RESEARCH & FORECAST REPORT

Transcription

1 Q4 INDUSTRIAL FAIRFIELD: SOLANO & NAPA COUNTIES CALIFORNIA RESEARCH & FORECAST REPORT MARKET INDICATORS Q4-13 Projected Q1-14 Industrial Market Review Wine Industry Growth Inspires Development was one of the strongest years in recent memory for the industrial market in Solano and Napa counties. Vacancy declined 3.7 percentage points for the year to 7.5 percent. The fourth quarter was no exception, as vacancy declined 0.6 percentage points. Net absorption was positive 286,287 square feet in the fourth quarter and 1,752,731 square feet for the year. Average asking rates dipped in the fourth quarter by $0.02 to per square foot per month (psf/mo) Triple Net (NNN). The decline in asking rates amidst positive absorption may seem counterintuitive. The explanation for this anomaly is when higher quality and more expensive spaces are leased, less desirable and less expensive spaces remain available (i.e., flight to quality). Sales activity rebounded in the fourth quarter as there were four sales of 50,000 square feet or greater in the quarter, up from only one in that size range in the third quarter. Two of these sales were user sales and two were investment sales. RENTAL NET ABSORPTION CONSTRUCTION SELECTED MARKET STATISTICS > > INDUSTRIAL INVENTORY: ±46,355,753 square feet As a result of the rapid absorption of space in Solano and Napa counties, the development of new buildings has ramped up. In particular, demand for large warehouses with good clear height (minimum 28 feet) such as the massive two building project Buzz Oates is building on Cordelia Road in Fairfield. Construction on both warehouses is expected to be completed by the end of Encore Glass has leased the first building, a 318,000 square foot warehouse that is under construction and will be completed in January Saxco International LLC recently signed the lease for the second building, a 473,000 square foot warehouse that is expected to begin construction in Q These two buildings represent > > CURRENT : ±7.5 percent > > AVERAGE ASKING NNN RENT*: psf/mo SOLANO & NAPA COUNTIES ALL CLASSES A sustained recovery: eight consecutive quarters of declining vacancy. 1 * Average Asking NNN rents represent asking rents for all industrial product type and size. This number is used as a tool to track historical market rent trends only. Actual Asking NNN rents vary dramatically depending on numerous variables. Please contact our Brokers for actual asking NNN rents

2 RESEARCH & FORECAST REPORT Q4 INDUSTRIAL SUBMARKET MAP KEY 1 Fairfield 2 Napa 3 American Canyon 4 Vallejo Benicia 6 Vacaville 7 Dixon 7 (continued from page 1) nearly 0,000 square feet of build-to-suit construction within months of Buzz Oates acquiring the property. Both Encore Glass and Saxco International LLC supply glass bottles for the wine industry. Saxco International LLC also supplies beer and food bottles. JCM Partners recently listed Gateway Business Park, a 52.4 acre parcel of land that is across the street from Buzz Oates above project on Cordelia Road. BENICIA Benicia extended its streak to six consecutive quarters of vacancy declines in the fourth quarter of. The vacancy rate declined by 0.8 percentage points to 9.2 percent. Santa Clara Warehouses was once again the leading contributor for this decline as they leased the 122,000 square foot warehouse at 539 Stone Road in the Benicia Industrial Park. FAIRFIELD Fairfield retained its position as the city with the lowest vacancy rate in Solano County. The vacancy rate for the fourth quarter declined to 4.5 percent from 5.1 percent. The largest transaction in the quarter was DBI Beverage s purchase of the 59,843 square foot warehouse at 2449 South Watney for $5,248,500, or $87.70 per square foot, in an owneruser transaction. VACAVILLE In a relatively quiet quarter, Vacaville s vacancy rate declined slightly in the fourth quarter by 0.3 percentage points to 9.5 percent. NAPA Continued strength in the wine industry led to another decline in Napa s vacancy rate, by 2.2 percentage points to 3.1 percent in the fourth quarter. The biggest transaction in the quarter in any of the cities covered in this report was the purchase of Dey Labs four building 365,000 square foot campus at 2741 Napa Valley Corporate Drive in the Napa Valley Commons business park by the County of Napa. The county is planning to renovate approximately 150,000 square feet of the space into offices for the county s Health and Human Services Agency for occupancy in 2015 and will put the rest of the space on the market for lease. LEASE AND SALES ACTIVITY LEASE ACTIVITY PROPERTY ADDRESS LEASE DATE SIZE TENANT TYPE Building A, Cordelia Road, Fairfield 12/ 473,136 Saxco International, LLC Warehouse/Distribution 5001 Industrial Way, Benicia 10/ 1,000 Saxco International, LLC Warehouse/Distribution 539 Stone Road, Benicia 11/ 122,000 Santa Clara Warehouses, Inc. Warehouse/Distribution 2131 Beechcraft Road, Vacaville 11/ 37,620 Pacific Cycle, Inc. Warehouse/Distribution 537 Stone Road, Benicia 11/ 30,976 Pacific Insulation Co. Warehouse/Distribution SALES ACTIVITY PROPERTY ADDRESS SALE DATE SIZE BUYER TYPE 2741 Napa Valley Corporate Drive, Napa 12/ 365,000 Napa County Industrial/Warehouse 2545 Napa Valley Corporate Drive, Napa 10/ 148,309 Lowenberg Associates LP Warehouse/Distribution 2511 Napa Valley Corporate Drive, Napa 10/ 87,751 Lowenberg Associates LP Industrial Flex 2449 South Watney Way, Fairfield 10/ 59,843 DBI Beverage, Inc. Warehouse/Distribution 1085 Horizon Drive, Fairfield, CA 12/ 17,8 Owen Equipment Sales, Inc. Light Industrial P. 2 COLLIERS INTERNATIONAL - FAIRFIELD

