INDUSTRIAL REAL ESTATE GUIDE
LISA STANLEY
EXECUTIVE DIRECTOR , Cushman & Wakefield
BOARD MEMBER / DIRECTOR AT LARGE , NAIOP Sacramento Valley Chapter
What does the industrial real estate market look like right now ?
There ’ s about 180 million square feet of industrial ( space available ) in the area and vacancy is above 4 % with very little sublease … We ’ re seeing an increase in industrial development that we historically haven ’ t seen as much since the last economic downturn , with new construction at Metro Air Park ( in Sacramento ) and Southport in West Sacramento ( from developers like ) Buzz Oates , LDK Ventures and Ridge Capital . It ’ s a tight market — rents are increasing , we ’ re running out of land that ’ s zoned for industrial ( use ) and the spaces that are leasing may be older or obsolete . What tenants are looking for has also changed over the years . Buildings that are taller with larger floor plans that are closer to freeways are in high demand … When people look at the Sacramento region , they realize it makes a lot of sense to be located here because of our freeway access . We ’ re at the intersection of I-5 and Highway 80 , which means you can go from Alaska to Mexico and the Bay Area to the East Coast . We ’ re a major transportation segment .
What are some of the current trends you ’ re seeing ?
Core areas are seeing an adaptive reuse of existing real estate … Developers are utilizing excess land to add additional buildings , trailer storage and extra parking . With rates increasing , you need to reuse everything . Kennedy Wilson has a team dedicated to repurposing malls and distribution is a big part of that plan . We are seeing potential in those spaces with excess parking or a vacant big box , which could ultimately become distribution hubs . We are also seeing more sale leasebacks . Owner-occupiers need capital to keep up with new regulations , COVID-19 compliance and just general demand . Plus , they are using the funds for expansion opportunities … Values have increased and companies are taking advantage of that .
DONNA CLARK
SENIOR MANAGING DIRECTOR , Kennedy Wilson Properties
BOARD PRESIDENT , NAIOP Sacramento Valley Chapter
What areas are you seeing the most market growth ?
Sacramento is still resilient , and the development pipeline has soared to some of the highest levels we have seen …( The ) Natomas / Northgate area , specifically the Metro Air Park , should continue to see growth … Elk Grove will continue its process to annex 570 acres , much of which will be industrial … West Sacramento ’ s proximity to the Port of West Sacramento and rail is also instrumental in driving growth to this area . Link Logistics has the first new development in the Power Inn market , breaking ground on a 500,000-square-foot spec building in December . Amazon continues with their growth , with new facilities in Elk Grove and Roseville … Opportunities can be found in Tracy and Stockton , but that market is tightening .
86 comstocksmag . com | February 2021