By Jon Peterson
Chicago-based First Industrial Realty Trust has paid $12.3 million (roughly $197 per square foot) to acquire the 62,474 square foot industrial property located at 2085 Burroughs Avenue in San Leandro, according to sources that track the sale of industrial properties in the East Bay region of the San Francisco Bay Area.
The seller of the asset was an entity associated with the occupier of the property, which will now relocate its business somewhere else in the Bay Area. The asset was sold as an off-market transaction, and the listing agent representing both parties was the Walnut Creek office of JLL. Working on the transaction was Eddie Shuai, executive vice president, and Jason Ovadia, senior managing director.
First Industrial had John Quinn, regional director of JLL, involved in the transition for the company. He works out of the company’s regional office in Oakland located at 1111 Broadway. First Industrial did not respond with a comment for this story.
The asset will give the new owner a chance to bring in a new tenant into an infill industrial location, which does not happen often in the East Bay industrial market, according to industry sources who follow this industry. It is expected that the property will be leased to a single tenant that will most likely use it for warehouse space. JLL will oversee the leasing of the building, which will be led by Shuai, Ovadia and Patrick Metzger, a senior vice president with JLL in the Walnut Creek office.
Part of the sale of the property included a leaseback clause, which allows the current occupier access to the property for the next three to four months. There will be some additional capital invested in the property by First Industrial to reposition the building going forward. Presently, there is around 4,000 square feet of office space in the property.
The San Leandro industrial market remains tight, which is the case for most industrial submarkets across the greater Bay Area region. According to JLL, the vacancy in the market at the end of 2020 was around four percent. Rents for industrial properties in the region were flat last year, however it is projected that by the end of this year there will be a slight increase in rental rates.
First Industrial has very little exposure in the Northern California region, as stated in its 2020 fourth-quarter earnings report. It held a portfolio of 68,500 square feet that was 100 percent occupied. This company has much larger exposure in other parts of the West Coast. In Southern California, it owns a 9.6 million square feet portfolio, and in the greater Seattle market, the company owns roughly 410,000 square feet.