by Ben van der Meer,
Sacramento Business Journal –
The sale of a 302,400-square-foot industrial building in West Sacramento takes a hefty chunk of space off the market. But it also illustrates a conundrum for brokers and landlords in the industrial sector.
Bay Area-based Wang Brothers Investments bought the building at 3689 Industrial Blvd. for $9.4 million last month, according to property records. That backfilled one of the big spaces left when Nor-Cal Beverage Co. decamped from older buildings to new ones developed by Ridge Capital in West Sacramento’s port area.
Broker Matt Cologna with Cushman & Wakefield, who worked on behalf of seller 3689 Industrial Blvd. LLC, said the building dates to the 1970s, making it too old for many current users. Former owner Sudler Construction built it for long-gone department store Montgomery Ward.
“It’s not so state-of-the-art by today’s standards,” he said. It lacks features such as certain clear heights and plentiful outdoor space for storage and employee parking. “But it’s in one of the best locations.”
He said Wang Brothers, which specializes in pottery and housewares, will occupy most of the new building for the same purpose.
Cologna, who worked with Bryce MacDonald of Cushman & Wakefield on the seller’s side, said deals for a buildings that large are getting increasingly rare. For buildings of 300,000 to 444,000 square feet, the options are limited to one in West Sacramento, two in Woodland, McClellan Business Park and one in Lincoln.
“There’s activity on some of those, though not necessarily for full space,” he said. “But if everything that’s out in the market happens, we’ll have no big space.”
That’s ominous if another big tenant comes along, he said. Even if there’s no available space, rents aren’t where they need to be to encourage new development. Right now, adding up all the involved costs such as fees, labor and materials, his firm couldn’t help a project of that size get developed, leased and sold as a profitable investment, he said.
Cologna said he’s made a public plea for jurisdictions to adjust their fee and permits costs to make more projects pencil out. In the interim, he said, the Sacramento region runs the risk of having a big industrial user come along, then look elsewhere when there’s nothing for them.
Ben van der Meer covers real estate, development, construction, water issues and the business of sports.
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