By Meghan Hall
Amazon is on a leasing tear across the East San Francisco Bay Area, this time taking 1.2 million square feet in Richmond and Hayward during the first quarter, accounting for a large chunk of leasing activity in both submarkets, according to industry sources and brokerage firm Kidder Mathews. The larger of the two leases was in Richmond, where Amazon took all of the 707,820 square foot Bay Area Logistics Center. The second lease was also significant in size: Amazon took all 506,925 square feet part of Black Creek Group’s Hayward Logistics Center.
The Bay Area Logistics Center is located at 2995 Atlas Rd. and is currently owned by McClellan, Calif.-based LDK Ventures. The property, according to one source who asked not to be named to protect business relationships, is also being marketed for sale.
The Class A warehouse sits on a 42-acre site that LDK had originally acquired in 2014, and includes 427 parking stalls and 160 trailer stalls. The stand-alone building also includes build-to-suit office space, 4,000 amps of electrical power and 36-foot clear heights, according to the property’s leasing brochure.
The property is directly across the street from DSF6, another Amazon Distribution Center. A Whole Foods Distribution Center, UPS hub and planned FedEX Ground facility are all also nearby. Additionally, the facility is in a central location for delivery services, and is within 18 miles of the Port of Oakland, 20 miles of San Francisco and 60 miles of San Jose.
The Hayward Logistics Center, which I s currently under construction, is located at 2710 West Winton Ave. The facility’s anticipated delivery is Q4 of this year.
The leases continue to build upon the massive momentum that the e-commerce giant has garnered during Q1. Amazon also recently inked a deal for 388,000 square feet in Milpitas, as well as 10-year, 250,000 square feet at Victory Station LLC’s development in Sonoma. The latter lease is Amazon’s first for a property in Sonoma County.
According to Kidder Mathews, Hayward ended the first quarter with 941,842 square feet of leasing activity, of which more than half went to Amazon. The Richmond El Cerrito submarket ranked second, with 730,371 square feet leased. The leases produced an uptick in activity when compared with the end of 2019; activity increased 28 percent over Q4 and 45 percent year-over-year.
At the end of the first quarter, Richmond and Hayward had vacancy rates of 8.5 percent and 5 percent, respectively. However, vacancy rates, especially in Richmond, were higher due to new product coming to market during the first quarter. Overall, direct rental rates averaged about $1.06 per square foot triple net, and development activity was strong at the beginning of the year, with some 1.8 million square feet of industrial and flex product under construction. 80 percent of that inventory was expected to arrive by the end of the year; however, it is unclear what impact COVID-19 may have had on deliveries.