The most direct reason for the decrease in vacancy is due to
notable large lease transactions that have occurred thus far this
year. Zinus, Inc., a mattress distribution company, leased ±116,017
Square Feet at 1951 Fairway Drive in San Leandro for five years,
filling a large vacancy in the northern I-880/80 market. The vacancy
was part of a larger ±288,900 Square Feet industrial building
owned by Fairway San Leandro, LLC. Another large vacancy was
leased in the San Leandro market when All American Containers
signed a five year lease for ±142,137 Square Feet just south of the
Zinus space at 2011 Farallon Drive
The southern portion of the I-880/80 market has also witnessed
increased lease momentum in some of its previously vacant spaces.
± 45,980 Square Feet of warehouse distribution space was leased
in the Stockbridge owned Hayward Commerce Park to Premier
Products on a five year term. Southern Wine and Spirits, who cur-
rently occupies nearly 1,000,000 Square Feet in Union City, leased
an additional 68,450 Square Feet on 1000 Whipple Road. SW&S
had a need for this space as they are in the middle of demolish-
ing an existing building adjacent to their current headquarters and
constructing a state of the art 60’ Clear distribution building on
Atlantic Street.
There has also been a flurry of large building sales in 2013 as
both users and investors look to take advantage of historically low
financing rates. On the user side of things, Emerald Packaging,
one of the largest flexible packaging manufacturers on the west
coast, bought a ±98,500 stand alone warehouse/distribution facility located next to their current company headquarters from KTR
Capital Partners.
Another large user sale that recently closed was Restoration
Management’s purchase of a ±153,819 multiple building office/
warehouse/distribution facility on Point Eden Way in Hayward at
the foot of Highway 92 and the San Mateo Bridge. The buildings
were previously owned by Stefanac Trust.
Two large investment sales occurred in Q2 2013 as well. In
Richmond, the northern most region of the I-880/80 market, Sares
Regis sold a ±117,200 SF warehouse/distribution center to MMB
Management LLC. The building was a build to suit completed by
Sares Regis for Whole Foods and will act as the food services main
Northern California distribution center. Whole Foods signed a fif-
teen year lease and occupied the building in May of this year.
In Fremont, Prologis sold the ±173,946 Fremont Industrial
Center to Industrial Income Trust. The multi-tenant project is cur-
rently divided into five spaces, only one of which (± 28,000 SF) is
currently vacant.
The I-80/880 market should continue to attract more sales and
leasing activity, and brokers expect to see a continued trend of
established Peninsula and Silicon Valley users migrating to the
I-80/880 corridor, because of the quality product and greater selec-
tion of inventory at significantly lower costs.
Further optimism exists in the market because for the first
time in years there is significant spec development underway
throughout the market that is either in progress or planned with
targeted Q4 2013/Q1 2014 completion dates. A single or two ten-
ant ±374,725 SF high cube warehouse/distribution center set for
a Q4 2013 completion is currently in progress at 8350 Pardee
Drive. Owned by Goodman Birtcher, and known as the Oakland
Airport Logistics Center, the facility is located minutes from both
the Oakland International Airport and the Port of Oakland making
it a prime location for tenants who warehouse and distribute goods
internationally.
In Newark, McShane Development Company is currently
constructing a ±574,640 SF Class A cross dock distribution facil-
ity, Cherry Logistics Center. The new building is situated on
± 29. 54 acres of land and is scheduled to be completed in the first
quarter 2014.
A positive start for both sales and leases in the first half of 2013,
and significant state of the art new construction in the works gives
the I-880/80 corridor reason for optimism as we move forward.
abouttheauthor
Greig specializes in the
sales and leasing of
industrial real estate
in Northern California
with an emphasis on the
San Francisco East Bay
Area. He began his real
estate career in 1989
and has been involved in
over $3 billion worth of
transactions. Greig is an
industry expert and is
the Senior Vice President
and Corporate Director
of Colliers International’s
Oakland office.
San Francisco Bay Area
Industrial Market Has
Positive Outlook for
Remainder of 2013
THE MOST DIRECT
REASON FOR THE
DECREASE IN VACANCY IS
DUE TO NOTABLE LARGE
LEASE TRANSACTIONS
THAT HAVE OCCURRED
THUS FAR THIS YEAR.
