How Much More Can North Bay Industrial Tighten?

PETALUMA, CA—The recent $26.45 million sale of a 183,000-square-foot multi-building industrial portfolio demonstrates the tightening of the North Bay market, which has been evident for several years. These buildings at 755-775 South Point Blvd. were purchased by Indianapolis-based Scannell Properties. The seller consisted of a pair of private individuals who formerly operated Sistema Plastics at the site.

Trevor Buck, Steven Leonard and Brian Foster with Cushman & Wakefield’s North Bay office represented both buyer and seller in the transaction. The trio was also retained by the buyer to perform leasing services.

“At the time of sale, both buildings were fully vacant, to which the portfolio had represented the largest industrial lease opportunity in the North Bay. However, already since the date of sale, we have swiftly closed two significant lease transactions in the project, and are currently in negotiations for a third lease,” said Trevor Buck, executive director. “Scannell, who has great knowledge and experience in our local North Bay market, remains bullish in our region, particularly for industrial product.”

755 South Point consists of a freestanding 88,466-square-foot two-story building and 775 South Point consists of a freestanding 94,500-square-foot two-story building. Centrally located in Southern Sonoma County, both buildings provide freeway visibility, desirable loading capabilities, clear height and parking, and natural light, while 755 South Point features 62,000 square feet of temperature-controlled space. The buildings are also situated close to Redwood Business Park, downtown Petaluma and the SMART Train with direct access to Highway 101.

“The industrial market has been in a tightening mode for a couple of years with space options dwindling even with new construction in the pipeline,” Buck tells GlobeSt.com. “Scannell Properties has hands-on experience in dealing with properties that need capital infusion and was able to reposition the property with tenant improvements and other property upgrades to move forward with market activity. The South Point buildings offer some of the best available warehouse/distribution space in Petaluma/Southern Sonoma County.”

Indeed, the Marin County industrial market remains tight, with a vacancy rate of just 1.8% at the close of the first quarter of 2019, according to a report by Cushman & Wakefield. The county recorded 11,650 square feet of positive net absorption this quarter. More than 10,000 square feet of that positive net absorption came from the Novato submarket which makes up roughly one third of Marin’s total inventory and currently half of its available space. Still, the vacancy rate in Novato is just 3.1%.

Industrial availabilities in Marin were dominated by smaller blocks with only one property offering of more than 20,000 square feet of contiguous space. Spaces tend to be smaller and more expensive than Sonoma County, so large-scale industrial users typically move further north, says the report.