By Jon Peterson
In a market deeply affected by the economic calamity following the COVID-19 pandemic, the industrial commercial real estate sector is likely set to emerge as stronger than it was coming into the downturn. This has resulted in companies looking for industrial deals across a broad swath of the industry, and one those, Walnut Creek-based Nearon Enterprises, had just placed a bet on a property in Central Valley. Nearon acquired the 155,945-square-foot Eastgate Business Park industrial property in Tracy for $21.3 million, or just under $137 per square foot, according to sources that were aware of the transaction closing.
Nearon did not respond to a phone call or email seeking comment for this story.
The seller of the property was Indianapolis-based Scannell Properties. This real estate firm was the developer of the property, and it has a regional office in the San Francisco Bay Area in Lafayette. Scannell was represented in the transaction by CBRE. Among those working on the transaction were Rebecca Perlmutter, executive vice president, and Darla Longo, vice chairman. CBRE declined to comment when contacted for this story.
The sale of the Eastgate industrial property had produced a 5.4 percent cap rate. This property that was constructed 2019, and it is located at 1447 Mariani Court, which gives it good access to I-205, I-580 and SR-120, all major thoroughfares in the region that allow allow tenants to move products around with ease.
The property has one tenant in the asset at the moment, Blue Line Foodservice Distribution. The company has signed a 10-year triple-net lease in the property that will expire at the end of March 2030. This lease has two percent annual rent increases. Blue Line’s lease of 57,942 square feet means that the property has a current occupancy of 37.2 percent.
The property has a variety of types of space in it. This includes 134,760 square feet of warehouse, 6,409 square feet of freezer, 5,192 of cold deck, 6,494 square feet of cooler space and an office component of 3,090 square feet.
The Central Valley continues to draw strong demand for industrial properties. It set a new record for annual net absorption with 7.6 million square feet in 2019, according to sources that track this information. Rent growth is predicted to reach 8.5 percent in 2020 and 6 percent in 2021. Demand is expected to remain steady this year with 24.8 million square feet of active tenant requirements.
Nearon is known as an investor of a variety of property types including industrial, multi-family and office assets. The company currently oversees a portfolio in excess of 30 properties totaling around 4.5 million square feet with gross assets valued at approximately $700 million.