Stockton Continues to Impress Institutional Buyers
CT Realty recently sold the newly built 1.12 million-square-foot industrial building, NorCal Logistics Center, to Bentall Kennedy (US) Limited Partnership on behalf of its US core fund for $105.3 million.
STOCKTON, CA—CT Realty recently sold the newly built 1.12 million-square-foot industrial building, NorCal Logistics Center, to Bentall Kennedy (US) Limited Partnership on behalf of its US core fund for $105.3 million. This marks CT’s completion of the first phase of development at the 342-acre logistics center located at 4532 Newcastle Rd.
The building was previously one of the largest spec industrial developments in Northern California. CT acquired the 342-acre parcel for development of a 4.4-million-square-foot logistics park in spring 2017. CT has now sold 1.7 million square feet in the three buildings that comprise phase one of NorCal Logistics Center, including this transaction and two buildings that sold to Prologis in 2018. The recently sold building was 100% leased to Amazon at the time of the sale.
“NorCal Logistics Center was developed to meet the demands of today’s most progressive logistics users, and no one embodies this better than Amazon,” said Carter Ewing, managing partner at CT Realty. “It’s only natural, therefore, that a leading institutional investor such as Bentall Kennedy was attracted to the fundamental strengths of this state-of-the-art logistics building and its long-term value proposition.”
The building is within close proximity of two intermodal rail facilities and multiple interstate highways, serving all major Northern California markets and key Western US destinations. The region is an extension of a global logistics supply chain infrastructure that links to West Coast ports in Oakland/Stockton, Los Angeles/Long Beach, Portland, OR and Seattle/Tacoma, WA.
“The timing of the sale is on par with expectations following the lease of the building to Amazon in November 2018,” Ewing tells GlobeSt.com. “High-quality core industrial real estate is in heavy demand among institutional investors, and we expect this to continue for the foreseeable future.”
Logistics facilities near heavily populated metropolitan areas are especially in demand, Ewing says.
“Having begun NorCal Logistics Center entirely on a spec basis, CT has now leased or sold the first phase of the project at a pace that reinforces our belief in the region’s demand drivers and reflects the high level of interest we are experiencing in our other projects nationwide,” he observes.
The second phase of development at NorCal Logistics Center is underway and includes 2.7 million square feet in five buildings in a mix of spec and build-to-suit projects. CT is in construction on the first of these buildings, a 709,556-square-foot building.
“Phase two will be developed both on a spec and build-to-suit basis,” Ewing tells GlobeSt.com. “At this time, the first building of phase two is under construction, with an August 2019 completion date planned. The Cushman & Wakefield leasing team reports strong tenant interest in the building, in alignment with the pace of construction and our experience in other large-scale logistics developments around the US.”
Ewing says CT continues to be impressed by the strength of the local labor market and the strong ongoing support from the team at the city of Stockton.
The San Joaquin County industrial market continued to experience a healthy volume of activity and industrial development as the year began. A total of slightly less than 2.2 million square feet of industrial product was delivered during the fourth quarter, split between five separate developments. The year-to-date total for industrial development delivered during 2018 totaled 8.1 million square feet, according to a fourth quarter report by Colliers International.
Shifting into 2019, nearly 6.5 million square feet remains under construction and will be delivered throughout the year. In 2016, 2 million square feet of speculative space was developed and absorbed leaving no new product available for lease. During 2017, 3.5 million square feet of speculative space was developed and absorbed by year-end with no new product available. During 2018, close to 7.3 million square feet of speculative space was delivered. Of that, approximately 46% has been absorbed, the report indicates.
CT is currently in construction on 5 million square feet of industrial space nationwide, including 1.3 million square feet of large-scale distribution buildings at Interchange 55 Logistics Park in the greater Chicago area, 1.8 million square feet in Atlanta, 1 million square feet in Indianapolis, 800,000 square feet in the Dallas/Fort Worth area and nearly 100,000 square feet in New Jersey. The company’s current land holdings support the development of an additional 15 million square feet of industrial buildings during the next five to seven years, and CT is actively seeking additional development opportunities in 2019 for future expansion.