By Meghan Hall
A two-building industrial property within the Midpoint area of Redwood City has been put on the market as the product type continues to attract high-levels of investor interest. The owner/user and potential value-add opportunity is located at 820 Sweeney Street, and is owned by a Menlo Park limited liability company affiliated with Daniel and Shari Kitzmiller. Guidance on the property was not immediately available.
CBRE’s Senior Vice President Charles Strouss, Transaction and Project Manager Yvonne Hsiung and Analyst Jonathan Ziegler are working to market the property for sale.
The two buildings total 8,697 square feet and sit on 0.33 acres of property. 26 percent of the space is designated for office uses, with the front building on Sweeney Avenue totaling 6,430 square feet, plus a 900 square foot mezzanine. Currently, the front building is used as a commercial-grade paint booth. The back building includes 2,267 square feet. The buildings feature 16-foot and 15.5-foot clear heights, respectively, as well as two grade-level doors each.
The property is located within an opportunity zone and is also proximate to the Stanford Redwood City Campus—the university’s first ever development outside of Palo Alto. The campus features more than 1.5 million square feet of office and amenities that continues to attract tenants to the growing neighborhood. Once fully built out, the campus will be Redwood City’s third largest employer.
“The Midpoint area of Redwood City is experiencing a confluence of forces which are driving energy, investor perception, connectivity, and as a result…value,” states an offering memorandum obtained by The Registry. “In recent years, we’ve seen several large and prominent tenants relocate to Downtown Redwood City as this area improves its transportation, restaurants, and housing numbers. This tenant migration has caused many investors to focus on Redwood City as a strategic place to invest for the long term.”
Public documents show that the property last traded in July of 2009 for $1.716 million. A number of similar properties have sold around the area in recent months, including 890 Barron Avenue, a 3,676 square foot asset. The property traded in April of 2020 for $2.199 million and was sold by the San Mateo County Mosquito Abatement District. The price per square foot of the transaction came to $576. In June of 2020, the Society of St. Vincent de Paul sold 2406 El Camino Real, a 12,000 square foot building, to Immobiliare Management. The deal closed at $6.15 million, or $513 per square foot.
The offering memorandum obtained by The Registry states that the mid-peninsula market remains one of the most competitive in the Bay Area, even for industrial product. At the end of 2020, there was just about 6.532 million square feet of net rentable square footage in the market, and total vacancy sat at 3.3 percent.
Rents have largely held steady despite a drop in demand, as landlords continue to favor concessions such as rent abatement and tenant improvement allowances as opposed to dropping asking rates. Average asking rents came in at about $1.79 per square foot triple net. Office vacancy was higher, at 12.5 percent, and commanded average asking rents of $6.74 per square foot full service gross.
“The mid-peninsula is the highest barrier of entry market in all of the Bay Area,” states the memorandum. “Due to its topographical and political constraints, it is incredibly challenging to add new product to the market. This gives existing land/building owners built-in supply side protection against overbuilding.”