By Jon Peterson
UPS has expanded its East Bay footprint by signing a lease to occupancy 297,000 square feet of industrial space located at 22290 Hathaway Avenue in Hayward, according to source that are familiar with the transaction.
The industrial property is owned by Denver-based DCT Industrial Trust. This real estate investment trust declined to comment on who the tenant that signed the lease was when contacted for this story.[contextly_sidebar id=”3k7mABkor7M9ydYlY8sN6XOJJu84utWl”]UPS was represented in the transaction by the Oakland office of Colliers International. “The tenant was looking to expand its operation in the East Bay. They already had a sizeable amount of space in Oakland and were looking for a new site [where they] could expand into. This new location is attractive as it’s very close to the 880 Freeway,” said Todd Severson, a senior vice president with Colliers. He closed this deal for the tenant.
UPS has signed a five-year commitment for the building on Hathaway. DCT has owned the property since March of 2015, when it acquired the empty building for $16.6 million, according to public records. The property at that time was 394,000 square. It has been reduced down to a smaller size. “We did this so that we could put in loading docks and trailer parking, which the property didn’t have before,” said David Haugen, a vice president in the Northern California region for DCT. He works out of the company’s regional office in Emeryville.
The property owner started the redevelopment in February and is anticipating it to be completed sometime during the third quarter of 2016. According to DCT’s 2015 year-end operating results, the company’s projected total investment in the asset is $32 million. The property totals 12 acres of land. DCT was represented in the lease transactions by Jeff Starkovich, a managing principal with Cushman & Wakefield in its Oakland office.
DCT sees that the East Bay industrial market continues to be a challenging market in which to find new investment opportunities. “The market remains very tight with current vacancy somewhere in the neighborhood of 2 percent. For the most part, the only real way to add new product is to do what we have done on Hathaway. That is to buy an existing property and redevelop it. There is very little land left to build on,” said Haugen.
DCT hopes to find more investment opportunities in the San Francisco Bay Area in the future. This would be the East Bay, San Francisco Peninsula and the Central Valley.