By Jon Peterson
Sacramento-based Dimension Properties will be going to the market with one of its properties. The company has placed up for sale the 127,838 square foot Prospect Center light industrial/R&D park in the Sacramento suburb of Rancho Cordova with the pricing guidance on the sale at $29 million, as stated by sources aware that the asset is on the market. This potential pricing brings the asset at just below $227 per square foot.
The seller has chosen CBRE to be the listing agent on the property’s marketing efforts. Among those working on the transaction are Rebecca Perlmutter, executive vice president, and Darla Longo, vice chairman. CBRE declined to comment when contacted for this story.
Prospect Park is a four-building asset with the addresses of 3035 Prospect Park Drive, 3164, 3140 and 3146 Gold Camp Drive. The property has a current occupancy of 91 percent with a total of 20 tenants spread among the four buildings. On average, tenants in the property have occupied space in the asset for 12 years, and rents in the property are close to current market rates. Some estimates place them under 5 percent below market levels. The average remaining lease term on the leases is 3.3 years.
There are a wide range of businesses in Prospect Park. The three biggest sectors are business services, which take up roughly 25 percent of the property, manufacturing, which accounts for 16 percent of the asset, and around 15 percent is allocated to telecommunications tenants. The well-known corporate tenants in the property include American Woodmark, ADT, Johnson Controls, Descor Builders, The Lyle Company and Level 3 Communications.
The asset has strong on-site amenities. These include a fitness center, café, conference center and Class A finishes like glass roll-up doors and glass wall rooms.
Should the pricing guidance be reached, it would come in at $226 per square foot, which places the property well below replacement cost. According to industry experts, this comes in the range of around $400 per square foot. The potential cap rate on the sale would be in the mid 5 percent range. This return is based on the property’s current net operating income.
The new owner of Prospect Park has the ability to create a larger asset in the future, as well. The Sacramento industrial market has been a strong performer in Northern California. According to industry sources, industrial rents in the market have grown approximately 10 percent annually over the last five years. The current vacancy in Sacramento is 3.7 percent and even lower in Rancho Cordova at 3.3 percent.