Institutional Owner Places Industrial Asset in Central Valley on the Market, Guidance Pricing of Around $85MM

Visalia, Central Valley, CBRE, VF Corporation, Los Angeles, Bay Area, Sacramento, San Francisco
Photo by Marcin Jozwiak on Unsplash

By Jon Peterson

An un-named institutional owner has put on the market for sale the 817,000 square industrial property in the Central Valley located in Visalia at 2525 North Plaza Drive. The potential price of the property could be in the range of $105 per square foot, or roughly $85.8 million, according to sources that track sales of major industrial assets in California.

The current owner of the property has awarded the listing on the sale to CBRE. Among those working on the property include Rebecca Perlmutter, executive vice president, and Barbara Perrier, vice chairman. CBRE declined to comment when contacted for this story.

The sale of the property could be moved at a price that would yield a mid-four percent cap rate. This return is based on the property’s current net operating income, which would be at $3.9 million under the first year of the new ownership.

There are no current vacancies in the building. The entire property is leased to VF Outdoor, a large subsidiary of the VF Corporation. This company has brands such as The North Face, Timberland, Icebreaker and Altra. The lease with the tenant expires in July 2026 with annual increases of 2.5 percent. VF Outdoor does have two five-year renewal options at levels that are the greater of fair market value or the last rent. The current rent in the property is estimated to be around 10 percent below market rents.

The new ownership may be able to increase the value of the property in the future. There is an expansion possibility that would be available to the new owner, which comes from the extra land on the parcel that could be used for either trailer storage or to expand the building by an additional 250,000 square feet. The current tenant has been in the property since it was constructed in 2006. It has invested $35 million of its own capital into the asset for extensive racking and a conveyor system upgrades. Other recent improvements have included a new roof, which was replaced in January of this year, office renovations and asphalt work.

The property is used to move products up and down the state of California. Its central location puts it a three-hour drive from San Francisco, Sacramento and Los Angeles, and it has access to 40 million customers within a one-day drive. The property has a total of 21,860 square feet of office space.

The Visalia industrial market has no space available for industrial tenants that are looking for space in excess of 500,000 square feet. The overall Central Valley sub-market for industrial product in California has a large pool of tenants in the market with 24.2 million square feet of active space requirements.

West Coast Commercial Real Estate News