Sizable industrial projects planned for north Sonoma County

Each March, the Business Journal invites top commercial real estate brokers from around the North Bay to submit analyses of their markets. Here are their insights on what’s being built, what’s in demand and who is moving around.

The north Santa Rosa corridor real estate office market struggled over 2022, while industrial properties around Sonoma County airport and north had historically low vacancy.

The submarket’s office space had a significant increase in vacancy, going up to 7.2% in fourth quarter from 5.3% at year-end 2021.

COVID-19 continues to play a role in companies’ decisions on how many employees will be working in the office as opposed to working from home. This dilemma is affecting all sizes of businesses but from a vacancy standpoint it is the larger firms that are creating the spike in the overall market vacancy. The preponderance of leasing was either renewals or space sizes under 5,000 square feet.

Many transactions were with three years or less in term and full-service rents ranging from $1.80 per square foot monthly to $2.25.

Significant leases in the Sonoma County airport area for 2022 included Evolve Restorative Center for 11,011 square feet at 220 Concourse Blvd.; Anova Education, 7,000 square feet, 475 Aviation Blvd.; Life Medical Holdings Inc., 5,115 square feet at 451 Aviation; and Providence Medical Foundation for 3,075 sf at 8911 Lakewood Drive.

Oak Valley Business Center has a unique opportunity for a large company to occupy a free-standing two-story, 40,000-square-foot office building either for sale or lease.

Industrial real estate in the north Santa Rosa corridor enjoys a 1.4% historic low vacancy rate, which continues to drive rental rates higher for existing space.

It continues to be very challenging to develop new industrial projects due to the cost of new construction, which is increasing due to shortages in construction material, increased labor costs and extremely long time periods to process plans through the county planning and permit department.

One challenge facing new development is the current uncertainty of electrical power.As PG&E is assessing what is available for new developments, it continues to be unclear as to what service is immediately available or delayed while waiting for a PG&E upgrade to the infrastructure to the entire area.

The demand by many local jurisdictions to go all electric in homes and businesses along with the push for electric cars is coming at a time when PG&E is not equipped to handle the service, and with the spike in the cost of utilities it is putting critical jobs at risk.

Industrial rental rates are $1.15 per square foot on a gross basis to $1.25 a square foot on a triple-net basis. Industrial build-to-suit deals are still an option but difficult with the increased pricing in construction costs as well as the increased value in land due to the lack of existing inventory.

Airport Business Center has several large parcels which are zoned for a mix of industrial uses and is poised nicely for build-to-suit development that can accommodate projects from 35,000 square feet to several hundred thousand square feet.

Industrial leasing was modest with the lack of inventory: 8,773 square feet to Vortex Industries at 3130 Regional Parkway and 8,246 sf to Leaf Filter North LLC at 5813 Skylane Blvd.

Other transactions included the sale of 1740 Copperhill Parkway, a 70,312-square-foot newly built industrial building to Korbel Winery; 830 DenBeste Court, Windsor, a 63,000-square-foot wine storage facility to Sonoma County Vintners Co-Op; and 3388 Regional Parkway, a 16,679-square-foot industrial building to a local company.

About 45 acres of the old Standard Structures property off Shiloh Road in Windsor was sold to Brennan Investment Group, which plans to build three industrial buildings totaling 477,093 square feet of class A industrial space.

Another significant sale was Ahlborn Fence & Steel Inc., which purchased 100 Henry Station Road in Ukiah, previously occupied by Retech Systems. That included 30 acres of land and several building totaling 138,000 square feet.

Sonoma County Airport District continues to process the Sonoma County Airport Area Specific Plan update, which could have important zoning changes with potential negative effects on current property and long-term property values.

In November the Sonoma County airport opened its new terminal to the public, marking a core milestone in its approximately $40 million improvement and modernization project that kicked off two years ago. The new terminal will have 238 seats, four ticket counters and two gates to the aircraft.

Shawn Johnson is managing partner at Keegan & Coppin Co. Inc. (

Each March, the Business Journal invites top commercial real estate brokers from around the North Bay to submit analyses of their markets. Here are their insights on what’s being built, what’s in demand and who is moving around.

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