferred. That's no easy task when vacancy rates for industrial space are falling generally throughout the Bay Area and particularly in the North Bay, where little new space has been built, Mr. Dowling said.

For example, the Napa County vacancy rate for larger-sized warehouses is 3.5 percent to 4 percent, with just one new 104,000-square-foot warehouse reaching completion and several hundred thousand square feet recently getting under construction or planned to start this summer, he said.

"There's no question that in the investment world, there is a lot of money chasing well-leased industrial product," Mr. Dowling said. "The volume of exchange buyers is increasing."

In Sonoma County, the industrial vacancy rate was 11.3 percent in Petaluma in the first quarter, according to Keegan & Coppin Co., Inc./ONCOR International. The rate in Santa Rosa is about 12 percent, with certain areas such as Piner Road even tighter, but near Charles M. Schulz--Sonoma County Airport north of the city availability is around 5 percent, according to Shawn Johnson, managing partner.

Lowenberg's most recent previous North Bay portfolio additions were 239,000 square feet in four south Napa wine warehouses: Vines Business Center at 2511--2515 Napa Valley Corporate Dr. and Bordeaux Centre at 2545--2557 Napa Valley Corporate Dr. Exchange transactions for those properties were completed in December.

Lowenberg's total portfolio is about 4.5 million square feet.