The Northern California Chapter of Certified Commercial Investment Member hosted its first broker forum of 2014 this week in Benicia.
The organization is a certification recognizing professionals who specialize in commercial and investment real estate. The forum provided an overview of the Solano County and Napa County commercial real estate markets and gave landlords, developers, brokers, city and county officials a chance to learn “what is hot” and “what is not” in Solano and Napa.
Here are some of our thoughts from the forum.
Kudos to Benicia for accommodating the event in the city-owned historic Clocktower building. It’s an interesting contrast when folks gather to talk mainly about “new industrial building development” while seated in a charming building constructed in 1859 from Benicia sandstone.
The forum’s first speaker, Garrick Brown, is the research director for Cassidy Turley Commercial Real Estate Services. He noted that today’s industrial users prefer new buildings because older industrial buildings can’t accommodate their needs. Brown further said that the current surge in demand for industrial space on a national level is primarily driven by e-commerce fulfillment centers for companies such as Amazon. The U.S. has an industrial inventory of more than 20 billion square feet. Amazon alone occupies more than 56 million square feet of industrial distribution space and hopes to increase its total to more than 90 million square feet within the next few years.
In 2013, more than 137 million square feet of industrial space was absorbed on a national level. This year is projected to be another banner year for the national industrial absorption trend line, with growth projected to cover more than 150 million square feet. Solano County has approximately 27 million total square feet of industrial space and Napa County has approximately 12 million square feet.
While many traditional brick-and-mortar stores are reducing their footprints, the need for e-commerce support infrastructure is growing. Even if one views the modern marketplace as a war between the “bricks” and the “clicks,” the most Web-dependent e-tailer still needs industrial space and well-located communities that can provide modern buildings will benefit from this growing market.
Large-scale buildings for distribution and warehousing are not new to the Fairfield market. The former Breuners’ Furniture Warehouse (aka Fibrebond) is still a Fairfield landmark, Meyer continues to operate its distribution center off Highway 12 and our readers may recall the 1 million-square-foot distribution center built for glass bottler Saint-Gobain Containers in the Tolenas Industrial Park near Travis. These were specialized buildings – would they be “new” enough to be suitable for the e-commerce distributors now dominating the market?
In addition to e-commerce, Brown noted that demand for industrial space in Solano County has been recently driven by the wine industry – so the Saint-Gobain building should be safe for now. Fairfield’s close proximity to Napa has benefited the local marketplace for industrial development. Demand for space to support the wine industry and allied specialty food products has exploded in the past couple of years. Wine is certainly in the “what’s hot” category today, and developers agree the 1 million square feet of flexible distribution space under construction on Cordelia Road is targeted to wine and food distributors who need access to Napa and Sonoma counties.
Brown is a very informative presenter and collects a lot of information about new development activity for retail, industrial and other sectors. If you like reading about what’s happening in any of those sectors, you might want to subscribe to his Bay Area Research Rant and get on his mailing list at [email protected].
U.S. Bank was also a presenter at the forum and touted its ability to provide loans for industrial projects as well as other business loans. GO-Biz, the state of California’s economic development arm, also presented at the forum and provided a wealth of information about new programs available to California businesses. The GO-Biz information included the California Competes Tax Credit program and the highly regarded sales and use tax exemption program available July 1, 2014. More information on these programs can be found at www.business.ca.gov.
The economic development divisions for the cities of Fairfield, Napa and Benicia also gave presentations at the forum, with each hyping why their city would be the place to invest. Of course we are biased about the benefits of investing in Fairfield, but this event gave attendees an excellent overview of the entire regional market and what is happening in local cities. The forum wrapped up with the panel of experts answering questions about the future of local industrial markets.
For those interested in ebbs and flows of the real estate market, the Northern California Chapter of CCIM Commercial Real Estate Market Forum is certainly worth attending each year. It allows the key players in the marketplace an opportunity to promote services, facilities and opportunities.
Economic Notes is an update from Fairfield City Hall written by Brian Miller and Karl Dumas of the Fairfield Planning and Development Department. Reach them at 428-7461 or email at [email protected] or [email protected]