special promotional section
The demand for industrial space in the Sacramento region is at historic highs — and even with millions of square feet under construction , there is an appetite for plenty more .
“ One of our brokers had 17 million square feet of industrial requirements for Sacramento ,” says Barry Broome , president and CEO of the Greater Sacramento Economic Council . “ That ’ s probably more space than we ’ ve built in 10 or 20 years . That ’ s how much interest there is in this market .”
E-commerce companies have been the clear leaders in the absorption of space in the area , says Matt Cologna , senior director at international commercial real estate brokerage Cushman & Wakefield ’ s Sacramento office . He says an attractive labor market , along with Sacramento ’ s location and the amenities it offers , is driving companies to bring logistics operations to the area that require increasingly larger spaces .
His firm recently did a study comparing the Bay Area , the Stockton-Tracy region , Sacramento and Reno . It found that Sacramento has more available labor for warehouse-type jobs than any of the other areas . Companies with these types of operations are also finding Sacramento to have the prime geography they need to distribute their goods efficiently .
“ Sacramento used to be a spoke to the Bay Area ,” Cologna says . “ What ’ s happened now is that Sacramento has evolved into its own hub .”
McClellan Park — the former air force base that has been transformed into California ’ s largest master planned corporate community — completed a 400,000-square-foot deal with Amazon in spring 2020 and is planning construction of additional buildings totaling nearly half a million square feet . Denton Kelley , managing principal of LDK Ventures ( developer of McClellan Park ), says the pandemic has done more than amplify the trend toward online shopping that is fueling a demand for space by e-commerce companies . It is also changing the way other industrial tenants operate .
“ Most manufacturers and suppliers are kind of getting away from the justin-time inventory management system , given how the pandemic created a supplychain shock when people couldn ’ t get goods out of Asia or Europe ,” Kelley says . “ So what you ’ re finding is that a lot more industrial users are warehousing a lot more goods as a percentage of sales .”
“ The growth we see today is driven by a strong desire of companies to be more efficient in material handling and energy consumption ,” says Tim Schaedler , a partner at international commercial real estate development company Panattoni Development , whose recent projects include an Amazon last-mile facility in Roseville . “ You will continue to see facilities of all sizes and shapes be developed to supplement online shopping . I really don ’ t see that demand slowing down for three or four years . I anticipate we will see a building or two in the future that will make Sacramento ’ s largest current warehouse seem small .”
Commercial real estate asset services provider Buzz Oates , which owns 21 million square feet spread over 200 buildings across the Central Valley , has been developing industrial and warehouse properties for over 60 years . Kevin F . Ramos , Buzz Oates ’ chief investment officer , says he has seen significant changes in the market during his 25 years at the company .
“ Over the years , the market ’ s players — tenants , landlords , investors and developers — have evolved from being mostly local to regional ( and ) nationally focused companies ,” he says . “ The average building size has also increased . Thirty years ago , a 100,000-square-foot building was large and not common . That number grew to 200,000 ( square feet ) 20 years ago , and to 500,000 square feet 10 years ago .” Today , he says , a building of 1 million square feet is considered large but not
“ The growth we see today is driven by a strong desire of companies to be more efficient in material handling and energy consumption ... I really don ’ t see that demand slowing down for three or four years .”
Tim Schaedler Partner , Panattoni Development
February 2021 | comstocksmag . com 77