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Real estate developers stake out Sonoma Co. warehouse turf

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Warehouses are hot merchandise in Sonoma County these days. Two commercial-land sales north of Santa Rosa totaling about 50 acres were purchased by developers with deep local history recently, and Petaluma’s largest warehouse project in years is spoken for long before construction wraps.

On Aug. 31, Airport Business Center purchased 24 acres of land at 1631 Airport Blvd., near the entrance to Charles M. Schulz–Sonoma County Airport. The seller was SeaStack Enterprises LLC, which has been holding on the property for a decade and a half and had secured a tentative map from the county for development of industrial space.

“We just needed some more inventory,” said Larry Wasem, managing member of Airport Business Center, which has been developing more than 360 acres of commercial land east of the airport for decades. “We have a number of deals in the works.”

The developer is talking to a few tenants who are looking for 30,000 to 150,000 square feet of warehouse space.

“If someone wanted something bigger than 150,000 square feet, it would be hard to figure out where to put them that’s zoned [for it],” Wasem said.

Shawn Johnson of Keegan & Coppin/ONCOR International represented the buyer and seller

Another deal nearby, completed in May, was for 22 acres along Copperhill Parkway between Westwind and North Laughlin boulevards. Billa Enterprises LLC purchased the land from Brondi Development, which has been rolling out buildings in Westwind Business Park for the past two decades.

The property was being considered by Russian River Brewing for a 50,000-square-foot production facility, before the Santa Rosa company ultimately decided to ink a deal with Airport Business Center for a plant, still under development, nearby in Windsor.

At the helm of Billa is Ajaib Bhadare, a board member of Santa Rosa’s First Community Bank and a founder of Cerent Corp., a telecommunications equipment company that made a big splash for a quick-lived Petaluma-centered cluster called Telecom Valley. Cisco Systems purchased it in 1999 for more than $7 billion. After that, Bhadare was an investor in multiple projects with early Telecom Valley real estate developer Basin Street Properties.

Bhadare could not be reached for comment. Danny Jones of Keegan & Coppin represented Billa in the sale. Dave Peterson and Jeffrey Wilmore of Keegan & Coppin represented the seller.

At Petaluma’s first large industrial project in years, the project recently became fully leased, although tenants won’t be moving in for months. The remaining upwards of 100,000 square feet in the Cader Corporate Center project just off Lakeville Highway in south Petaluma has been leased to an as-yet undisclosed company.

“It’s 100 percent leased,” said Steven Leonard, part of the Cushman & Wakefield team marketing the project.

Very low industrial vacancy, particularly for large-scale warehousing, had the developer expecting quick leasing of the space.

“Given the level of activity we’re seeing now, we anticipate the project will be 100 percent preleased by the time we complete construction,” Ross Berry told the Business Journal in February as construction started. He’s senior director in the San Francisco office of New York Life Real Estate Investors, which is co-managing the project for owner MNCVAD-Ind Petaluma CA LLC.

Already set to go into the project are two Petaluma success stories: wine-focused Scott Laboratories and dairy producer Clover-Stornetta Farms. In late January they signed 10-year leases for 58 percent of the 259,600-square-foot development.

Project general contractor Devcon Construction of San Jose broke ground Feb. 8, and building is scheduled to be complete by year-end.

“Vacancy for large industrial is under 5 percent, and for tenants to look this far ahead, to plan a year in advance, is the norm now because there is no space,” said Steven Leonard, who with Cushman & Wakefield colleagues Trevor Buck and Brian Foster brokered the Cader leases.

Having space companies need to expand is critical to attracting companies to a city and keeping them there as they grow, according to Ingrid Alverde, city of Petaluma economic development manager.

“What we know about economic development is 80 percent of growth will come from companies already here, and that’s a great example of that,” Alverde said about the Cader project and preleasing to Scott Labs and Clover.

She noted that HenHouse Brewing Co.’s move from Petaluma to Santa Rosa, announced in August, had more to do with available real estate for its growth than challenges with wastewater disposal.

Scott Labs (scottlab.com) plans to move into the 85,000-square-foot front building of the three-structure project, located at 1490 Cader Ln. The company offers laboratory services and sells fermentation supplies, filtration media, packaging such as bottle closures to the wine, cider, beer and spirits industries.

The firm is gearing up to expand and bring under one roof operations currently occupying 75,000 square feet in three south Petaluma buildings, said CEO Zach Scott.

“We’re growing,” he said.

Scott Labs now employs 100 in the U.S. and Canada, mostly in Petaluma, but the workforce size likely won’t change with the move, he said, declining to comment much further on company growth.

Started in 1933, the company has locations in Healdsburg and Paso Robles. The latter opened last year in the growing California Central Coast ultrapremium wine region. There’s also a sister company in Canada, Scott Laboratories Ltd.

Scott Labs was selected as a Business Journal 2015 Wine Industry Awards-winner in early December. At the time, the company said it employed 80.

“As Scott Labs continues to grow, we find new opportunities in the beer, cider and distilling industries,” the company told the Journal. “It’s very exciting to be on the forefront of these booming craft markets.”

Clover (cloverpetaluma.com), known for its whimsical Clo the cow mascot and pun-filled advertising, intends to set up additional distribution warehousing in 65,000 square feet of another building.

“We’ve been growing over the course of the last several years, and we’ve been outsourcing some of our warehousing needs,” said Mkulima Britt, chief strategy officer. “It’s not necessarily a sudden change but continued growth, and we’re wanting to get everything under one roof.”

The expansion also will allow for more staging room at the production plant at 91 Lakeville Hwy., he said.

Cader Corporate Center is the second development project for the Northern California Value Add/Development Fund, a pension investment by a group of construction trade unions. New York Life and McMorgan & Company of San Francisco manage the fund, which launched with $91 million in backing. The fund bought the 20-acre property in October 2014, and it came with entitlements and building pads.

UPDATE, Sept. 19, 2016: Shawn Johnson of Keegan & Coppin represented the buyer and seller of 1631 Airport Blvd. Danny Jones, Dave Peterson and Jeffrey Wilmore of Keegan & Coppin brokered the sale of the Westwind Business Park land.

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