By Jon Peterson
Denver-based Black Creek Group has paid $45.8 million, or $120 per square foot, to acquire the 381,600 square foot Tracy Pescadero Distribution Center in Tracy, according to sources familiar with the transaction. The property is located at 1700 East Pescadero Avenue in the Central Valley city.
The buyer did not respond to phone calls seeking comment for this story.
The seller of the property was a joint venture between Chicago-based LaSalle Investment Management and Atlanta-based Ridgeline Property Group. These firms were involved in the originally development of the property, which took place in 2017.
“Tracy, California, is the best distribution location in the Central Valley, and the Tracy Pescadero Distribution Center will provide much-needed Class A space for modern distribution operations,” said Greg Thurman, CEO of Ridgeline Property Group in July of 2015, when the company announced that it was commencing construction of the speculative development. “There is virtually no availability of Class A space greater than 200,000 square feet in the Central Valley. In addition to providing bulk space, this 381,600-square-foot facility will offer the option of either a rear-load or front-load configuration, depending on the needs of the tenant. The flexible design also enables the building to be divided into three separate spaces with front offices.”
The property owners had placed the property on the market earlier this year with the assistance of CBRE. Two people involved for this company were Darla Longo, vice chairman and managing director, and Rebecca Perlmutter, senior vice president. Longo works out of the company’s Ontario, CA office, while Perlmutter is in San Francisco. Both CBRE and LaSalle declined to comment when contacted for this story.
The cap rate that the sale of this property produced will be a new low for an investment into a new industrial property in the Central Valley region of California. The cap rate on the sale was 4.7 percent, as stated by sources that were aware of the sale. This will be the first sub 5 percent cap rate deal for a new industrial building in this region.
The Pescadero Center was 100 percent occupied when the property was placed on the market for sale in January of this year. The two tenants in the property are Excel dba DHL Supply Chain and Pactra USA. The average lease term on these two tenants is 5.6 years. In-place rents with these tenants are around 5 percent below market, according to sources.
The industrial distribution building is located on 19.46 acres of land. The office component in the property is 9,470 square feet, or roughly 2.5 percent of the total building.
Ridgeline is known in the industrial sector as a merchant developer. The company does have a regional office located in Northern California in Roseville.