Industrial real estate in Solano and Napa counties finished a fifth straight year of “strong” demand for space, while the office market there continued to have high vacancy rates and not much activity at the end of 2016, according to a new report.
“This demand is driving the current high levels of [industrial] construction in the region,” said the fourth-quarter report released Feb. 2 by Colliers International’s Fairfield office, which covers Solano, Napa and parts of Contra Costa counties.
The fourth-quarter vacancy rate was 6.1 percent across the two counties, less than half the 15.0 percent rate in early 2011, the brokerage noted.
“The food and beverage industry has been the leading driver of creating low vacancy and increased construction of bulk logistics properties,” the report said.
Napa Valley’s wine business has been key to construction of large warehouses in the south part of the county for decades, but more construction has been shifting to neighboring Solano in the past decade. Solano has lower real estate costs, and closer access to major interstate, rail thoroughfares and ports. Opposition to construction projects also can be less in Solano than in Napa County.
The office market in Solano and Napa counties “experienced a quiet end to 2016,” according to Colliers. “These markets had limited activity in the fourth quarter as fundamentals remained generally flat and the vacancy rate declined fractionally from 17.2 percent to 16.9 percent for the quarter.”
Medical and health care has been the leading industry for office space demand, Colliers said. The thing happening in the Solano office market is construction of Partnership Health Plan’s 101,000-square-foot class A office building on Business Center Drive in Fairfield, the brokerage said.
Napa–Solano commercial real estate
Inventory: 49,731,005 sq. ft.
4Q vacancy: 6.1%
4Q net absorption: -89,708 s.f.
Under construction: 1,520,651 sq. ft.
Overall asking rents: 53¢ per sq. ft. monthly
Inventory: 5,055,655 sq. ft.
4Q vacancy: 16.9%
4Q net absorption: 14,801 sq. ft.
Under construction: 101,000 sq. ft.
Overall asking rents: $1.71 per sq. ft. monthly
Source: Colliers International, Fairfield