Research & Forecast Report FAIRFIELD | INDUSTRIAL 104Q3 2016 Market Trends Relative to prior period...
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Vacancy vs. Asking Full Service Rental Rates Fairfield | All Classes Both the vacancy rate and asking rates dipped slightly in the third quarter. $0.35 $0.40 $0.45 $0.50 $0.55 $0.60 0% 2% 4% 6% 8% 10% 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 Vacancy Rate Average Asking Rent Research & Forecast Report > Industrial Inventory: 49,720,767 SF > Current Vacancy: 6.0% > Net Absorption: +118,750 SF Construction activity in Solano and Napa counties is increasing again as there is now 1,520,699 square feet of industrial product underway. Vacancy inched downwards from 6.2 to 6.0 percent in the third quarter amidst slightly softening levels of activity. Net absorption in the second quarter was a positive 118,750 square feet. Average asking rates dipped by one cent to $0.52 per square foot per month (psf/ mo) Triple Net (NNN) in the quarter. FAIRFIELD | INDUSTRIAL Q3 2016 Market Trends Relative to prior period Q3 2016 Q4 2016* Vacancy Rental Rate Net Absorption Construction *Projected Construction Activity Is Increasing Again Summary Statistics Q3 2016 Solano & Napa Counties Industrial Market Previous Quarter Current Quarter Overall Vacancy Rate 6.2% 6.0% Net Absorption 306,786 118,750 Construction Completed 156,350 0 Under Construction 1,360,651 1,520,651 Overall Asking Rents* $0.53 $0.52 Industrial $0.61 $0.61 R&D/Flex $0.78 $0.62 Warehouse/Distribution $0.49 $0.49 *Asking Rents Reported Monthly 104.1 1.63 Market Indicators Unemployment Rate 10-Year Nominal Interest Rate Consumer Confidence Solano County Napa County 5.7% 4.1%
Transcript of Research & Forecast Report FAIRFIELD | INDUSTRIAL 104Q3 2016 Market Trends Relative to prior period...
Vacancy vs. Asking Full Service Rental RatesFairfield | All Classes
Both the vacancy rate and asking rates dipped slightly in the third quarter.
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Research & Forecast Report
> Industrial Inventory: 49,720,767 SF
> Current Vacancy: 6.0%
> Net Absorption: +118,750 SF
Construction activity in Solano and Napa counties is increasing again as there is now 1,520,699 square feet of industrial product underway. Vacancy inched downwards from 6.2 to 6.0 percent in the third quarter amidst slightly softening levels of activity. Net absorption in the second quarter was a positive 118,750 square feet. Average asking rates dipped by one cent to $0.52 per square foot per month (psf/ mo) Triple Net (NNN) in the quarter.
FAIRFIELD | INDUSTRIALQ3 2016
Market Trends Relative to prior period Q3 2016 Q4 2016*
Vacancy
Rental Rate
Net Absorption
Construction
*Projected
Construction Activity Is Increasing Again
Summary Statistics Q3 2016 Solano & Napa Counties Industrial Market
Previous Quarter
Current Quarter
Overall Vacancy Rate 6.2% 6.0%Net Absorption 306,786 118,750Construction Completed 156,350 0Under Construction 1,360,651 1,520,651Overall Asking Rents* $0.53 $0.52Industrial $0.61 $0.61R&D/Flex $0.78 $0.62Warehouse/Distribution $0.49 $0.49
*Asking Rents Reported Monthly
1.63
104.1
10-Year Nominal
Interest Rate
Unemployment Rate
5.7% 4.1%
1.63
1.63
104.1
10-Year Nominal
Interest Rate
Unemployment Rate
5.7% 4.1%
1.63
Market Indicators
Unemployment Rate10-Year Nominal
Interest Rate Consumer Confidence
Solano County Napa County
1.63
104.1
10-Year Nominal
Interest Rate
Unemployment Rate
5.7% 4.1%
1.63
Benicia Vacancy declined for the third consecutive quarter in Benicia, now at 6.0 percent, a 0.5 percentage point decline from the prior quarter. Central Coast Wine renewed their lease at their 133,500 square foot wine warehouse space at 4301 Industrial Way in the largest transaction in Benicia this quarter. The property is located in the Benicia Industrial Park.
