By Meghan Hall
The industrial asset class has become the darling of the commercial real estate industry, and two months after the end of the fourth quarter, more deals are coming to light. According to a recent report released by brokerage firm Cushman & Wakefield, a pair of East Bay assets have sold for a combined $71.5 million as the market continues to draw significant investment.
In the larger of the two transactions, Swire Properties acquired 2900 Main Street in Alameda for $41.9 million, or $115 per square foot. Swire purchased the asset from FISC Properties. The property totals 364,378 square feet.
In a second deal, Landmark Exchange Management acquired a Fremont manufacturing building at 47951 Westinghouse Drive for $29.6 million, or $359 per square foot. Sharp Development was the seller. According to Sharp’s website, the property totals 82,408 square feet, and it was renovated in 2017 to a net zero energy building.
“We lowered our tenant’s overall operating cost, and eliminated one of it’s largest variable costs, while delivering a simple payback of 4.67 years to the ownership,” Sharp states on its website. “This renovation offsets the burning of over 95 Million Gallons of Gasoline over a 20 year period.”
The sales closed as the East Bay industrial market recorded its sixth consecutive quarter of positive net absorption, even as the pandemic continues. Total net absorption during 2021 came to about 4.2 million square feet, or 2.3 percent of total industrial inventory. Gross absorption reached 12.4 million square feet, the highest level of five years, and 12 leases greater than 100,000 square feet were signed.
As a result, asking rents were up to $1.06 per square foot by the year’s end, and vacancy sat at just four percent. Vacancy is expected to decline further throughout the course of 2020, even though there is nearly 1.5 million square feet of space in the construction pipeline.
Such fundamentals have drawn investors far and wide. In other recent deals to close, Fortress Investment Group paid $80 million for 47550 Road as part of a sale-leaseback from Homelegance Incorporated. Also significant was CenterPoint’s $86 million acquisition of 41119 Boyce Road, a 208,180 square foot manufacturing facility. As land and developable space becomes scarce among surging demand, competition for assets is expected to increase further.