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Solano County long has been fertile ground to plant huge, low-cost warehouses to distribute products to the Sacramento, East Bay and Napa markets.

Now there are two big opportunities arriving at opposite ends of the county.

On May 15, the Vallejo City Council unanimously voted to enter exclusive negotiations with Nimitz Group to redevelop 157 acres at the north end of the Mare Island former Navy shipyard into a 1.2 million-square-foot commercial development that already has letters of intent from SHM Partners Film Mare Island, Joel Gott Wines and Safe Harbor Wine Partners.

Nimitz Group is led by Dave Phinney of Orin Swift Cellars and The Prisoner fame, together with East Coast farming and banking billionaire Gaylon Lawrence Jr., who purchased Heitz Wine Cellars in April for an estimated $180 million.

“I don’t want this project to languish for a considerable amount of time before we can break ground,” Mayor Bob Sampayan said just before the vote. He said Nimitz Group should try to incorporate space for Mare Island-based earthquake-shoring systems maker EPS, which was one of the eight submitters of redevelopment proposals. “We will work with you.”

The Nimitz Group plan includes 600,000 square feet for film production on 56 acres, 365,000 for wine production and tasting on 15 acres, 100,000 of offices on 10 acres, 75,000–100,000 for mixed uses on 20 acres, and 37,000 for industrial on 20 acres.

In May, modernization renovations were completed on the 843,000-square-foot former Save Mart Supermarkets distribution center at 700 Crocker Drive in Vacaville. It’s been vacant since early 2017.

But lease negotiations are progressing for half the building, which is divided into four sections along shear walls, and for parts of the planned second building on the property, which would have 600,000 square feet and potentially be under construction next year, according to Brooks Pedder, whose Cushman & Wakefield team is marketing the property. PCCP-LDK Ventures purchased it in September.

He and other local real estate experts say that the county’s big industrial real estate market has been suffering with relatively little available space to lease. In the first quarter, the Solano industrial vacancy rate rose from 7.9 percent to 9.0 percent of 37.3 million existing square feet, according to Colliers International’s Fairfield office.

Despite the slight increase in the first quarter, vacancy remains near historical lows, driving a steady wave of warehouse construction and development, according to Phil Garrett, executive managing director of that Colliers brokerage team.

“The historically low industrial vacancy rates in both Solano and Napa counties are driving construction activity,” Garrett said. “We anticipate leasing to remain constant pushing already low vacancy rates even lower.”

The two big reasons for the countywide vacancy increase in the first quarter were the Save Mart space and the new availability of a 100,500-square-foot warehouse at 2290 Cordelia Road in Fairfield’s 26-acre Solano Commerce Center project by Panattoni Development, according to Colliers. The Fairfield project largely contributed to the city’s industrial vacancy rate going up to 7.2 percent in the first quarter from 6.4 percent at year end.

About 80 percent of Vacaville’s industrial vacancy is because of the Save Mart building, Colliers notes. The largest Solano-Napa industrial lease in the first quarter was 25,000 square feet of a warehouse to Orbis RMP at 2131 Icon Way in Vacaville Business Park.

Fairfield has been the most active in the Solano-Napa commercial real estate market for construction, according to Colliers. The two-building, 861,000-square-foot Gateway80 project at 2920-2950 Cordelia Road was recently completed and sold for $100 million. Dennis Paulley, owner of Benicia’s Metropolitan Van & Storage, is building two warehouses totaling 197,752 square feet at 2200 S. Watney Lane in Solano Business Park in Fairfield. Fairfield-based Jelly Belly just completed a 103,820-square-foot warehouse addition to the candy maker’s existing warehouse at 2500 N. Watney Way.

Lack of big spaces to accommodate tenant demand may have slowed activity in the first quarter, but interest in deal-making picked up with new arrivals of space in the second quarter, Pedder said.

“Potentially, we’ll lease through most of the inventory we have by the end of the year and see a couple point drop in vacancy,” he said.

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

Correction: The 2290 Cordelia Road property in Fairfield became available for lease. The story originally said it was recently completed.