381,600 SQFT Industrial Sale In Tracy Could Attract Record Price For New Industrial Project

Ridgeline Property Group, Central Valley, Tracy Pescadero Distribution Center, LaSalle Investment Management, Tracy Pescadero Distribution Center, Prologis, DCT Industrial Trust, DHL Supply Chain entity,
Rendering courtesy of Ridgeline Property Group

By Jon Peterson

Atlanta-based Ridgeline Property Group could attract a record price on a per square foot and cap rate basis for brand new industrial product in the Central Valley for its planned sale of the Class A, 381,600 square foot Tracy Pescadero Distribution Center in Tracy, according to sources that track the sale of industrial assets in the region.

Ridgeline and its capital source, Chicago-based LaSalle Investment Management, had developed the property together, which was completed in 2017. The 19.46-acre site is less than one mile from Interstate 205, an east-west route connecting to Oakland and San Francisco, and it provides easy access to the regional transportation corridors serving the major markets of the Western U.S., according the company’s statement.

“Tracy, California, is the best distribution location in the Central Valley, and the Tracy Pescadero Distribution Center will provide much-needed Class A space for modern distribution operations,” said Greg Thurman, CEO of Ridgeline Property Group in July of 2015, when the company announced that it was commencing construction of the speculative development. “There is virtually no availability of Class A space greater than 200,000 square feet in the Central Valley. In addition to providing bulk space, this 381,600-square-foot facility will offer the option of either a rear-load or front-load configuration, depending on the needs of the tenant. The flexible design also enables the building to be divided into three separate spaces with front offices.”

The sellers are bringing the asset to market for sale on Monday, and they have hired CBRE as the listing agents on the sale. Two people involved are Darla Longo, vice chairman/managing director and Rebecca Perlmutter, senior vice president. CBRE declined to comment when contacted for this story.

Its rare for new industrial product in Tracy to come up for sale so soon after the property was developed. Most property owners in Tracy are major institutional owners. Two such examples would be Prologis and DCT Industrial Trust. These companies and others are more interested in holding on to their assets for a long period of time.

The Pescadero Center is a single building property. The asset is now 100 percent leased to Excel, which is a DHL Supply Chain entity, and Pactra USA. Both of these companies are considered to be high-credit tenants. The average lease term on these two tenants is 5.6 years.

This investment opportunity offers strong cash flow with significant upside to rents given the steady demand and lack of available inventory driving future rent growth. In-place rents are approximately 5 percent below market, offering the new owner future NOI increases upon lease rollover.

Located at 1700 East Pescadero Avenue, the distribution facility features 32-foot clear heights, 57 dock-high doors, two drive-in doors, a 185-foot truck court, 92 trailer parking spaces, 317 auto parking spaces and Early Suppression Fast Response (ESFR) fire sprinklers. The asset also has an office component inside the property, which is 9,470 square feet, or approximately 2.5 percent of the total building.

The overall 95 million square foot industrial market in the Central Valley remains very strong. The region recorded its 19th consecutive quarter of positive absorption with 2.8 million square feet of net absorption year-to-date bringing the vacancy rate down to 2.2 percent at the end of the third quarter.

The Tracy industrial market has also shown strong operating fundamentals. At the end of 2017, Tracy’s average asking lease rate of $0.45 triple-net had increased 15 percent over the past two years.

Ridgeline is known in the industrial sector as a merchant developer. The company does have a regional office located in Northern California in Roseville.

381,600 SQFT Industrial Sale In Tracy Could Attract Record Price For New Industrial Project

Ulta Beauty’s first distribution center in California now calling Fresno home

The walls are up at Ulta Beauty’s new distribution center in Southwest Fresno. But it’s taken months to turn Ag land into a commercial business that will soon house hundreds of employees, sending beauty products around the country.

Fresno Mayor Lee Brand said, “We had the right business elements. The right geographical location in California, the right weather, a big enough urban base to have a substantial labor supply, the cost of the building. All of that works in our favor.”

