Bentall Kennedy Leads Oakland Sale

OAKLAND, CA–A 374,725-square-foot, fully leased Class A, LEED silver-certified core warehouse logistics building located at 8350 Pardee Drive sold for $54.8 million or $146 per square foot, Ashley Powell tells GlobeSt.com in this exclusive. Powell, who is senior vice president and western region head of transactions, led the sale on behalf of Bentall Kennedy Limited Partnership, a real estate investment advisor.

Bentall Kennedy purchased the building on behalf of an unnamed institutional investor client. The seller was a joint venture between Goodman Birtcher, part of The Goodman Group, and Canada Pension Plan Investment Board. Mark Detmer and Bo Mills of JLL's Phoenix office and Jason Ovadia of JLL's Walnut Creek office handled the sale on behalf of the seller.

Powell tells GlobeSt.com: “The transaction required complex structuring and working closely with the Goodman Birtcher team. The close working relationship is what made this off-market transaction possible.”

The one-year-old facility near the Oakland International Airport and the Port of Oakland was the largest industrial building to be built in that city in the last 20 years when construction began in 2012. Key features of the building include 32-foot clear heights, 92 loading positions in a cross-dock configuration, 185-foot concrete truck courts on both sides of the building, truck queuing lanes, drive-around capability, and abundant truck and trailer storage.

Powell further explains to GlobeSt.com: “With less than 5% of the industrial space in the Bay Area designed as cross-dock distribution facilities, we feel that Pardee offers unique characteristics that are both rare and very efficient to service the dense population of the Bay Area.”

A large furniture distributor, Coaster, signed a lease for 232,881 square feet earlier this year, and is expected to move in next month. The other tenant, Benjamin Moore, a Berkshire Hathaway subsidiary, occupies the remaining 141,844 square feet.

The Oakland/East Bay industrial market witnessed near record-breaking leasing activity in 2014 and this, combined with rising rental rates for a range of industrial real estate, is producing strong market interest among investors. 

“Investor appetite for well-located, state-of-the-art logistics facilities continues to intensify, especially for high-quality construction buildings, like 8350 Pardee Avenue, which easily attract strong tenant interest,” said Ovadia.

Powell agrees, adding, “With the recent announcement of Prologis' purchase of KTR Capital and other large industrial portfolios reportedly being pursued by sovereign wealth funds, the price support for Class A institutional-quality industrial properties in key markets like the Bay Area continues to strengthen.”

The Pardee Drive location is in the center of the Bay Area for goods arriving by sea, rail, truck and air. According to JLL's research on the Oakland industrial market, traffic through the Port of Oakland was up 3.4 percent in the fourth quarter 2014. The report notes traffic was bolstered by increased volume during the holidays and spillover from shippers diverting inbound cargo from other West Coast ports affected by prolonged longshoremen strikes/labor negotiations. While Oakland also suffered from strike activity for a short time, the increased pressure on an already supply-constrained market surrounding the Port has led to continued rental rate increases on remaining blocks of available space. Total net absorption in the Oakland/East Bay industrial market in 2014 reached the second highest level in the last 17 years and this has led to a surge in demand that is being met by an increase in speculative development as well as build-to-suits.

Bentall Kennedy serves the interests of more than 550 Canadian and US investors, with 132 million square feet of office, retail, industrial and multi-residential properties valued at more than $32 billion. As reported earlier this year, Bentall Kennedy is also part of the development team in another Class A industrial logistics project in the East Bay.