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