Large East Bay Industrial Trades Point to Lower Prices

Investors remain interested in Bay Area industrial properties but sales prices in the submarket with the largest inventory appear to be on a downward trajectory as rising vacancy rates and oversupply impact the nine-county region.The largest recent East Bay transaction reflects this trend: a three-building industrial campus encompassing more than 724K square feet in Richmond has changed hands for $132.5M, which translates into $183 per square feet. That made up less than half the average sales price in the Bay Area at the end of the third quarter.Minnesota-based WPT Capital Advisors, acting through separate affiliates, acquired the campus, which is part of the Pinole Point Business Park at the corner of Giant Highway and Atlas Road, The Mercury News reported.The largest building in the deal, a 224K warehouse located at 6015 Giant Highway, is leased by G Logistics, an Amazon delivery partner.Investors have flocked to the logistics hub in the Atlas Road area of Richmond in recent months. In July, Santa Monica-based GLP Capital Partners bought three industrial buildings at 2100, 2500 and 2900 Atlas Road encompassing a total of nearly 475K square feet.GLP’s purchase price this summer was $129M, or about $272 per square foot, which is 33% higher than WPT’s nearby deal in the fall.The 127M square feet Oakland submarket in the East Bay, which includes Emeryville, Berkeley, Alameda, Richmond and San Leandro, reported a total of nearly 7.3M square feet of vacant space at the end of the third quarter, according to CBRE.The Bay Area’s overall industrial vacancy rate rose to 5.1% at the end of Q3, with negative net absorption totaling minus 1.8M square feet, bringing the year-to-date total to 5.5M square feet.Bay Area industrial deliveries totaled 1.9M square feet in Q3, with another 2.6M square feet under construction. This month, Bridge Industrial snared a $117M construction loan to build a 714K square feet industrial campus on a 33-acre site in San Jose, a project expected to deliver in Q4 2025.As of the end of the third quarter, industrial sales transaction prices in the Bay Area led all California markets with an average price of $476 per square foot, followed by Orange County at $319 per square foot; Los Angeles at $297 per square foot; and Inland Empire at $265 per square foot, according to CommercialEdge data.In one of the largest industrial sales transactions of the year in the Inland Empire, Boston-based Cabot Properties recently purchased a fully leased portfolio of four warehouses encompassing a total of 670K square feet for $202M, or about $302 per.The buildings in the portfolio, which were sold by Link Logistics, are located in Ontario, Fontana and San Bernardino.The highly developed logistics cluster in the Fontana submarket, located at the nexus of several interstate highways, continues to generate the strongest sales transaction volume in the Inland Empire. Fontana alone has accounted for more than $700M in industrial sales thus far this year, with properties trading for an average of $331 per square feet.In April, EQT Exeter paid $197M for the Commerce Way Distribution Center, an 819K square feet facility on Santa Ana Avenue in proximity to interstates 10 and 15 as well as Ontario International Airport. The seller was Manulife Investment Management, which acquired the property in 2011 for $55M.