Fairfield Fairfield’s vacancy rate increased from 3.6 percent to 4.9 percent in the third quarter of 2016. The largest lease in the quarter for the region is the Biagi Bros. sublease of 150,000 square feet within the 1,020,000 square foot Ardagh Glass warehouse located at 2600 Stanford Court. Construction continues on Panattoni Development’s Gateway 80 Business Park: a two-building 861,000 square foot warehouse/distribution center. Construction is expected to be completed in the first quarter of next year.
American CanyonAmerican Canyon’s vacancy rate declined slightly from 9.2 percent to 9.0 percent in the third quarter. The decline was largely a result of Freon Free Recycling’s lease of 9,000 square feet of light industrial space at 120 Klamath Court. The recently completed 646,000 square foot warehouse at 1 Middleton Way at the Napa Logistics Park remains available and accounts for virtually all of the available warehouse space in American Canyon. Other than this one large vacancy, the vacancy rate in American Canyon is 0.2 percent and there are no spaces greater than 6,000 square feet available. ICC/Stravinski has commenced construction on a 258,048 square foot wine warehouse at 450 Green Island Road with an expected completion in the second quarter of 2017. Buzz Oates Enterprises is processing a 115,000 square foot cross-loader to be built at the intersection of Green Island Road and Jim Oswald Way.
City of Napa & Unincorporated AreasThe vacancy rate in Napa decreased again from 3.5 percent to 0.5 percent in the third quarter. Top It Off Bottling’s lease of 62,400 square feet of warehouse space at 2747 Napa Valley Corporate Drive in the Napa Valley Commons business park was the primary cause of this decline in vacancy.
The largest sale in the region covered in this report was IDS Real Estate Group’s purchase of a warehouse/distribution project on Airport Road at the Greenwood Business Park. One 226,044 square foot warehouse has already been completed and construction on the 80,000 square foot warehouse is scheduled to be completed in the second quarter of 2017. IDS Real Estate Group purchased the project from New York Life for $30,500,000. The other significant sale in Napa in the quarter was Bin To Bottle’s purchase of the 19,926 square foot light industrial building at 122 Camino Oruga for $2,200,000, or $110 per square foot. Bin To Bottle had been leasing the building and exercised their option to purchase.
In the largest lease of the quarter, Biagi Bros. subleased 150,000 square feet in the 1,020,000 square foot warehouse/distribution center at 2600 Stanford Court, Fairfield
2600 Stanford Court, Fairfield
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Vacancy Rate Average Asking Rent
Vacancy Rate Average Asking Rent
Vacancy Rate Average Asking Rent
Vacaville Vacaville’s vacancy rate declined for the second consecutive quarter, now at 2.7 percent, down from 3.4 percent in the prior quarter. Construction is underway on the 321,651 square foot warehouse by Buzz Oates located at 300 Crocker Drive in the Vacaville Business Park. Completion is expected in the first quarter of the next year. The only significant sale in Vacaville in the quarter was Blue Sun Sales’ purchase of two adjacent light industrial condos at 907 Cotting Lane for $1,287,000 or $56 per square foot.
SummaryThe 1.5 million square feet of industrial product currently under construction is the highest we have ever recorded with the exception of the 1.8 million square feet underway during the third quarter of 2014 and the first quarter of 2015. Not only is there strong demand for new construction given the low vacancy rates in the region, but Solano and Napa counties still do have available developable land, while most of the other Bay Area counties do not.
The continued expansion of the food and wine industry in the region in addition to growing logistics/distribution companies are leading drivers of the push for new construction in the region. Napa County’s renown as a world class wine region is a well-documented driver of activity. Solano County is well positioned for future commercial real estate expansion as a transportation hub for local, national and international businesses. As much of California is experiencing drought conditions, Fairfield’s exceptional water quality, quantity and sewer capability, is expected to continue to draw food and beverage users, as well as other industries.
