Bentall Kennedy Buys 375K SQFT Industrial Building in Oakland

By Jon Peterson

Seattle-based Bentall Kennedy has acquired the 8350 Pardee Drive 374,725 square foot industrial building in Oakland in the range of mid-$140 per square foot, according to sources familiar with the transaction.

“The San Francisco Bay Area industrial market continues to be a strong market to own assets in. This is due to the fact of the area continues to have population growth and still has a dwindling supply of industrial space. The property that we acquired has a very strong location. It’s about 10 minutes from the Port of Oakland and is adjacent to the Oakland International Airport,” says Ashley Powell, senior vice president and head of transactions in the western U.S. for Bentall Kennedy. He works out of the company’s regional office in San Francisco.

[contextly_sidebar id=”MDLvjeIN7PYuTcEhkxSyoCoQSqsD1zgq”]The cap rate on this deal was 4.3 percent, according to sources familiar with the property. Powell declined to comment on what the cap rate was on the transaction.

The seller of the property was a joint venture with Australia-based The Goodman Group and Toronto-based the Canada Pension Plan Investment Board. The listing agent on the sale for the ownership group was JLL. This included Mark Detmer and Bo Mills of the Phoenix office and Jason Ovadia of the Walnut Creek office. This transaction was done as an off-market deal.

The venture sellers of the property were the original developers of the asset. In August of 2014, they had placed a value on the property of somewhere in the range of $43 million to $44 million. The property was built with all equity with 55 percent of the capital coming from Goodman and 45 percent from the pension fund.

8350 Pardee Drive is a warehouse logistics property. It’s considered a core asset as the property is leased to two tenants. Coaster Company of America signed a 10-year lease in February for 232,881 square feet. The other tenant is Benjamin Moore, which signed a 10-year lease in 2014 covering 141,844 square feet. “I would think that both of these tenants would use this space to move products throughout Northern California,” said Powell.

Bentall Kennedy acquired the property for one of its pension fund clients as a separate account client. The real estate manager declined to comment on which pension fund it bought the property.

The development of 8350 Pardee Drive was started in 2012. At that time, it was the largest industrial building to be built in Oakland in the last 20 years. Total net absorption in the Oakland East Bay industrial market in 2014 reached the second highest level in the last 17 years. This has led to a surge in demand.

Bentall Kennedy would like to buy or invest in more industrial assets in the San Francisco Bay Area. “We would like to find transactions as far east as Tracy, up and down the I-880 corridor and on the Peninsula,” said Powell. The real estate manager earlier this year along with Trammell Crow Company broke ground on the 1.3 million square foot Oaks Logistics Center development in Livermore.

West Coast Commercial Real Estate News