Sonoma County’s industrial future: Deals for Amazon hub, big Scannell development

Top commercial real estate deals

Read about major North Bay lease and sale transactions in the past 18 months.

A common refrain about Sonoma County’s commercial real estate market is that it has been constrained by a lack of supply of large, modern distribution facilities.

But then came a real estate boom in the past several years, as the legal cannabis industry ramped up also made prices spike. That’s bad news for longtime local producers outside that sector but good news for developers of such space that had been waiting for rent movement to begin making investments.

The Business Journal asked local real estate experts what recent deals revealed the direction of commercial activity and demand for property to support business plans. Below are examples of big plays by warehouse developers and investors as well as deal-making to retain stalwarts of local high-technology manufacturing.

Victory Station

22801 Eighth St. E., Sonoma

Size: 249,904 square feet

Lessor: McNeill Real Estate Services

Listing agents: Steven Leonard, Brooks Pedder, John McManus, Mike Goodwin and Tony Binswanger of Cushman & Wakefield

Lessee: Amazon (reportedly)

Procuring agents: KBC Real Estate Advisors

Transaction: April 28, 2020

One of the Business Journal’s top construction projects of 2018, the Victory Station project was awaiting a tenant until this spring. Petaluma-based hydroponics equipment wholesaler and manufacturer Hydrofarm had made significant movement toward a deal to lease the 19-acre site equidistant to Napa and Marin counties on Highway 12, but the quick cooling of the newly legal cannabis industry led to that deal fizzling, according to real estate sources.

Then came Seattle-based e-commerce giant Amazon. The deal was to be kept under wraps, but the plan for a Sonoma County staging hub was revealed when permits were sought from the county of Sonoma, according to the Index-Tribune. The plan is to use the building as a hub for trucks making deliveries in the North Bay, rather than starting at East Bay or Vacaville distribution centers, property developer Jose McNeill said.

The goal is to open the facility by the end of this year. Some local residents have questioned the speed of permitting and truck traffic at the facility, which sits at the corner of the highway and the busy wine distribution warehouse corridor of Eighth Street East.

755 & 775 Southpoint Blvd., Petaluma

Size: 182,966 square feet

Seller: Scannell Properties No. 375 LLC

Listing agents: Trevor Buck, Brian Foster, Steven Leonard of Cushman & Wakefield

Buyer: DRA Advisors LLC

Price: $33.78 million

Transaction: Jan. 13, 2020

Indianapolis-based Scannell Properties made a nice nine-month return on its investment in these two light-industrial and warehouse buildings. Scannell bought them on April 15, 2019, for $26.9 million, or about $145 a square foot. This was the first of $46.5 million in acquisitions of Sonoma County industrial property Scannell has made in the past 15 months.

After upgrades to the exterior and grounds plus 45,000 square feet in new leases, the builders were sold as an “investment-grade” property for roughly $185 a square foot, a 27% gain.

500 Hopper St., Petaluma

Size: 39.23 acres

Price: $20.1 million

Seller: Bay West Development

Listing agents: Trevor Buck, Brian Foster, Steven Leonard of Cushman & Wakefield

Buyer: Scannell Properties

Procuring agents: Trevor Buck of Cushman & Wakefield

Transaction: May 28, 2019

This was the second major Sonoma County play by the industrial real estate developer in the past two years. On May 28, 2019, Scannell Properties Number 388 LLC purchased the industrial-zoned land along the Petaluma River. The company has Northern California projects in Napa, Sacramento, Newark, Livermore and Tracy.

The deal comes as Sonoma County has few speculative industrial projects in the works, some of which are being redesigned for housing, according to sources.

5300 Commerce Blvd., Rohnert Park

Size: 8.24 acres

Seller: Headley Properties LLC

Buyer: Pape Properties Inc.

Brokers for seller and buyer: Ron Reinking and Haden Ongaro of Newmark Knight Frank

Price: $8.3 million

Transaction: May 1, 2019

The Headley family founded the Sonoma County-based Yardbirds chain of home-improvement stores then sold it to The Home Depot in 2005. In 2009, the Headleys announced an effort to convert the Rohnert Park site to housing and other uses to fit with a planned SMART station nearby. The site later was used to stage wildfire recovery and Highway 101 expansion projects.

The sale to the real estate arm of construction industry supplier The Papé Group is set to become future development for one of its Papé Machinery rental, sales and repair locations, according to Newmark Knight Frank. Papé currently has a location next to the property.

3300 Coffey Lane, Santa Rosa

Size: 143,750 square feet

Transaction: April 11, 2020

Lessor: 3300 Coffey Ln, LLC

Listing agent: Jeffrey Wilmore of Keegan & Coppin Company, Inc.

Lessee: Lockheed Martin Corp.

Procuring agents: Jones Lang LaSalle (JLL)

Defense and aerospace giant Lockheed Martin in 2014 purchased Deposition Sciences Inc., a Santa Rosa maker of thin-film coatings used by high-tech companies and founded in 1985 by former workers at Optical Coating Laboratory Inc.

When industrial real estate rents escalated 15%, largely from a real estate rush due to the emerging legal cannabis industry, the company said it would relocate operations to Southern California, according to Jeffrey Wilmore, who represented the property ownership. It took five months to negotiate a lease renewal.

“Lockheed Martin was the 10,000-pound gorilla, and they knew it,” Wilmore said.

133 Copeland St., Suites C-1, C-1 and D, Petaluma

Size: 12,101, 9,895 and 9,014 square feet

Lessor: 133 Copeland LLC

Listing agents: Ron Reinking of Newmark Knight Frank

Lessee: Rogue Research Inc.

Procuring agent: Demi Basiliades of Keegan & Coppin Co., Inc.

Transaction: April 1, 2020

Soap maker Rogue Research has been a long-term tenant in the 77,000-square-foot former poultry processing plant built in 1901. The company consolidated some of its nonproduction operations in the building in this lease-renewal deal, according to tenant agent Demi Basillades.

133 Copeland St., Suite B, Petaluma

Size: 4,780 square feet

Transaction: April 1, 2020

Lessor: 133 Copeland LLC

Listing agents: Ron Reinking of Newmark Knight Frank

Lessee: Hoocha LLC

Procuring agent: Demi Basiliades of Keegan & Coppin Co., Inc.

Launched in 2019, hard kombucha maker Hoocha LLC expanded into manufacturing space long occupied in the 119-year-old industrial building as production space for The Smoked Olive, maker of smoke-infused olive oils, according to tenant agent Demi Basillades.

8465 Old Redwood Highway, Suites 700, 710, 720, Windsor

Size: 4,400 square feet

Seller: Mark Santino

Buyer: Beau Investment Properties LLC

Listing and procuring agents: Brian Keegan and Dino D’Argenzio of Keegan & Coppin Co., Inc.

Price: $1.3 million

Transaction: April 8, 2020

Owners of Township Animal Hospital plan to expand their existing veterinary business in the Windsor Palms shopping center and retain a second tenant, Windsor Palms Market, for additional income, according to the agents in the deal.

The seller sold this retail property and completed a Section 1031 exchange into a new investment property in Santa Rosa.

Jeff Quackenbush (, 707-521-4256) covers wine, construction and real estate.

Top commercial real estate deals

Read about major North Bay lease and sale transactions in the past 18 months.

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