Brand likes the progress he’s seeing, he said the area in Southwest Fresno, known as the “Reverse Triangle”, features an e-commerce business boom with Amazon and Ulta going up. The nearby 41 and 99 will help drivers goods get shipped far north to Canada and as far south as Mexico.

Both Ulta and Amazon combined are expected to fill about 3,000 positions for their new centers.

Brand said, “The bad news is we have a lot of underemployed people. The good news is, now we have solutions to fill these slots. These people are working with social services and other agency sought to get them trained.”

The city is working to get people trained and ready. Ulta has hired its leadership positions to work in the new 670,000 square foot distribution center at the Northeast corner of East and Central Avenues.

Recently they started hiring mechanics and clerks. Online, people can start applying for material handlers or associate positions.

Brand said, “The orders come in, the computerized labels, they’re sorted, probably electronically and robotically– but there’s always humans there making sure those things get out and are done properly.”

The city offered companies a tax incentive per job, which they say will in turn, over a long period of time, will bring a $40-million to $50-million impact to our area.

Now other companies are looking at expanding.

“I think we are on the forefront here in Fresno on this new type of economy, and we’re hoping to really capitalize on it,” said Brand.

Ulta will be hiring during the next six months. They plan to begin shipping to stores and online guests in July.

http://abc30.com/2959548/?sf179533845=1

Hundreds come for an Amazon job.

BY TIM SHEEHAN

Updated January 16, 2018 03:00 PM

Supply-chain management company offers fulfillment center capabilities

LATHROP—Many smaller companies need the capabilities of a large-scale fulfillment distribution center, but don’t have the space or capital of Amazon or other mega-shippers. Many supply-chain management companies help with business conundrum.

One company with local centers just might have the ecommerce solution for many valley businesses without resources.

Dearborn, Michigan-based Hollingsworth is an end-to-end supply chain management company with 28 distribution facilities located throughout the U.S. and two such locations in Tracy and Lathrop.

In 1991, Hollingsworth began by shipping parts for the Ford Motor Company, a relationship that continues to this day. They are the primary packager for the automotive giant.

By taking on multiple clients, Hollingsworth is able to parse out warehouse space, bringing shipping costs down.

“In the Lathrop area we are very much focused on ecommerce and retail and direct-to-consumer,” said Brian Sheehan, sales and marketing manager for Hollingsworth in this region. “We have local companies and companies that are overseas. It depends on the port of entry for their goods.”

Sheehan said many of their customers are manufacturers, and multiple facilities may be used for one client. Increased facilities also helps Hollingsworth offer same day shipping on behalf of its clients to most areas.

“In a shared warehouse, there’s shared costs,” Sheehan said, allowing for the cost savings to be passed onto the client.

Hollingsworth offers solutions to warehousing, fulfillment, packaging, inventory and program management and more, allowing those who use their services to scale their businesses easily without the hassle of dealing with expansion costs.

With the holiday season estimated to be the peak time for sales, Hollingsworth is preparing for the increased traffic. It’s estimated that the holiday rush accounts for 30 percent of annual sales for many retailers.

Ulta bringing part of its billion-dollar business to Fresno

Central California

The Fresno Bee
BY TIM SHEEHAN
PUBLISHED MARCH 10, 2017

Ulta Beauty and the city of Fresno officially announced Friday that the cosmetics company has chosen Fresno as the site of a large distribution center that will initially employ more than 500 workers and could swell to more than 1,000 employees with seasonal hires during busy periods.

The joint statement issued by the company and the city confirmed what The Bee reported Tuesday about Ulta’s selection of Fresno for a 670,500-square-foot warehouse to be built in south Fresno. Carolyn Sutphen, a spokeswoman for Ulta, said the distribution center is expected to hire an initial workforce of 542 when it opens in the summer of 2018. It will be built at the northwest corner of East and Central avenues.

