Shortage of warehouse space drives construction in Sonoma, Napa, Solano counties
The better part of a decade in the works, a large warehouse project is now under construction at the entrance to the Eighth Street East industrial parks near the city of Sonoma.
But the 250,000-square-foot warehouse project, called Victory Station, is one of a few sizable industrial buildings set to come out of the ground in Sonoma County this year, at a time of scant vacancy and strong demand. It’s a different story in the eastern half of the North Bay, where construction of more than 1 million square feet of warehouses are poised to begin this year.
“What attracts me to the North Bay is it’s a tough, longer approval process, so the usual players such as Buzz Oates and Trammell Crow may get taken out of the market,” said Jose O’Neill, developer of Victory Station as well as completed warehouse projects in Napa and Petaluma in the past few years.
Buzz Oates Group of Companies has been building extensively in one part of the North Bay — Solano County, particularly Vacaville. But the Sacramento-based real estate development and construction has made a recent venture into Napa County. It has a 120,000-square-foot class A distribution warehouse under construction at 10 Jim Oswalt Way in American Canyon.
Another big industrial builder making inroads into Napa County is Innova Development of Los Angeles. Late last year, it finished an 82,000-square-foot new wine-bottle-decoration plant for Bergin Glass Impressions at 451 Technology Way in south Napa. Now, Innova is gearing up to break ground on a 73,000-square-foot warehouse around the corner on Gateway Road East.
McNeill has been working to get the Victory Station project built since he and financial backer Washington Capital Management purchased the property in April 2016. A grading permit was secured from the county of Sonoma in November; and a building permit, in the first half of March.
Led by general contractor Devcon, work on the pad for the building has been completed, and the underground utilities are installed. Soon the tiltup concrete walls will be poured and hoisted into place.
“Interest is coming from tenants in Sonoma (County) as well as Napa (County),” McNeill said. “The Napa market is really tight. … Finding land to put of a building this size is very difficult.”
Prices for large parcels of ready-to-build industrial-friendly land around the business parks of southern Napa Valley can be as much as $15 per square foot, he noted. “That starts pricing out rents for warehouses,” he said.
Another Sonoma County industrial project set to bring space to market this year is Billa Landing near Charles M. Schulz–Sonoma County Airport.
“Construction costs along with land values are increasing at such a rate that many users are surprised with how expensive it is to build new facilities and the time it takes to complete them,” said Shawn Johnson, managing partner of Keegan & Coppin Co. Inc./Oncor International. Dave Peterson and Danny Jones of the brokerage are marketing the Billa Landing project, which is set to have 380,000 square feet in five buildings.
The first two buildings, each with 48,100 square feet, are set to be completed by early September, according to Peterson. A lease is being drafted with an undisclosed Fortune 500 company for one of them, and terms are being discussed with multiple prospects for 20,000 square feet or all of the other, he said. Interested companies are looking for standard distribution warehouse space, a place to house or produce wine, or to room to operate cannabis-related businesses.