WEST SACRAMENTO—Construction is set to begin by month's end on a379,161-square-foot industrial project in the Southport BusinessPark called LogistiCenter at Southport. Dermody Properties' class-Aindustrial distribution facility demonstrates that replacement costrents have returned to Sacramento and industrial is poised forgrowth, says Schaal Realty Advisors principal Tom Schaal, who hasreturned to his roots in West Sacramento.

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"Replacement cost rents have finally come back to Sacramento,perhaps one of the last markets to come back in the country,"Schaal tells globest.com. "And, industrial is targeted to flourishpost-COVID-19 because supply chain disruption has caused a need formore inventory storage. There will continue to be more e-commerceand manufacturing is going to come back to diminish US dependencyon foreign manufacturing. Downtown and Midtown have come back in abig way and created a cool factor that has created a very positivevibe for Sacramento. This has attracted a young and highly educatedworkforce to the area."

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The development will have 36-foot clear height, divisible to75,000 square feet with cross dock and front-load docs, 58 dockdoors, 56- by 50-foot typical column spacing, ESFR fire protectionsystem, 106 trailer parking spaces and 222 car/small truck parkingspaces.

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Schaal, an El Dorado Hills resident and Sacramento veterancommercial real estate executive with expertise in landacquisitions and development entitlement work, has migrated back toSacramento after working in other markets with various partners andclients since the demise of Opus West in 2009.

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Schaal Realty Advisors just completed a 252,000-square-footdistribution warehouse in Vacaville with Dermody as well as a171,000-square-foot project with New York Life in Contra CostaCounty. Schaal partnered with Mark Heavey, formerly with VentureCorp, to develop the Contra Costa and West Sacramento projects.

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Schaal formerly ran the Opus West office in Sacramento anddeveloped approximately 700,000 square feet of suburban office and750,000 square feet of retail from 2004 to 2009. Opus morphed intoFounder's Properties, which retained Schaal to stabilize andoversee the disposition of all Northern California assets.

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He re-entitled, mapped and sold 320 acres of industrial propertyin Stockton, leased and stabilized 320,000 square feet of office inRocklin and Roseville, and re-entitled and facilitated the sale ofapproximately 10 acres in South San Francisco/Brisbane for a425,000-square-foot life science project to close out the Founder'sNorthern California portfolio. Schaal also brokered, entitled andsold multifamily projects in Davis and Rocklin, and has consultedon various projects for other developers and investors.

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While the future outlook for Sacramento's industrial market isunclear at this point, developers are still bullish on theSacramento market and industrial seems to be the property sectorleast susceptible to the COVID-19 business disruptions, accordingto a first quarter report by Colliers International.

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Solid fundamentals were in place prior to mid-March. Leasingactivity was strong, owner-users were active and large-scalespeculative development was moving forward. Today, landlords aredealing with rent relief requests from tenants and manytransactions have been put on hold for the time being. In addition,some speculative projects have been delayed.

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Lisa Brown

Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.