By Meghan Hall
As available supply continues to dwindle in the Emeryville market, an industrial value-add opportunity has been posted for sale for the first time in decades. The two assets on the market are 4700 and 4770 San Pablo, and with zoning in place for redevelopment and consistent demand for industrial properties as-is, the offerings hold a large amount of potential for interested investors.
Guidance pricing for the properties were not immediately available. Cushman and Wakefield, the brokerage firm in charge of marketing the property for sale, did not immediately return The Registry’s request for comment.
According to an offering memorandum obtained by The Registry, 4700 and 4770 San Pablo are a “rare opportunity to acquire two of the remaining industrial assets in Emeryville, a city with years of dwindling supply due to redevelopment.” Together, the two multi-tenant industrial buildings include 33,250 square feet of space.
Tenants in both buildings are currently month to month, giving investors an immediate value-add opportunity for redevelopment or an owner/user the option to occupy one or both buildings. Currently, 4700 San Pablo is occupied by Hydraulic Controls Inc., while 4700 San Pablo is leased to Intoxalock Ignition and Street Sounds.
The offering memorandum states that both 4700 and 4770 San Pablo are “well-built, classic industrial buildings,” and an investor could also potentially double the property’s income by addressing some of the property’s deferred maintenance items. The properties were originally constructed in 1956.
The assets could also be a potential covered land play, as both industrial buildings are located within the Mixed Use with Residential (MUR) and Medium Density Residential (RM) zoning districts. Should an investor choose, the properties could be redeveloped with up to 69 housing units. Because the properties are leased, an investor would be able to collect rental income while obtaining entitlements for a new project.
Currently, discretionary apartments in nearby cities such as Oakland, Berkeley and San Francisco, can achieve rent premiums of $521, 19 percent more than apartment units could at the San Pablo sites. Cushman and Wakefield predicts that the local multifamily market will continue to grow, and by 2025 there will be a 25 percent increase of households making more than $150,000 per year. Renters are continuing to migrate to markets like Emeryville, as it is less expensive than other core markets but still accessible to major urban centers and employers.
In Alameda County, where Emeryville is located, there were more than 170,000 apartment units at the end of 2020. Another 7,677 units are under construction, according to a fourth quarter Cushman and Wakefield report. Alameda County delivered a new record of units over the course of the year, bringing 1,834 apartments to market. Vacancy rates sit at 7.8 percent, and while rental rates declined 3.3 percent year-over-year due to challenges posed by coronavirus in 2020, rents still came in at about $2,060 per unit.
Cushman and Wakefield expects that the economy will gradually improve through the beginning of 2021, and markets like Alameda County will continue to see the largest construction pipelines. Counties that are outside the urban core could continue to see increased demand for product, creating ample opportunity for investors in the future.