As the Bay Area’s industrial market heats up, investors PCCP LLC and Lift Partners dropped $28 million or about $239 per square foot on a 117,500-square-foot warehouse at 100 Utah Ave. in South San Francisco.
The price is more than double – 138 percent higher – than the $11.8 million the sellers, a family trust, paid for the property in 2016.
“This is a unique asset,” said Mike Murray, a partner with Lift, in a statement. “There are very few blocks of industrial space over 100,000 square feet available on the Peninsula, we expect this project to achieve premium rents.”
The new buyers are now focused on leasing up the building.
“We expect to receive a great deal of interest for single-tenant occupancy, due to the rarity of finding such a large block of space within the South San Francisco market,” said Erik Flynn, managing director with PCCP, in a statement.
Throughout the Bay Area, demand for industrial space has been rising due to ecommerce companies wanting to be closer consumers as well as growth in industries such as specialty foods and advanced manufacturing.
“The supply of industrial space continues to shrink on the Peninsula as buildings are demolished for higher and better use,” said Mark Melbye, a broker with Kidder Mathews who represented the buyers in the purchase and is handling the leasing efforts. “At the same time, we’re seeing increased demand with last-mile delivery and advanced manufacturing requirements. We expect to see a lot of activity on the asset.”
Vacancy for industrial space has been steadily dropping on the Peninsula for years hitting 1 percent during the fourth quarter of 2017, according to a recent report from CBRE.
“Despite strong demand, new construction still remains muted,” the report states. “Given the overall lack of availability coupled with steady demand, rents are likely to further increase in the near future.”
PCCP manages about $6.8 billion in assets on behalf of institutional investors. San Francisco-based Lift Partners, founded in 2016, is a West Coast-focused real estate investor and recently grabbed six buildings in Berkeley and Emeryville totaling 139,000 square feet.
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