3 RESEARCH & FORECAST REPORT Q4 INDUSTRIAL The two largest investment sales in this report also took place on Napa Valley Corporate Drive in the Napa Valley Commons business park. Lowenberg Associates was the buyer in both cases. They purchased both the two wine warehouses totaling 148,309 square feet at 2545 Napa Valley Corporate Drive and the 87,751 square foot Industrial Flex building at 2511 Napa Valley Corporate Drive. AMERICAN CANYON American Canyon s vacancy rate blipped upwards from 0.2 to 0.6 percent in the fourth quarter, which remains the lowest vacancy in the cities covered in this report. American Canyon is literally full with respect to warehouse space; the only current availabilities on the market are a handful of small light industrial spaces. SUMMARY The growth in the wine industry has inspired the recent resurgence of the development of new construction, which had been largely non-existent in the past five years. Napa County s current industrial vacancy rate of a miniscule 1.8 percent clearly demonstrates the need for additional space. Solano County also benefits from both the wine industry s strength and the greater economy s recovery in general. Now that the long anticipated recovery is underway, Solano County is well positioned to take advantage of its location as a regional transportation hub with a pro-business climate that features a significant amount of clean, deliverable land. SOLANO & NAPA COUNTIES WAREHOUSE/DISTRIBUTION 2741 NAPA VALLEY CORPO DRIVE NAPA ±365, SOLANO & NAPA COUNTIES INDUSTRIAL SOLANO & NAPA COUNTIES R&D/FLEX COLLIERS INTERNATIONAL - FAIRFIELD P. 3

