ASA Trading Places San Leandro Warehouse Up for Sale, Pricing Could Reach ~$16MM

ASA Trading, San Leandro, Marcus and Millichap, Instone Marble
Image Courtesy of Marcus & Millichap

By Meghan Hall

The Oakland and San Francisco East Bay industrial submarkets have been holding strong in recent months, as major tenants such as Amazon and Facebook increasingly look to more suburban areas for adequate warehouse, industrial, and research and development space. Even with the rise of COVID-19, ample online shopping and e-commerce demand is expected to buoy fundamentals for East Bay industrial real estate. Given this climate, ASA Trading has placed its San Leandro warehouse on the market. According to a leasing brochure obtained by The Registry, pricing could reach about $16.65 million, or about $220 per square foot.

“We’re in a great market, and they wanted to take advantage of the market environment that we have in the East Bay, specifically within the industrial asset class,” explained Brendan Gallagher, associate at Marcus and Millichap, the brokerage firm hired to market the property for sale.

The property, located 2300 Polvorosa Ave., totals 75,414 square feet and sits on 3.45 acres of land. Of that square footage, 61,414 square feet is designated as warehouse, while the remaining 14,000 square feet is office. ASA Trading is the single master tenant of the property. The company, which is a global supplier of food products, has been owned and operated out of San Leandro for the past 30 years and works with major food distributors such as Sysco, Safeway, Tyson, Kraft Heinz and U.S. Foods. Because of ASA Trading’s history in San Leandro, the property is offered with a new industrial triple-net sale leaseback. 

The new lease—whose expiration is slated to come around in three years—brings in $70,000 in rent per month, or $0.93 per square foot annually. The lease also includes three, three-year renewal options. Rent increases will be based on the consumer price index. Currently ASA Trading is master leasing the entire property, but subleasing some showroom space to Instone Marble on a month-to-month basis.

The offering document also notes that the building only covers about 50 percent of the property, meaning that a future owner could redevelop the property down the line.

San Leandro has long been called home to a variety of industrial and manufacturing businesses, including Ghirardelli, Coco-Cola, The North Face and Jansport. As the market cycle continues to mature and many are preparing for a market correction in the face of COVID-19, the offering memorandum notes that industrial fundamentals in San Leandro are continuing to remain stable. At the beginning of 2020, unemployment was below three percent and industrial vacancy was down 280 basis points.

“Specifically with this property, it is in a fantastic location in San Leandro, in the core industrial market in the middle of the I-880 corridor, which in the San Francisco Bay Area is one of the strongest markets,” said Gallagher. “Historically, it has had low vacancies and has been able to attract fairly high rents in relation to the rest of the Bay Area.”

Marcus and Millichap expects tenant demand in markets such as San Leandro to hold, and more than two million square feet of speculative space was completed during the first quarter of the year. An additional 3.4 million square feet is expected to be delivered during 2020. While short-term this is likely to increase vacancy, the brokerage firm is confident that the space will be leased in the future.

Additionally, Gallagher noted, while there haven’t been too many industrial properties to trade as COVID-19 as made its impact on the economy and commercial real estate, there are investors in the market looking to move forward with acquisitions.

“The investor sentiment is still strong; we still see buyers out there that are eager to place capital,” said Gallagher. “And I think industrial will be one of the asset classes that will come out a little bit stronger than some others because many of the businesses that are operating them were deemed essential during this pandemic. 

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