Large warehouses roll into Napa, Solano counties
Construction hums along on 1.5 million square feet of warehouse space in Napa and Solano counties to meet demand from companies needing to store and move a large amount of North Coast wine and other goods coming into and going out from the San Francisco Bay area.
At the same time, the North Bay's distribution juggernaut has just had upwards of 1 million square feet suddenly become available.
The second phase of the Greenwood Business Park warehouse project at the corner of Airport Boulevard and Devlin Road near Napa County Airport started construction last month, according to Brooks Pedder, whose Cushman & Wakefield team is marketing the project. The concrete slab has been poured on what is designed to be an 80,000-square-foot warehouse.
San Diego-based IDS Real Estate Group purchased the 19.4-acre property earlier this summer reportedly for about $30 million. It is said to be the group's first Northern California acquisition, coming soon after opening an investment office in San Francisco. IDS purchased the site from McMorgan Northern California Value Add Development Fund (MNCVAD-IND Greenwood CA), an investment fund comprised of Northern California trade union pension funds and led by New York Life Real Estate Investors and San Francisco-based McMorgan & Company.
The fund had acquired the full-entitled project in 2013 and spent about $20 million constructing a 226,000-square-foot warehouse last year. It was leased during construction to Windsor-based Vynapse LLC, part of Adams Wine Group and better known as the wine order fulfillment house Pack n' Ship Direct.
Also last month, the hulking 644,000-square-foot first warehouse of Orchard Partners-Devco's 218-acre Napa Logistics Park in American Canyon got the official occupancy go-ahead, Pedder said. For the past eight months, the whole building had been set to be leased to a fulfillment house, but that deal ultimately didn't materialize recently, said Pedder, whose team also is marketing that project.
The second phase of the 218-acre industrial project is entitled and awaiting a go-ahead.
In Vacaville at Solano County's north end, the 843,000-square-foot Save Mart Supermarkets distribution center is looking for a tenant.
'That's a big property,' said Pedder, who is marketing the property.
In June, the company said it would be closing the distribution center at 700 Crocker Dr., trimming 323 jobs there and moving goods to a Lathrop warehouse. Save Mart acquired the Vacaville warehouse and one in Roseville on buying Albertsons in 2007.
Up to this point, demand for big warehouse space in excess of new supply in Solano and Napa counties has been fueling the 1.36 million–1.49 million square feet currently being built there, according to Colliers International and JLL.
'From large warehouse investment sales to new speculative buildings being quickly leased, there are many indications of a strong and active market in Solano and Napa counties,' said Phil Garrett, executive managing director in Colliers' Fairfield office.
The industrial vacancy rate for Solano and Napa counties declined in the second quarter to 6.2 percent of 49.5 million square feet, down from 6.6 percent in the first quarter, according to Colliers. Average asking monthly rental rates increased by 3 cents a square foot to 53 per square foot, on a triple-net basis.
Based on 61.5 million square feet JLL tracks in Solano, Napa, Sonoma and Marin counties, the second-quarter industrial vacancy rate is estimated to be 2.6 percent, after 2.9 million more square feet came off the market in the first half of this year than came on.
Developer confidence in North Bay industrial real estate has bounced back from the economic recession, when the vacancy rate for such product types peaked at 12.5 percent in 2009, according to JLL. The brokerage's North Bay team is based in San Rafael and led by Glen Dowling and Matt Bracco. Nearly 3 million square feet of warehouses and distribution centers are planned for southern Napa Valley, which has the highest concentration of any North Bay submarket, and 3.7 million square feet of projects, according to JLL.
In addition to Greenwood Business Park and Napa Logistics Park, key Napa-Solano projects are Panattoni Development Company's million-square-foot Gateway80 Business Park in Fairfield, Buzz Oates Group of Companies projects in Vacaville and soon American Canyon.
The Napa Commerce Center project has 152,000 and 81,600-square-foot warehouses set to break ground next spring, according to Glen Dowling of JLL.
The Gateway80 Business Park project has two 436,000-square-foot buildings under construction, with concrete walls titled up on one so far toward completion in January, Dowling said. Lease negotiations are in progress, including a full-building deal.