Colony Industrial has expanded its light industrial warehouse portfolio with its first investment in the high-growth Oakland/East Bay market. The firm has acquired a two-building East Bay industrial portfolio in San Leandro, Calif. Financial terms of the transaction were not disclosed.
Colony Industrial is the industrial platform of Colony NorthStar, a diversified global real estate investment firm with $43 billion of assets under management.
The two class A light industrial buildings total 587,051 square feet and are located at 2380–2388 Williams Street and 1717 Doolittle Drive in San Leandro. The portfolio is fully leased to five tenants with a weighted average lease term remaining of five years. San Leandro is located on the eastern shore of San Francisco Bay, south of Oakland, just two miles from Oakland International Airport and 10 miles from the Port of Oakland.
“San Francisco/Oakland is a terrific, high-demand and low-vacancy market,” said Lew Friedland, Colony NorthStar managing director and head of Colony Industrial. “The East Bay industrial portfolio is ideally situated near San Francisco and Silicon Valley businesses, highways, airports and the port. The properties fit perfectly with our strategy of occupying the ‘last-mile’ in the logistics chain for e-commerce retailers, distributors and manufacturing companies that require ever-faster delivery to their B2B, wholesale and retail customers.”
Colony Industrial’s platform generally targets properties 250,000 square feet or smaller.
Recent acquisitions for Colony Industrial include the following:
- A three-building portfolio totaling 304,948 square feet in Jacksonville, Fla.
- A 217,422-square-foot building in Phoenix
- A 265,877-square-foot building in Dallas
- A 85,229-square-foot building in Jacksonville, Fla.
- A 102,948-square-foot building in Las Vegas
As of Dec. 31, 2017, Colony Industrial’s portfolio is 95.1 percent leased, has 43 million square feet and 369 buildings, and is in 17 major markets including Atlanta, Dallas, Philadelphia/N.J., Orlando and Phoenix.
Vacancy in the East Bay Oakland industrial market closed 2017 at 2.9 percent, according to Cushman & Wakefield. This is a 100 basis point increase year-over-year from 1.9 percent. Despite a notable amount of space returning to the market during 2017, extreme constraints on supply have persisted for four consecutive years, while the vacancy rate has remained below the 5 percent mark for that entire time period.
In addition, the market saw a return to significant positive absorption in the fourth quarter totaling 484,000 square feet. However, this was not sufficient to reverse the amount of space givebacks seen in the prior three quarters; annual net absorption for 2017 ended the year at –1.6 million square feet. This is the first year the market has seen a negative absorption figure since 2010 when the market was encumbered by the Great Recession, according to Cushman & Wakefield.
