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Napa Valley has been big on preserving its prime vineyards from development, but companies seeking a home for their wines, foods, wares or services are feeling the squeeze from dwindling options in the county’s urban and industrial areas.

“The Napa office market is getting tighter by the day,” said Gary Van Dam of Napa’s Strong & Hayden Commercial Real Estate. The brokerage has three lease deals working at Financial Plaza, has recently filled up 1700 Soscol Ave. and is down to marketing one space in the Gasser Building. “Not much has been built in the past several years.”

So companies looking for sizable offices are running out of alternatives in central or downtown Napa, according to Cathy D’Angelo Holmes of Coldwell Banker Commercial Brokers of the Valley. For example, the downtown Riverfront mixed-use project along the Napa River has 30,000 square feet, but the last 1,300-square-foot space that had been on the market for months has been leased after garnering three offers.

There will be downtown office space opening up this fall, when the county of Napa District Attorney’s Office vacates 7,500 square feet of the Young Building.

“This lease the largest contiguous space available downtown,” Holmes said.

Next year will bring new office space. The Wiseman Co. early next year plans to complete 14,000 square feet at its 1300 Main St. building. A number of deals are said to have that space spoken for.

And the First Street Napa mixed-use project is set to have two office buildings with 39,000 rentable square feet, starting next spring. Pacific Union and Silicon Valley Bank made early moves to stake out space in the project for their Napa offices.

The downtown office activity is filling up the business parks around Napa County Airport, Holmes said.

“We are showing the space to business that prefer to be downtown but realize they must move for space and pricing,” Holmes said.

The pricing differential provides quite the incentive, Van Dam said. Owners of downtown properties have been asking for $2–$3.50 per square foot monthly on a full-service gross basis, while those with buildings in the business parks have been seeking $1.75.

NAPA-SOLANO INDUSTRIAL MARKET

Availability of industrial real estate in Napa Valley and neighboring Solano County have been dwindling to low levels for the past few years, spurring a string of large construction projects. Trouble is, developers are running out of options in both counties to rapidly build more space.

“If you’re looking for 5, 10, 20 acres of land, it is very hard to find for something to pencil for development,” said Chris Neeb of The Dowling-Bracco Team of JLL about land around Napa County Airport. “Available parcels on the market are at price points that do not work for most developers.”

Asking prices at least $10–$12 a square foot, but developers of large industrial projects usually look to buy land for $7–$8.

“A few dollars makes a huge difference,” Neeb said.

Industrial land also is getting scarcer in surrounding cities in Solano, according to Bill Kampton of Colliers International’s Fairfield office.

Tenants are responding to the dwindling supply of space, now just a few percent of the 14 million square feet of industrial square footage in Napa County, by moving faster on opportunities, Kampton said.

“You can’t afford to wait for two or three options,” he said.

The wine business has been known to take a just-in-time approach to warehousing space, securing more when production increases and shedding square footage in leaner times.

“It’s an industry that’s used to reacting when it wants to react,” Kampton said. “I think this market will change that way of doing business. Most industries looking in Napa for larger space will have to look a year down the road.”

Sizable Napa and Solano properties have come on the market recently. The second phase of Greenwood Business Park, a 80,000-square-foot warehouse at 1225 Airport Blvd. south of Napa, was just completed and reportedly has a lease pending for a significant portion of it.

The other major available industrial property around Napa County Airport is the first phase of the 218-acre Napa Logistics Park project, a 646,000-square-foot distribution warehouse completed a year ago at 1 Middleton Way in American Canyon. Amazon reportedly had been pursuing a lease of the facility for a distribution hub but now is said to be considering an option in Solano. Home-goods retailer Ikea was mentioned at public meeting recently as the latest contender.

More industrial construction is coming. The Pigman Companies plans to start construction this summer on an 81,000-square-foot warehouse at its Napa Commerce Center project and also could start a 152,000-square-footer, Neeb said.

Reach Jeff Quackenbush at jquackenbush@busjrnl.com or 707-521-4256).