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Vacancy vs. Asking Full Service Rental RatesSolano & Napa counties | Industrial
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Vacancy vs. Asking Full Service Rental RatesSolano & Napa counties | R&D/Flex
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Vacancy vs. Asking Full Service Rental RatesSolano & Napa counties | Warehouse/Distribution
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DIXON
VACAVILLE
FAIRFIELD
NAPA
AMERICANCANYON
VALLEJO
BENICIA
Significant Lease Activity
Rion Designs
2650 Napa Valley Corporate Drive, Napa
8/2016
16,032 SF - Light Industrial
Top It Off Bottling
2747 Napa Valley Corporate Drive, Napa
8/2016
62,400 SF - Warehouse/Distribution
Biagi Bros
2600 Stanford Court, Fairfield
9/2016
150,000 SF - Warehouse/Distribution
Central Coast Wine
4301 Industrial Way, Benicia
8/2016
133,500 SF - Warehouse/Distribution
Golden State Overnight
6700 Goodyear Road, Benicia
8/2016
15,820 SF - Light Industrial
Significant Sale ActivityPROPERTY ADDRESS SALE DATE SIZE BUYER TYPE
1325 Airport Road, Napa 7/2016 226,044 IDS Real Estate Group Warehouse/Distribution
907 Cotting Lane, Vacaville 7/2016 22,979 Blue Sun Sales Light Industrial Condos
122 Camino Oruga, Napa 8/2016 19,926 Bin To Bottle Light Industrial
1735 Enterprise Drive, Fairfield 8/2016 3,380 Veritech Industries Light Industrial Condo
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Market Comparisons – FairfieldINDUSTRIAL MARKET
EXISTING PROPERTIES ABSORPTION CONSTRUCTION RENTS
SUBMARKET BLDGSTOTAL
INVENTORYSF
DIRECTVACANT
SF
DIRECTVACANCY
RATE
SUBLEASE VACANT
SF
SUBLEASE VACANCY
RATE
TOTALVACANT
SF
TOTAL VACANCY
RATE
VACANCY RATEPRIOR
QUARTER
NET ABSORPTION
CURRENTQTR SF
NET ABSORPTION
YTDSF
COMPLETIONSCURRENT QTR SF
UNDER CONSTRUCTION
SF
AVG ASKING RATE
AMERICAN CANYONIndustrial 32 740,174 10,500 1.4% - 0.0% 10,500 1.4% 3.0% 12,000 (4,500) - - $0.75
R&D Flex - - - - - - - - - - -
Warehouse / Dist. 29 6,551,284 646,000 9.9% - 0.0% 646,000 9.9% 9.9% - - - 258,000 $0.54
TOTAL 61 7,291,458 656,500 9.0% - 0.0% 656,500 9.0% 9.2% 12,000 (4,500) - 258,000 $0.54
BENICIAIndustrial 137 3,876,158 56,163 1.4% - 0.0% 56,163 1.4% 2.1% 24,911 26,468 - - $0.68
R&D Flex 5 156,833 - 0.0% - 0.0% - 0.0% 0.0% - - - - $0.55
Warehouse / Dist. 35 4,381,403 444,676 10.1% - 0.0% 444,676 10.1% 10.7% 24,121 234,636 - - $0.44
Total 177 8,414,394 500,839 6.0% - 0.0% 500,839 6.0% 6.5% 49,032 261,104 - - $0.47
DIXONIndustrial 31 818,517 22,840 2.8% - 0.0% 22,840 2.8% 2.8% - (7,876) - - $0.61
R&D Flex - - - - - - - - - - -
Warehouse / Dist. 6 1,511,988 136,500 9.0% - 0.0% 136,500 9.0% 9.0% - (3,500) - - $0.34
Total 37 2,330,505 159,340 6.8% - 0.0% 159,340 6.8% 6.8% - (11,376) - - $0.38
FAIRFIELDIndustrial 93 2,929,619 64,130 2.2% - 0.0% 64,130 2.2% 1.9% (8,788) 12,774 - - $0.72
R&D Flex 13 340,459 21,700 6.4% - 0.0% 21,700 6.4% 6.4% - 14,554 - - $0.67
