Amazon, Saverglass warehouse deals suggest North Bay industrial real estate is hardly ’idle’
Retail and office real estate markets have been reeling from uncertainty over closures of restaurants, gyms, theaters and workplaces under public health orders related to the coronavirus.
But interest in industrial property is picking back up, some driven by a surge in e-commerce business during the lockdown.
In Sonoma County, there are few newer industrial buildings available for companies that need larger spaces, according to Dave Peterson of Keegan & Coppin Co. Inc./Oncor International.
“There is very little inventory over 20,000 square feet,” he said.
Industrial vacancy for Sonoma County was 4.7% at the end of last year, and in the industrial parks near Charles M. Schulz–Sonoma County Airport north of Santa Rosa remains under 2%, Peterson said.
He’s marketing one of the two sizable industrial projects in the county under construction or about to be so. A 70,000-square-foot warehouse, called Hangar J, is set for completion in September at Billa Landing, a 360,000-square-foot, five-building complex at the corner of North Laughlin Road and Copperhill Parkway just east of the airport.
The two remaining buildings, with 70,000 and 144,000 square feet each, would take 18 months to build. No specific lease deals are in play but interest has come from local and East Coast companies, Peterson said.
The other Sonoma County industrial project with permits ready for construction is at 201 Business Park Drive, located behind The Press Democrat printing plant in Rohnert Park.
Demody Properties, a Reno, Nevada-based major developer of industrial buildings, made its entry to the county on May 1 with the purchase of land with approvals for a 70,000-square-foot light-industrial building designed for 10 truck docks, multiple tenants and outside storage, according to Trevor Buck, one of the Cushman & Wakefield agents who brokered the deal. Dermody has undertaken projects in Napa and Solano counties in recent years.
“There is more demand from companies that need more vehicle parking for customers to pick product up or for last-mile delivery,” Buck said.
Sonoma County doesn’t have the population density to warrant a number of large e-commerce logistics facilities (well over 100,000 square feet) like those in the Richmond-Oakland, South San Francisco or Silicon Valley areas, but there is more interest from companies looking for 15,000–50,000 square feet for such logistics.
A key exception to that is Amazon’s reported lease deal this spring for all the 260,000-square-foot Victory Station warehouse near Sonoma, located on the Highway 12 thoroughfare across southern Solano, Napa and Sonoma counties. Buck also was involved in that lease.
Are North Bay industrial property markets ’idle’?
A recent comparison of Northern California industrial real estate markets by JLL concluded that all the North Bay markets were “idle” on its industrial momentum index, meaning they are “generally characterized by smaller industrial operations and a built-out environment that constrains future growth.”
Markets were evaluated for community demand for services, talent base and real estate supply. San Jose, Sacramento and Fremont were among the “superstar” industrial markets. North Bay markets scored lower on access to talent, according to the report.
“We’ve heard that from medical tech and high-tech manufacturing companies,” Peterson said. “We’ve not heard that about general manufacturing jobs. We’re seeing demand from wine and beverage companies, food manufacturers and general goods makers.”
Chris Neeb, part of The Dowling-Bracco Team of JLL agents who work the North Bay, said the industrial markets in Napa and Solano are hardly idle.
“There is a lot of money out there chasing (local) industrial investment real estate, and there are sizable signed deals,” Neeb said.
Big vacant Fairfield space attracts Napa wine supplier
He pointed to this key example: France-based wine bottle supplier Saverglass, which has Napa facilities, in the past 30 days subleased the vacant 430,000-square-foot building at Invesco’s Gateway80 project in Fairfield. Meals-by-mail company Blue Apron secured that building but barely occupied it before pulling back to its East Bay facilities.
The glass company plans to occupy 330,000 square feet initially then expand into the rest over the next three years.
“It’s a little easier to recruit employees in Solano because it’s on the Interstate 80 corridor close to the East Bay and between the major universities at Berkeley and Davis,” Neeb said.
Large Napa projects under construction get tenants
In Napa Valley, an undisclosed wine storage company leased 40,000 square feet of the 500 Devlin Road building, the first in The Pigman Companies’ Napa Commerce Center project, Neeb said. Bounty Hunter already leased 22,500 square feet of the nearly 82,000-square-foot building.