A large wine warehouser plans to build a northern Sonoma County facility, as options to expand storage further south dwindle.

Sonoma County Vintners Co-Op, Inc., last month purchased 4.67 acres of industrial land near Bear Republic Brewing Company’s southwest Cloverdale production facility. The plan is to build a roughly 96,000-square-foot warehouse on the property, located along the South Cloverdale Boulevard frontage road from Highway 101 and just south of Kelly Road.

“We’re going to split our business in two, so that we will have a Co-Op North and a Co-Op South, as far as operations go,” said Nick Wilson, general manager.

The main office will remain in the co-op’s largest facility, located in the 150,000-square-foot Building B at 830 DenBeste Court in Windsor. Also staying in Windsor likely will be the Sonoma County part of the Pack n’ Ship Direct consumer-direct fulfillment business, of which the co-op is a minority partner.

The co-operative currently has 37 winery members that own it and get discounted rates for storing wine in its facilities. One hundred other vintners rent space for their casegoods.

During peak bottling season leading up to the winegrape harvest in the fall, the co-op stores up to 1.7 million cases of wine. It used to be that vintners would be actively calling warehousers and trucking companies looking for space to store newly bottled wine from July through August, but more bottling activity throughout the year has evened out that demand, Wilson said.

Cost of leases and availability of suitable space in the Windsor and Healdsburg area spurred the co-op to look for land elsewhere to build, Wilson said.

“The lease costs for wine storage in this area have skyrocketed,” he said. “We wanted to get our own property and lock in a loan and interest rate to stabilize that. And I don’t think there will be any problem selling a warehouse like that.”

The co-op mostly owns the 830 DenBeste building, but it leases another 147,000 square feet in multiple warehouses. That includes 64,000 and 24,000 square feet in two warehouses on the same cul-de-sac plus two Healdsburg warehouses with 35,000 and 24,000 square feet. The quoted rental rate for one of those spaces on lease renewal would be $1.05 a square foot monthly, up from the current 74 cents.

“We found that out after we purchased the property, but it cemented what we had been seeing the marketplace,” Wilson said. “Rather than finding ourselves in a difficult position trying to negotiate lower leases, we decided we would see what we could do to build a building ourselves.”

Starting in 2016 in the runup to the legalization of cannabis in California, industrial buildings in and around Santa Rosa started to become a hot item for indoor cannabis cultivation and processing of such products, according to Dave Peterson, a partner in commercial real estate brokerage Keegan & Coppin Co. Inc./Oncor International.

This has pushed up building prices and rents by two to three times previous levels, and traditional users of industrial space have been searching elsewhere in Sonoma County for space, he said. Price increases have risen to the point where developers are starting to build warehouses after a several-year dearth of such projects.

Three sizable projects by Billa Enterprises, Airport Business Center and DenBeste Properties are underway in the Sonoma County Airport industrial parks, and large speculative warehouses are under construction on the Eighth Street East “industrial wine corridor” near Sonoma.

A Cloverdale resident, Wilson thinks a sizable wine-storage facility would be a boon to the city’s economy.

“There is not a whole lot up there, in terms of industry,” he said. “It will bring a lot of winery people up to pick up will-calls.”

The co-operative bought the Cloverdale land at 28145 Highway 101, aka South Cloverdale Boulevard, on April 4 for $1.3 million, or $6.39 a square foot.

Phil Wright of Phil Wright Realty in Windsor represented the co-op in the transaction and is helping to guide the project-entitlement process. The co-op is working with the city of Cloverdale on widening of Kelly Road to accommodate a planned housing development west of the property without reducing the size of the warehouse, Wilson said.

LeDoux & Associates of Cotati is designing the Cloverdale building, and Kevin Doble in DobleThomas & Associates’ Ukiah office is overseeing engineering. Russ Mayer of Keegan & Coppin represented the seller, Edgar E. Smith and Susan F. Smith 1989 Trust.

Contact Jeff Quackenbush at jquackenbush@busjrnl.com or 707-521-4256.