4 RESEARCH & FORECAST REPORT Q4 INDUSTRIAL MARKET COMPARISONS INDUSTRIAL MARKET SUB-TYPE BLDGS TOTAL INVENTORY DIRECT DIRECT SUBLEASE SUBLEASE TOTAL CURRENT QUARTER PRIOR QUARTER NET ABSORPTION CURRENT QTR NET ABSORPTION YTD COMPLETED CURRENT QTR UNDER CONSTRUCTION AVG ASKING NNN AMERICAN CANYON Industrial ,601 39, , % (29,650) (21,2) - - R&D Flex Warehouse 26 5,628, , TOTAL 58 6,360,826 39, , (29,650) 159, BENICIA Industrial 136 3,773, , , , , $0.67 R&D Flex 8 281,509 27, , (23,514) 5,2 - - $0.59 Warehouse 36 4,422, , % , % 8.5% (63,758) 322,9 - - $0.42 Total 1 8,477, , , , , $0.53 DIXON Industrial ,017 14, , (270) (5,624) - - R&D Flex Warehouse 6 1,361, , , Total 37 2,197, , % , % 18.3% (270) (5,624) - - $0.36 FAIRFIELD Industrial 93 2,922, , % 30, , % 7.1% (1,354) 28, $0.72 R&D Flex ,459 22, % , % ,023 22, $0.67 Warehouse 57 8,651, , % , % 4. 63, , ,402 $0.51 Total ,913, , ,3 0.3% 531, % 5.1% 77, , ,402 $0.59 NAPA Industrial 99 2,301,3 86, , ,850 60, $0.87 R&D Flex ,427 55, % , % ,081 27, $0.98 Warehouse 34 3,205,148 46, , , , ,189 $0.66 Total 150 6,0, , % , % 5.3% 134, , ,189 SUISUN CITY Industrial ,463 40, , % 17,855 14, R&D Flex 1 29, Warehouse Total ,463 40, , ,855 14, VACAVILLE Industrial 65 1,475, , , ,008 26, $0.71 R&D Flex 6 151,782 63, , % (4,798) (10,425) - - Warehouse 28 4,748, , % , % 8.1% (12,000) 210, $0.39 Total 99 6,375, , % , % 9. 21, , $0.47 VALLEJO Industrial 83 3,365, , , (7,515) 27, $0.44 R&D Flex 4 49, Warehouse 15 1,286, , , % 4,011 68, $0.30 Total 102 4,701, , % , % 19.1% (3,504) 95, MARKET TOTAL Industrial ,625,264 1,467, ,3 0. 1,498, % 243, , $0.59 R&D Flex 49 1,426, ,2 11.9% ,2 11.9% ,792 45, $0.68 Warehouse ,303,671 1,813, ,813, % 26,871 1,377, ,591 TOTAL 3 46,355,753 3,450, ,3 0.1% 3,481, % 8.1% 286,287 1,752, ,591 QUARTERLY COMPARISON AND TOTALS Q ,355,753 3,450, ,3 0.1% 3,481, % 8.1% 286,287 1,752, ,591 Q ,355,753 3,767, % ,767, % 9.5% 633,679 1,466, ,591 $0.52 Q ,355,753 4,401, % ,401, % 11. 7, , ,402 $0.54 Q ,355,753 5,098, , ,181, ,121 52,121 48,133 - Q ,307,620 5,085, , ,185, ,8 1,404,106-48,133 COLLIERS INTERNATIONAL - FAIRFIELD P. 4

5 RESEARCH & FORECAST REPORT Q4 INDUSTRIAL EXECUTIVE MANAGING DIRECTOR Chris Petrini ADMINISTRATIVE Brenda Rodrigues Operations Manager offices in 62 countries on 6 continents INDUSTRIAL/OFFICE phil.garrett@colliers.com Jonathan Quick jonathan.quick@colliers.com William Kampton Senior bill.kampton@colliers.com Steve Crocker steve.crocker@colliers.com Bret DeMartini bret.demartini@colliers.com Eric Dakin Senior Associate eric.dakin@colliers.com Tony Binswanger, MCRE Senior tony.binswanger@colliers.com MULTI-FAMILY INVESTMENTS Brett Johnson Multi-Family Investment Group brett.johnson@colliers.com PROPERTY MANAGEMENT Patrick Murray Managing Partner/SVP pat.murray@colliers.com RESEARCH Rob Gerard Research Analyst rob.gerard@colliers.com United States: 140 Canada: 42 Latin America: 20 Asia Pacific: 195 EMEA: 85 > $2.0 billion in annual revenue > 1.12 billion* square feet under management > Over 13,500 professionals *The combination of Colliers International and First Service results in 2.5 billion under management (2nd largest in the world.) COLLIERS INTERNATIONAL FAIRFIELD 360 Campus Lane Suite 101 Fairfield, CA TEL FAX EXECUTIVE MANAGING DIRECTOR CA License No TEL RESEARCHER Rob Gerard Research Analyst II TEL TERMS Cap Rate: The ratio between the net operating income (NOI) produced by an asset and its capital cost (original sale price) or alternatively its current value, i.e., Cap Rate = NOI divided by Price. Full Service: Rental type generally used in office product where the landlord s rental rate contains all costs associated with occupying the premises inclusive of taxes, insurance, maintenance, janitorial, and utilities. Negative Net Absorption: The occupied square footage decreased from one period to another. Net Absorption: Measures the change in occupied square footage from one period to another. Positive Net Absorption: The occupied square footage increased from one period to another. Triple Net (NNN): Rental type where the tenant pays rent to the landlord and additionally assumes all costs regarding the operation, taxes and maintenance of the premises and building. This report and other research materials may be found on our website at This report is a research document of Colliers International - Fairfield, California. Questions related to information herein should be directed to the Research Department at Information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. As new, corrected or updated information is obtained, it is incorporated into both current and historical data, which may invalidate comparison to previously issued reports Colliers International. Accelerating success. COLLIERS INTERNATIONAL - FAIRFIELD P. 5