Ulta is a growing business that last year reported net sales of $4.8 billion.

The company had identified Fresno last fall as its preferred site, but Ulta representatives told the state in November that the firm was also considering sites in Visalia, Bakersfield, Nevada and Utah. The $110 million distribution center will serve 400 stores and handle fulfillment of online orders from throughout the western United States. Ulta has five other distribution centers in Illinois, Arizona, Pennsylvania, Indiana and Texas. The Fresno center will be Ulta’s first and only one in California.

“This is exactly the shot in the arm that Fresno needs to energize our economy and keep our momentum headed in a positive direction,” Fresno Mayor Lee Brand said in the joint statement. “We’re pleased that Ulta Beauty recognizes the value of our location. …”

As a city councilman last year, Brand was the author of the city’s Economic Expansion Act, which provides for rebates of sales and property taxes, along with other incentives, for companies that relocate to or expand in the city to create new jobs for local residents. In November, working under Brand’s act, the Fresno City Council approved a 30-year package of incentives – chiefly a partial rebate of sales taxes – worth up to $18 million to attract Ulta. To qualify for the city’s incentives, Ulta must create the equivalent of at least 500 full-time jobs at the Fresno center within five years. If the company fails to achieve that by the end of 2022, it would have to repay whatever rebates it had received to that point.

Also in November, the Governor’s Office of Business and Economic Development agreed to provide $8 million in California Competes tax credits to Ulta if it chose a site in California, conditioned on the net creation of 542 full-time jobs in the state.

An economic analysis of the Ulta project that was commissioned by the city last year estimated that Fresno stands to realize about $42 million in additional sales and property tax revenue, even after the incentives.

Ulta, based in Illinois, has almost 980 stores in 48 states; in the Valley, the company has two stores in Fresno and one each in Clovis, Visalia, Hanford and Porterville.

“We are pleased to be expanding in Fresno with a new distribution center that supports our company’s growth strategy and brings additional jobs to the community,” Ulta CEO Mary Dillon said in the joint statement. “This will allow us to continue to grow our stores and e-commerce business. …”

Sutphen, the Ulta spokeswoman, said the company will begin posting job openings on its website closer to the completion and opening date.

Company growing

In its financial results released Thursday for the fourth quarter of 2016, Ulta announced that its sales – both in-store and online – have been growing at a significant clip. The company reported more than $1.58 billion in net sales during the quarter, up almost 25 percent compared with the fourth quarter of 2015. Its e-commerce sales grew even faster, up more than 63 percent compared with a year earlier and amounting to $154.9 million for the quarter. For the entire year, online orders represented $345.3 million in sales for Ulta.

While the city and Ulta waited until Friday to make the formal announcement, the company’s choice wasn’t exactly top secret. Clayco, the Chicago-based contractor that will build the distribution center, already has a construction office on the site, and renderings on the company’s website identified Ulta as the tenant for the building. Clayco’s website indicates that construction is expected to be done by the end of 2017.

Additionally, the careers page of Ulta’s website included a job opening for a human resources director for the Fresno distribution center.

Ulta isn’t the only potential big fish for which the city has baited its economic hook. In December, a month after approving the enticements for Ulta, the Fresno City Council approved a similar Economic Expansion Act package of incentives for Golden State FC LLC, a wholly owned subsidiary of online retail giant Amazon.com. That package of incentives, including rebates of sales and property taxes, has a cap of $30 million over 30 years.

Larry Westerlund, the city’s economic development director, said Amazon deemed Fresno its preferred site for a $200 million, 855,000-square-foot e-commerce fulfillment center that would employ at least 750 workers and potentially hire up to 1,750 employees. There is, however, no word on when Amazon may make a decision on the location.

Brand traveled to Seattle late last week to meet with Amazon officials to pitch the Fresno site. The would-be location for that facility is less than a half mile from the Ulta site, in the North Pointe Business Park near Central and Orange avenues, and was formerly under consideration last year by clothing retailer Nordstrom for a distribution center. Nordstrom has put on hold any decision on a center in the Valley.

