Demand for Sonoma County warehousing, distribution space brings several projects on line

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Similar to Solano and Napa counties, industrial real estate is active in Sonoma County, but the frenzied deal-making in the run-up to the legalization of recreational cannabis in California has subsided.

“It was pretty crazy for a while, with calls coming from Western states looking to expand in this area, but it has slowed down. I see the industrial market as being stable,” said Rhonda Deringer, a partner of Keegan & Coppin/Oncor International. “There are a few new buildings coming on the market for lease, but not a lot of inventory is available.”

Real estate development, particularly for projects of a large enough scale to be of interest to institutional investors, can come with a steep learning curve in the north San Francisco Bay Area, according to Jose McNeill III, who has developed or staged projects in Solano, Napa and Sonoma counties for decades.

“The North Bay market is unique in a lot of ways,” McNeill said. “It’s about finding the right land. A lot of institutional (developers) can’t dedicate the time and manpower. They need to deploy capital quickly. You first have to explain the North Bay — why it has big barriers to entry and why it will take longer than you’re used to — but why it will work.”

Recent projects by McNeill Real Estate Services include Greenwood Business Park in south Napa and Cader Corporate Center in Petaluma, done with New York Life Real Estate and a Northern California construction trade union fund, and Victory Station, a 250,000-square-foot speculative warehouse set for early November completion south of Sonoma city.

McNeill plans to jump into the active industrial real estate market next to the airport in coming months. He is negotiating to buy land that could accommodate several hundred thousand square feet of buildings.

If successful, he would build sizable industrial projects by the airport similar to the Billa Management and Airport Business Center.

The first two buildings at the 380,000-square-foot Billa Landing project on North Laughlin Road are under construction, and one of those 48,100-square-foot warehouses is leased to All American Containers of the Pacific Coast. Airport Business Center purchased 24 acres of land at 1631 Airport Blvd. in August 2016 and is pursuing entitlements to build up as many as 150,000 square feet.

A significant office property transaction in Sonoma County recently was the sale-leaseback deal on Oct. 1 of O’Reilly Media’s 88,234-square-foot headquarters on almost 14 acres in Sebastopol for about $14 million. The technology publishing and events company signed a long-term lease for the facility, which is about 95 percent occupied by about 150 employees, according to Chief Financial Officer Maria Manrique.

The purchase included the three buildings and about half the land, with an option to buy the adjacent vacant land, said Ron Reinking, managing director of Newmark Knight Frank in Santa Rosa. He represented the Southern California investor buyer. Dave Peterson and Peter Briceño of Keegan & Coppin/Oncor International represented O’Reilly Media.

“It was an interesting opportunity, but it came with some risk involved, being a large property in a city like Sebastopol,” Reinking said. It is one of the county’s smaller cities, with a population of about 7,400, and O’Reilly is one of its largest employers.

Jeff Quackenbush covers wine, construction and real estate. Reach him at or 707-521-4256.

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