Warehouse / Dist. 62 9,741,963 554,268 5.7% - 0.0% 554,268 5.7% 4.1% (158,735) (243,452) - 861,000 $0.51
Total 168 13,012,041 640,098 4.9% - 0.0% 640,098 4.9% 3.6% (167,523) (216,124) - 861,000 $0.54
NAPAIndustrial 99 2,360,030 7,802 0.3% - 0.0% 7,802 0.3% 1.1% 17,232 28,791 - - $0.92
R&D Flex 16 567,626 11,608 2.0% - 0.0% 11,608 2.0% 12.6% 59,862 69,862 - - $0.96
Warehouse / Dist. 37 3,603,893 10,825 0.3% - 0.0% 10,825 0.3% 3.7% 121,479 150,044 - 80,000 $0.68
Total 152 6,531,549 30,235 0.5% - 0.0% 30,235 0.5% 3.5% 198,573 248,697 - 80,000 $0.85
SUISUN CITYIndustrial 13 220,463 8,265 3.7% - 0.0% 8,265 3.7% 5.0% 2,728 2,728 - - $0.66
R&D Flex 1 29,000 - 0.0% - 0.0% - 0.0% 0.0% - - - -
Warehouse / Dist. - - - - 0.0% - - - - - -
Total 14 249,463 8,265 3.3% - 0.0% 8,265 3.3% 4.4% 2,728 2,728 - - $0.66
VACAVILLEIndustrial 66 1,520,055 49,313 3.2% - 0.0% 49,313 3.2% 4.4% 17,913 32,875 - - $0.70
R&D Flex 4 85,691 34,200 39.9% - 0.0% 34,200 39.9% 39.9% - (34,200) - - $0.48
Warehouse / Dist. 31 5,531,460 110,974 2.0% - 0.0% 110,974 2.0% 2.5% 29,647 160,184 - 321,651 $0.42
Total 101 7,137,206 194,487 2.7% - 0.0% 194,487 2.7% 3.4% 47,560 158,859 - 321,651 $0.50
VALLEJOIndustrial 84 3,418,137 585,432 17.1% - 0.0% 585,432 17.1% 16.8% (10,221) (35,822) - - $0.58
R&D Flex 4 49,641 - 0.0% - 0.0% - 0.0% 8.5% 4,220 4,220 - - $0.48
Warehouse / Dist. 15 1,286,373 191,926 14.9% - 0.0% 191,926 14.9% 13.6% (17,619) (20,286) - - $0.46
Total 103 4,754,151 777,358 16.4% - 0.0% 777,358 16.4% 15.9% (23,620) (51,888) - - $0.55
MARKET TOTALIndustrial 555 15,883,153 804,445 5.1% - 0.0% 804,445 5.1% 5.4% 55,775 55,438 - - $0.62
R&D Flex 43 1,229,250 67,508 5.5% - 0.0% 67,508 5.5% 10.7% 64,082 54,436 - - $0.79
Warehouse / Dist. 215 32,608,364 2,095,169 6.4% - 0.0% 2,095,169 6.4% 6.4% (1,107) 277,626 - 1,520,651 $0.49
MARKET TOTAL 813 49,720,767 2,967,122 6.0% - 0.0% 2,967,122 6.0% 6.2% 118,750 387,500 - 1,520,651 $0.52
QUARTERLY COMPARISON AND TOTALSQ3-16 813 49,720,767 2,967,122 6.0% - 0.0% 2,967,122 6.0% 6.2% 118,750 387,500 - 1,520,651 $0.52
Q2-16 813 49,720,767 3,065,869 6.2% 20,003 0.0% 3,085,872 6.2% 6.5% 306,786 268,750 156,350 1,360,651 $0.53
Q1-16 811 49,564,417 3,216,305 6.5% 20,003 0.0% 3,236,308 6.5% 5.0% (38,036) (38,036) 774,758 238,013 $0.50
Q4-15 809 48,789,659 2,423,514 5.0% - 0.0% 2,423,514 5.0% 5.0% 24,067 1,610,573 - 931,108 $0.50
Q3-15 809 48,789,659 2,432,571 5.0% 15,010 0.0% 2,447,581 5.0% 5.8% 1,153,561 1,586,506 823,860 838,350 $0.49
The information contained in this report was provided by sources deemed to be reliable, however, no guarantee is made as to the accuracy or reliability.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.
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Copyright © 2016 Colliers International.The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. *All statistics are for 2016 and include affiliates
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