Betting that tenants will come when tens of millions of dollars are poured into a speculative construction project is risky business, but it has shown to put the Napa County commercial real estate market on the radars of site scouts for major companies.
Though the hulking 646,000-square-foot first warehouse in American Canyon sat empty about a year after completion, it landed a full-building tenant last fall.
“Inventory does create demand,” said Brooks Pedder, whose Cushman & Wakefield team is marketing the DivcoWest’s and Orchard Partners’s 218-acre Napa Logistics Park development on Middleton Way.
“If we didn’t have a 646,000-square-foot building in the market, we would not know Ikea was there. The same with Amazon. We’re getting a first look on these deals because we have big buildings close to the Interstate 80 corridor.”
Amazon reportedly was the interested in leasing the building but later leased a 320,000-square-foot North Bay fulfillment hub in Vacaville. Then home furnishings retailer Ikea leased it to set up an e-commerce fulfillment center.
Planned for 2.9 million square feet in five buildings, Napa Logistics Park has a 372,000-square-foot warehouse set to start construction and a 362,000-square-foot warehouse in the offing.
“We have a final map on Napa Logistics Center, but we cannot start on the third building until the third quarter of next year,” Pedder said.
Several smaller industrial projects in the county are set to begin or deliver space, but there could be a six- to nine-month dearth of sizable warehouse space in Napa County, Pedder said.
One challenge is that it can take a year or longer to secure conditional use permits in the county, he said.
Available large industrial space in Napa County is dwindling to historic lows, according to Colliers International’s Fairfield office. In the first quarter, the Napa County industrial space vacancy rate rose to 2.3 percent of 8.16 million square feet of existing space, roughly split between Napa and American Canyon, from 1.9 percent at year end, according to Colliers.
American Canyon’s vacancy rate remained unchanged in the first quarter at 1.0 percent, the lowest vacancy for a significant North Bay market, according to Colliers. The vacancy rate in the city of Napa increased in the first quarter from 2.9 percent to 3.8 percent. This increase was primarily a result of 745-747 Skyway Court in the Napa Airport Centre coming on the market.
Sacramento-based Buzz Oates Group of Companies is set to complete a 120,080-square-foot warehouse at 100 Jim Oswalt Way in American Canyon this quarter.
The Pigman Companies and Kraemer Land Company are gearing up to break ground this year on the first phase of Napa Commerce Center at the southwest corner of Highway 29, Devlin Road and Airport Boulevard, near Napa County Airport. It will be an 81,663-square-foot warehouse.
Scannell Properties is set to return to the Napa market with a 90,000-square-foot speculative warehouse on Gateway Road East in Napa Valley Gateway Business Park. Several years ago, the company built a 644,000-square-foot distribution facility for Biagi Bros. and Jackson Family Wines in American Canyon.
In the third quarter of this year, Sacramento-based Panattoni Development, which has built hundreds of thousands of square feet of warehouses in south Napa Valley over the past two decades, is set to break ground on the first space at its five-building, 350,000-square-foot Napa Airport Corporate Center project at the intersection of Highway 29 and South Kelley and Devlin roads.
North Bay commercial real estate market update