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Bay Area’s Industrial Markets Heat Up During Q4 With Flurry Of Transactions

It has been a particularly active Q4 for the Bay Area’s industrial markets. With single-digit vacancy rates throughout the Bay, space is in high demand, rents are rising and developers are filling up space as fast as they build it. Investors are buying in and construction is well underway on several large projects throughout the East Bay.

Check out some of the newest projects and recently closed transactions so far this quarter:

Bayside Business Park

Bayside Business Park in Fremont

BKM Capital Partners and Canyon Partners Real Estate acquired the 294K SF multi-tenant portfolio within the Fremont business park. The acquisition is BKM’s third investment completed this year through a JV with Canyon Catalyst Fund, the CalPERS real estate emerging manager program managed by Canyon. The purchase price was $72M, according to the Silicon Valley Business Journal.

The 12-building, 24.7-acre property at Fremont Boulevard and Clipper Court is 94% leased and units range from 1,244 SF to about 11K SF. A capital improvement plan will include renovations to enhance the property’s aesthetics.

“Fremont has rapidly grown into the fourth-largest city in the Bay Area as the Silicon Valley continues to push demand north,” BKM Capital Partners CEO and co-founder Brian Malliet said. “Today it is home to an increasing number of corporate headquarters, which is driving demand for industrial space by supply chain tenants as well as companies priced out of San Jose.”

Williams Industrial Park

Williams Industrial Park in San Leandro

Broadreach Capital Partners sold its Williams Industrial Park in San Leandro to Lift Real Estate Partners and Westbook Partners. The 438K SF campus at 2010 and 2020 Williams St. is 100% leased to five tenants. The park is anchored by the headquarters for 21st Amendment Brewery, which is the Bay Area’s third-largest brewery and produces 102,000 barrels annually. The buildings span 21.7 acres and have 31 loading docks.

JLL Capital Markets Managing Director Will Connors and Senior Vice President Erik Hanson led the sales team.

“The I-880 corridor is one of the most sought-after submarkets in all of Northern California and the competitive bid process showed that assets there have potential to create excellent value,” Connors said.

The 880 corridor has about 93M SF of industrial but 1.6% vacancy. Of San Leandro’s 16.2M SF of industrial, 1.2% vacancies remain. San Leandro has been particularly active for developers with Trammell Crow, DCT Industrial and Overton Moore Properties redeveloping or building industrial complexes in the city. These projects will create nearly 1M SF of new industrial.

Napa Logistics Park

Napa Logistics Park

IKEA leased 646K SF in American Canyon at DivcoWest and Orchard PartnersNapa Logistics Park. The entire park once completed will have 2.9M SF of industrial spanning five buildings. The next phase will begin in spring. This location will serve as a distribution warehouse for IKEA, which is establishing delivery of online orders and bulky products purchased at stores. 

Goodrick Commerce Center

New York Life Real Estate Investors began construction of the Goodrick Commerce Center in October. The 172K SF industrial complex in Richmond will consist of two buildings. NYL Investors, a wholly-owned subsidiary of New York Life Insurance Co., is developing the site with McMorgan & Co.

“Vacancy levels in both the Richmond submarket and entire East Bay area are currently at record lows,” New York Life Real Estate Investors Director Michael Hamilton said. “We expect the market’s response to these new top-tier industrial buildings to be very positive.”

The property includes a 113K SF warehouse-distribution building with 32-foot clear heights, 54 feet by 60 feet column spacing and 23 dock-high doors. The property’s smaller 59K SF building is divisible and will provide 24-foot clear heights and 10 grade doors. Both buildings will be equipped with an ESFR fire protection system.

Construction of the property is being coordinated by Overaa Construction, and the development will be managed by Schaal Realty Advisors. The project’s leasing efforts are being managed by Kennedy Wilson Vice Presidents John Troughton and Eric Rehn.

Pacific Commons

Fremont City Council approved a 2.53M SF development from Overton Moore Properties and Conor Real Estate in October. The 143-acre property would include 11 buildings; two car dealerships could be built on another 10 acres. The complex will be at Bunche Drive and Christy Street and could accommodate a variety of industries, including e-commerce fulfillment, technology assembly, advanced manufacturing and research and development, according to the East Bay Times. The buildings will range from 30K SF to 815K SF and be 30 feet to 50 feet tall.

Find out more about Northern California’s booming industrial market at Bisnow’s NorCal Industrial Surge event Dec. 7 in San Francisco.