Kelly Fairmont Places Sacramento Industrial Asset up for Sale with Pricing Guidance Reaching $47MM

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By Jon Peterson

Interest in industrial properties across Northern California is not abating, and one asset in Sacramento may be under new ownership shortly. McClellan-based Kelly Fairmont Inc. has placed on the market for sale the 384,000 square foot industrial property in Sacramento located at 8301 Belvedere Avenue. The pricing guidance on the property is somewhere in the range of $43 million to $47 million, according to sources aware that the asset is up for sale.

The current owner of the property has chosen CBRE to be the listing agent on the sale. Among those working on the transaction are Rebecca Perlmutter, executive vice president, Darla Longo, vice-chair/managing director, and Barbara Perrier, vice-chair. CBRE declined to comment when contacted for this story.

If the sale of the property reaches the upper level of its pricing guidance, it would be sold for $122 per square foot with a cap rate in the range of 4.7 percent to 5.1 percent, as stated by sources familiar with the property. The first-year net operating income in the property is projected to be $1.1 million.

The industrial property will be a significant mark-to-market investment opportunity for the new owner of the asset. The in-place rents in the building are roughly 40 percent below market, according to industry estimates, and the average remaining lease term is 1.61 years. The leases have annual rent adjustments of three percent.

8301 Belvedere has two tenants that occupy 100 percent of the space in the asset. One of the tenants is River City Indoor RV and Boat Storage. This space is used as a full-service indoor storage facility that handles RVs, boat trailers, 5th wheels and other vehicles. It has a lease for 232,800 square feet that expires in December of this year. The other tenant is American Furniture Galleries. This tenant occupies 115,200 square feet with a lease that ends in July 2025.

The industrial property was first developed in 1963. It covers a total of roughly 14.84 acres of land. The property is situated one mile south of the Highway 50 interchange.

8301 Belvedere is located within the Power Inn industrial submarket of Sacramento. This region has a total of 28.5 million square feet of industrial use, and it accounts for around 16 percent of the total space within the Sacramento industrial market.

The Power Inn region has very strong market fundamentals. According to information compiled by CBRE, it had a 2.9 percent vacancy at the end of 2021, a 25 percent decrease from the previous quarter and a 30 percent drop year-over-year. The sub-market had an average asking rent increase of 7 percent quarter-over-quarter and 35 percent year-over-year.

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