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Prime warehousing is getting harder to come by in the North Bay, and that’s making industrial real estate a prime buy.

Case in point, a Phoenix-area real estate developer and investor zeroed in on a sprawling Solano County distribution center to make a big play in San Francisco Bay Area commercial property. JDM Partners LLC purchased a 1.02 million-square-foot warehouse at 2600 Stanford Ct. from USAA Real Estate Company. Equivalent of having nearly 18 NFL fields under roof, it’s the largest warehouse in the North Bay and one of only seven with more than 1 million square feet in Northern California.

The sale price reportedly was $60.5 million, or about $59 a square foot. It was built a decade ago and would cost at least $75 a square foot to build such a structure now, according to JLL’s Matt Bracco, part of the local expertise representing USAA in the deal.

“Tremendous” investor demand and a limited supply pipeline continue to make the Bay Area a sought-after industrial locale, according to real estate brokers for the seller.

“Because this facility is just slightly further out from the ‘core’ institutional [grade investment] markets like the [Interstate] 880 corridor, investors are able to acquire an asset that provides a much better return on investment,” Bracco said.

That return works out to a capitalization rate — net operating income divided by the sale price — of 6.24 percent, he said. That’s well above caps rates of below or just above 4 percent on core infill properties, Bracco said.

The 55.72-acre property is fully leased to Europe-based Ardagh Group, one of the biggest makers and distributors of wine bottles in the world. The Fairfield building is a warehousing hub for glass plants in the Central Valley and Pacific Northwest. The building, with a 180-foot truck court and 32-foot interior ceiling clear height, was built in 2006 for Saint-Gobain Containers, which became Verallia and then Ardagh.

“Additionally, the rent that Ardagh renewed at was considered to be below market providing more upside for ownership down the road when the lease expires,” Bracco said.

The Bay Area is a tough industrial investment market to crack, said Mark Detmer, part of JLL’s national markets team. “With such heavy demand for industrial product and a very limited supply, Northern California is primed to continue its strong sales environment.”

BIG SPACES IN SOLANO

Fairfield has some of the lowest warehouse and distribution space vacancy in the North Bay, despite 156,000 square feet of new space reaching completion at mid-year and another 1 million square feet under construction, according to Colliers International. The vacancy rate for such space in the city was just 2.9 percent of 9.62 million square feet in the second quarter.

Panattoni Development Co. in April started construction on the 1.04 million-square-foot Gateway80 Business Park project just east of the towering Anheuser-Busch brewery windmills along Interstate 80. It’s set for completion by year-end. JLL is marketing the project.

Another half-million square feet of warehouse projects are planned to get started in the city this year, but opportunities for more big buildings is dwindling, according to Jon Quick, a Fairfield-based Colliers agent.

RUNNING OUT OF LAND

“Vacaville has more land for future growth than Fairfield,” Quick said. “Fairfield is running out of industrial sites.”

He’s on the Solano Economic Development Corporation board and part of a county-led task force looking at the local economy over the next two decades. One finding is that Fairfield doesn’t have much land left with entitlements for construction to begin quickly on large commercial projects, Quick said.

An example of industrial development potential in Vacaville is Interchange Business Park, which has about 100 contiguous acres available. The city’s warehouse vacancy rate was 3.7 percent of 5.49 million square feet in the second quarter, according to Colliers.

And space has been coming to market nearby in Vacaville Business Park.

Sacramento-based Buzz Oates Group of Companies finished construction on a 128,758-square-foot warehouse at 2060 Cessna Dr. in Vacaville Business Park earlier this year, leasing 81,000 square feet to Wunder-Bar and 47,000 square feet to Los Angeles-based Acorn Paper Products Company, which is relocating a distribution center from American Canyon in Napa Valley.

“It was one of first [speculative commercial] buildings built in Solano County in a number of years,” Quick said. “It feels like a strong, active market. We’re starting to see new projects coming out of ground.”

For example, Buzz Oates Group plans to break ground shortly on a 321,000-square-foot speculative warehouse at the southwest corner of Crocker and Aldridge drives in Vacaville Business Park.

Colliers markets Interchange Business Park and Vacaville Business Park.

Buzz Oates Group also is venturing into the scant-vacancy southern Napa Valley warehouse market. The company purchased land in American Canyon late last year and plans to start construction this year on a 115,000-square-foot warehouse. Colliers is marketing the project.

Brokering the 2600 Stanford sale with Detmer were fellow JLL Capital Markets agents Bo Mills and Ryan Sitov plus local JLL experts Glen Dowling, Matt Bracco and Chris Neeb.