Industrial real estate demand outstrips supply in Solano County
While demand has been quiet for office and retail space in Solano County even before the coronavirus pandemic, deal-making for industrial properties has been steady enough to increase the pace of construction.
Office vacancy in the county ticked up to 18.3% of 3.55 million square feet, and many companies have pushed back their dates for a full return to the office with the rise of the delta variant, according to Colliers.
It’s quite a different picture for industrial space. Out of 2.43 million square feet of industrial space under construction in Solano, Napa, Sonoma and Napa counties, the bulk of it (1.9 million square feet) is in Solano, and all of that is for warehousing and distribution, according to JLL’s third-quarter report.
“It’s a challenge out there for tenants to find space, and it competitive when there’s any space out there,” said Chris Neeb of JLL.
Of the dozen projects underway across all four counties, 42% of the space already is preleased, the brokerage reported. Over 50 companies were out looking for more than 4 million square feet of industrial space in the region last quarter, the company said.
When proposed projects and newly acquired land by industrial developers is included, there’s potential for roughly 5 million square feet to be built on a speculative basis just in Fairfield and Vacaville, according to Brooks Pedder of Cushman & Wakefield.
“Some of that may be preleased and some may not get built, but we need all of it,” Pedder said. “We’re bullish on the 2023 industrial market.”
Here are some of the Solano warehouse projects in construction now or shortly set to be, according to Cushman & Wakefield, Colliers International and JLL.
Scannell Properties is building a 502,000-square-foot warehouse and distribution center at 250 E. Dorset Drive in Dixon, and it is preleased to appliance company Haier.
Panattoni Development has 415,000 square feet under construction at 4555, 4750 and 4700 Business Center Drive in Green Valley Corporate Park in Fairfield. Sized at 197,000, 113,000 and 103,000 square feet, the warehouses are set for completion by mid-2022.
Buzz Oates Companies has a 304,600-square-foot warehouse coming out of the ground at 1051 Aviator Drive in Vacaville, also set for completion in the opening months of 2022.
Dermody Properties is set to start construction this fall on the first two of five planned LogistiCenter warehouses with 700,000 square feet altogether. The Reno, Nevada-based company recently purchased the 49 acres northeast corner of Cordelia Road and Beck Avenue in Fairfield. The project is set to start with two warehouses of 259,000 and 102,000 square feet, with completion sometime late next year.
Phelan is set to complete a 69,000-square-foot warehouse in the middle of this quarter in Fairfield Commerce Center. Phelan completed two other warehouses in the third quarter: nearly 252,000 square feet preleased to beverage container company Ball and 175,000 square feet for hydroponics equipment supplier Hydrofarm, which previously was based in Petaluma.
Further out to the horizon are these projects, according to Cushman & Wakefield and JLL.
Seeno and Sierra Pacific plan to build three warehouses with 385,000 square feet at 1 Redtop Road in Fairfield.
USAA and Ridgeline Properties recently got approval for a modification to their mammoth 1.5 million-square-foot, three-building Midway Commerce Center project on almost 90 acres at Eubanks and Midway drives in Vacaville.
Approved last year for 1.68 million square feet in five warehouses, the project now would have the footprint of three of them combined into one 1.23 million-square-foot structure, according to documents filed with the city.
If built, that would be the North Bay’s largest commercial structure to date. Previously, the region’s largest warehouses have been the 823,000-square-foot North Bay Logistics Center in Vacaville, 702,000-square-foot warehouse at Napa Logistics Park in American Canyon, and Biagi Bros./Jackson Family Wines’ 644,000-square-foot wine storage warehouse also in that southern Napa Valley city.
The phasing of that project would build the largest first, starting next spring and finishing in the first half of 2023, followed by starts on the 198,000- and 104,000-square-foot buildings in early 2023 and 2024.
Conco Companies wants to build a 415,000-square-foot warehouse on Eubanks Drive in Vacaville.
Trammel Crow has come in strong to the Solano market with two projects. On Low Court in Fairfield, the developer has a 205,000-square-foot building planned, perhaps to get started next year. Further into the future is a plan, needing a Fairfield general plan amendment, to redevelop a former Walmart store into two warehouses with almost 329,000 square feet.