By Jon Peterson
San Diego-based IDS Real Estate Group has made its approximately $30 million acquisition of the Greenwood Commerce Center in Napa its first completed transaction in Northern California, according to sources familiar with the property. The buyer declined to comment on the purchase price of the property.[contextly_sidebar id=”61ftc14yINzzDJuBJatioU4RD0po55UZ”]“When we first opened our regional office in San Francisco last year, it was our goal to find some transactions in the region and grow our portfolio here. We hope that the transaction in Napa is our first of many investments in the overall Northern California region,” said John Quinn, a vice president with IDS. He oversees investments in the Northern California region, and he works out of the company’s regional office in San Francisco at 535 Mission Street.
Quinn sees several things to like about the industrial property in Napa. “The existing 225,000 property has very stable cash flow. The asset is located in a market where the current vacancy for industrial product is 2 percent. We also have the ability to start pretty quickly on an 80,000 square foot second building at the project,” he said.
The seller of the property was New York Life Real Estate Investors. The insurance company’s real estate firm wouldn’t comment on the sales price of the property. The listing agent on the sale included Brooks Pedder, a senior managing director for Cushman & Wakefield who works out of the firm’s Walnut Creek office.
The cap rate on the existing property was sub six percent, as stated by sources aware of the deal. This property is leased to a single tenant, the Adams Wine Group, which signed a 10-year lease in 2015. The construction on the second building will be started shortly and will likely take six to seven months to build. It will be started on a spec basis and could be leased to either one or two tenants. The leasing efforts will be handled by Cushman & Wakefield.
New York Life was the equity source behind the development of the Napa property. The project had a development cost in excess of $20 million. The real estate investor placed this project into its McMorgan Northern California Value Add/Development Fund. It looks to invest in a mixture of apartments and commercial assets in Northern California. This could be either existing properties that have a value-add play or placing equity into new development projects. There are now a total of seven assets remaining in the fund.
New York Life is now working on another industrial development project in the East Bay. The company hopes to close on the investment sometime in the four quarter.
IDS is looking to find a variety of projects for investment. “We are interesting in investing in office, retail and industrial properties. This could be core stabilized assets, value-add or ground up developments. Our strategy calls for transactions that are even bigger than the transaction in Napa. We typically work with institutional equity partners on our investments,” said Quinn.