CT Realty Acquires 345-Acre Industrial Parcel in Stockton, Plans $135MM Build Out

Central California

The Registry
Posted on

CT Realty (CT) has acquired 345 acres of industrial land within the master-planned NorCal Logistics Center in Stockton, Calif., with plans to develop 4.4 million square feet of high-clearance distribution, e-commerce/logistics and advanced manufacturing buildings. The project, which breaks ground this month, includes an unprecedented amount of speculative construction for Northern California.

Valued at $135 million, the first phase of development includes approximately 1.7 million square feet in three buildings, including a 1,122,341-square-foot building that will be the single largest spec building developed in Northern California. Two additional buildings of 388,183 square feet and 186,944 square feet will complete Phase 1. Beyond the planned development, NorCal Logistics Center has sites available for build-to-suit developments ranging in size from 100,000 square feet to more than 1.9 million square feet.

“We view this as a long-term development opportunity to assemble a world-class logistics campus in one of the strongest markets in America,” said Carter Ewing, managing partner of CT Realty. “The dynamics of California’s Central Valley region, with an industrial base of more than 185 million square feet, mirror the favorable activity we have encountered over the last three years in Southern California and other major distribution markets in Dallas, Atlanta and Chicago.”

NorCal Logistics Center, which is already home to General Mills, Fresh & Easy and Fox Head, is located in the heart of California’s Central Valley industrial market and serves an extension of the global logistics supply chain infrastructure directly linked to West Coast ports in Oakland/Stockton, Los Angeles/Long Beach, Portland, Ore., and Seattle/Tacoma, Wash. The project is proximate to key intermodal facilities operated by Burlington Northern Santa Fe and Union Pacific railroads, and is accessible to SR-99, I-5, I-205 and I-580, linking to all major Northern California markets and strategic Western U.S. destinations.

“The evolution of modern logistics infrastructure, including inland ports, sea ports and commercial rail systems, has changed the dynamics of how containerized cargo is distributed nationwide and throughout the world,” added Ewing. “Investing in buildings that are strategically located near this infrastructure is integral to meeting the demands of today’s most progressive logistics users, and this is at the heart of our national strategy. The locational attributes of NorCal Logistics Center give us confidence that this will become one of the premier master planned logistics parks in the entire Northern California market,” added Ewing.

CT and related development partnerships are developing speculative and build-to-suit Class A logistics buildings for some of the largest industrial users in America. The company has acquired or developed 7 million square feet of industrial buildings in the U.S. over the last 36 months, experiencing strong leasing activity from projects that have been well received in their respective markets.

“NorCal Logistics Center represents the calculated expansion of an industrial logistics strategy we began implementing aggressively across the country five years ago,” said J.C. “Watty” Watson, managing partner of CT.

CT has capitalized much of its acquisition and development activity with Diamond Realty Investments (DRI) the U.S. real estate investment arm of Japan-based Mitsubishi Corporation. Both DRI and CT have 25-year histories in development and investment.

“We are delighted to again combine forces with DRI in this exciting new venture,” added Watson. “Together, we have almost 4 million square feet under construction and another 10 million square feet in our development pipeline on land that we own across America.”

The project is designed by Ware Malcomb, a premier architectural design firm with global experience in logistics and distribution facilities. Construction financing is provided by Cal Bank & Trust and Fifth Third Bank.

CT acquired the NorCal Logistics Center parcel from Arch Road, L.P., a partnership controlled by Minnesota-based Founders Properties and represented in the transaction by Darla Longo, Barbara Emmons Perrier, Rebecca Perlmutter, and Michael Kendall of CBRE National Partners. CT was represented by Cushman & Wakefield’s Kevin Dal Porto, Blake Rasmussen, John McManus and Tyler Vallenari, who will provide ongoing leasing, sales and market support services.