As the greater Northern California industrial market continues to hum along, the leasing activity shows the extend of the market and its impact on the broader commercial real estate industry in the region. In a recently announced leasing transaction, DHL took 92,400 square feet, occupying the entire building located at 601 Tesla Drive in Lathrop, Calif. The landlord in the property is LBA Logistics, and the listing team was led by a team of Colliers industrial experts, Michael Goldstein, Greig Lagomarsino and Gregory O’Leary.
Lathrop is a town between Tracy and Stockton, which sit between the Bay Area and Sacramento markets. Sacramento’s industrial market continues to benefit from the rise of e-commerce and recovering economy in the first quarter of this year, according to a recent Colliers Sacramento Industrial 21Q1 market analysis. Tenant demand in the area has brought the overall industrial market vacancy rate to 4.7 percent, with net absorption of over 900,000 square feet. An additional 3.6 million square feet is under construction.
The Stockton market is even more robust. It features 6.5 percent overall market vacancy, with first quarter gross absorption hitting 3.2 million square feet and over 6.4 million square feet under development.
The DHL lease is certainly not one of the biggest. Amazon took 851,000 square feet at Prologis’ International Park of Commerce Building 16, Allen Distribution leased 709,000 square feet in Stockton, Hawthorne took down 390,000 square fee in Tracy, and Pratt another 262,000 square feet in Stockton.
The vacancy rate for industrial buildings in the city of Lathrop was at 12.2 percent by the close of the first quarter of 2021 with three Class A building vacancies over 100,000 square feet, according to a report from Colliers. While no additional development was delivered during the first quarter, a total of 3.6 million square feet of construction is currently underway.
According to the Colliers report: TriPoint Logistics Center, Crow Holdings’ industrial park located south of Highway 120 and home to Wayfair’s 1.1 million square feet, is in process of developing four buildings totaling just under 1.5 million square feet that will be available later in 2021. Located on the north side of Highway 120, Phelan Development is approaching completion of Phase I on both a 609,984 square foot and 382,380 square foot buildings known as Lathrop Gateway. Clarion Partners is underway on 200,000 square feet on Tesla Drive that is expected to complete during the third quarter. Duke Realty broke ground on land that they purchased in late 2019 with a 346,631 square foot building that is expected to be completed in late 2021. A build-to-suit for Kraft Foods located at the former Pilkington Glass site is underway and will total 610,000 square feet. Expected completion is late 2021 or first quarter 2022. The overall average asking lease rate in the submarket increased by $0.02 to $0.52 per square foot, triple net.