Colliers International’s Fairfield office, which covers Solano, Napa and parts of Contra Costa counties, released market research reports recently indicating industrial real estate occupancy gains continued in 2014 locally. The vacancy rate at the end of 2014 was 5.8 percent, down from 6.7 percent at the beginning of the quarter and 7.2 percent at the beginning of the year, the firm noted.
Colliers International is a leader in commercial real estate services, with over 15,800 professionals operating out of more than 485 offices in 63 countries. It is a subsidiary of FirstService Corporation.
Construction activity remains the predominant story in the region as construction continues on the 597,816 square foot warehouse Buzz Oates is building for Pacific Cycle on Cessna Drive in Vacaville. The 473,136 square foot warehouse that Buzz Oates built for Saxco International on Cordelia Road in Fairfield was completed in the fourth quarter. Buzz Oates is also building a 177,000 square foot warehouse on Cordelia Road for Saxco International that is expected to be completed in the third quarter of 2015. Phil Garrett and Jon Quick of Colliers International pre-leased these three buildings.
Napa County also has significant construction underway as New York Life is building a 226,000 square foot warehouse on Airport Boulevard in the Greenwood Business Park and ICC/Stravinski & Hess Development are building two warehouses totalling 287,000 square feet in the Lombard Crossings Industrial Park in American Canyon. The construction activity in Napa County is in response to both the fact that there continues to be a lack of Class A high cube warehouses larger than 50,000 square feet currently available in Napa and American Canyon as well as the continued recent strength in the wine industry.
Leasing activity for office properties remained soft in the fourth quarter as the vacancy rate increased from 19.1 to 20.0 percent. Despite the limited office leasing activity in Solano and Napa counties in the quarter, there were some signs of optimism. Two investment sales of greater than 25,000 square feet occurred in the quarter and a new office building was constructed for the first time in several years.
In the industrial market locally, Solano and Napa counties’ vacancy rate declined 0.9 percentage points to 5.8 percent in the fourth quarter of 2014. The occupancy gains experienced in recent years continued as net absorption was a positive 851,401 square feet for the quarter, and a positive 1,536,997 square feet for the year. Average asking rates declined by $0.01 in the fourth quarter to $0.51 per square foot per month (psf/mo) Triple Net (NNN).
Sales activity dipped in the fourth quarter as there was only one sale of 35,000 square feet or greater, down from five sales in that size range in the prior quarter. Airstream Adventures Nor Cal exercised an option to purchase the 129,669 square foot warehouse and large yard they occupy at 2400 Cordelia Road in Fairfield for $7,680,925 or $59.23 per square foot.
In the fourth quarter, Vacaville’s vacancy rate declined from 3.2 percent to 2.1 percent, which is now the lowest vacant rate of any of the Solano County cities. DataSafe leased 55,000 square feet of warehouse space at 400 Crocker Drive, Vacaville Fruit Company expanded into 25,749 square feet of warehouse space at 2055 Cessna Drive and ICON Aircraft leased the 22,800 R&D/Flex building located at 2144 Beechcraft Road.
In the commercial office market locally, leasing remained soft in the fourth quarter as the vacancy rate increased from 19.1 to 20.0 percent. Net absorption for the quarter was negative 22,244 square feet; however for the entire year of 2014, it was positive 22,839 square feet. Average asking rates in the fourth quarter increased by $0.05 to $1.72 per square foot per month full service (FS).
The single largest reason for this increase in vacancy was the completion of The Wiseman Company’s 30,000 square foot Class A office building at 2470 Hilborn Road. However, 25,000 square feet of the building remained vacant at the end of the quarter. This was the first new office building constructed in several years in the region.
The sales market was significantly more active than leasing in the fourth quarter as there were two sales of greater than 25,000 feet, compared with no leases of greater than 5,000 square feet.
Despite the limited office leasing activity in Solano and Napa counties this quarter, there were some signs of optimism. Two investment sales of greater than 25,000 square feet occurred in the quarter and a new office building was constructed for the first time in several years, Colliers researchers concluded.
