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STOCKTON, CA-O’Reilly Automotive Inc. has inked a long-term lease for a 519,840-square-foot distribution warehouse here that will replace a smaller building the publicly traded retailer of auto parts and accessories currently utilizes in Dixon, CA, according to the Buzz Oates Group of Companies, which which developed the building. The lease rate reportedly starts at just under $2 million per year.

Based in Springfield, MO, O’Reilly Automotive sells to commercial businesses and consumers through approximately 3,400 stores nationwide under the brand names Checker Auto Parts, Schuck’s Auto Supply, Kragen Auto Parts and Murray’s Discount Auto Stores. Last year, the company acquired CSK Auto Corp., which had 1,342 stores in 22 states operating under four brand names: Checker Auto Parts, Schuck’s Auto Supply, Kragen Auto Parts and Murray’s Discount Auto Parts. Since that time it has been busy integrating the stores and adjusting its distribution center network.

On its third quarter conference call, company executives said that after the addition of our four new distribution centers in the West next year, it will operate from 23 locations providing nightly service to its stores in 38 states. “Based on our distribution capacity, we are in good shape to continue expanding into new market throughout the states we currently operate in,” one executive said.

O’Reilly’s new Stockon warehouse, delivered last year, sits on 30 acres at 3412 Perlman Dr. The building has 76 loading docks, eight drive-in bays and and a clear height than ranged from 28- to 32 feet. The estimated move-in date is the second quarter of 2010. The company reportedly signed a 15-year lease that starts at approximately $3.70 per square foot per year, which equates to $1.9 million per year and approximately $0.31 per square foot per month, and has built-in rental rate increases, according to local industry sources.

Bob Taylor of Buzz Oates Real Estate represented BOGC. Rob Stephens and John McManus of Cushman & Wakefield represented O’Reilly. The brokers were not immediately available Friday afternoon for comment.

Buzz Oates chief investment officer Kevin Ramos tells GlobeSt.com that the company considered remaining in Dixon but there was not existing product that would work and the company didn’t want to wait. Meanwhile, the Stockton area had three or four of which would fit O’Reilly’s needs.

“There were six or seven brand new big-box buildings available in the region at the start of the year but there have been three substantial deals—this one; general mills, which took 750,000 square feet; and Whirlpool, which took down 450,000 square feet,” Ramos says. “There are still four remaining—one in Patterson, one in Tracy and two in Stockton—so the heavy supply is getting eaten into. Demand is not yet exceeding supply but there is some demand, especially in the 20- to 70,000 square-foot range. There’s not a lot of expansion but there are fewer and fewer tenants giving back space.

“I think we’re seeing the stabilization of the market,” he continues. “There’s absolutely nothing under construction and we are starting to see some positive absorption in some markets. If we get a year of positive absorption we will see rent growth because the supply is getting soaked up and there’s nothing more coming.”

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