https://www.costar.com/article/21248525/developer-drops-39-million-on-bay-area-industrial-site-neighboring-amazon-fedex
REDCO Scoops Up South San Francisco Warehouse as Part of Sale-Leaseback Deal
A local developer is digging its heels into the Bay Area's strengthening industrial market with the $39 million acquisition of fully occupied warehouse space located among some of the region's most prominent tenants.
REDCO Development, a San Francisco developer focused on adaptive reuse and value-add properties, closed on the 4.6-acre site at 344-352 Shaw Road in South San Francisco, California, as part of a sale-leaseback deal. The former owner, event design and production company Blueprint Studios, agreed to stay on as the anchor tenant in the 127,000-square-foot warehouse space, according to CoStar.
Blueprint's leaseback deal extends through 2026, after which REDCO is able to expand, upgrade or lease out the mid-1950s property.
Located a short drive away from the San Francisco International Airport, the site is nestled among large industrial tenants including Amazon and FedEx. South San Francisco's limited pool of industrial properties makes the Shaw Road building one of the last available warehouses in the region that can be redeveloped to capture accelerating demand for distribution space.
That rising demand over the past year has largely been driven by last-mile logistics companies, tech tenants hunting for flex space and biotech firms expanding into new lab and research availabilities.
However, meeting that demand is another story. The region has a lack of available industrial-zone land, weak infrastructure and limited distribution facility potential, according to CoStar analysis. The Bay Area's skyrocketing land values over the past several years have also been a factor in hampering new developments.
A little more than 2 million square feet of industrial construction is underway throughout the greater San Francisco area, most of which is biotech and life science space concentrated around South San Francisco, according to CoStar.
Even with the dwindling pool of value-add opportunities in the region's industrial market, REDCO still scored somewhat of a deal for its new Shaw Road purchase.
The deal closed at about $307 per square foot and $195 a foot for the land itself. The current market average is $324 a foot, according to CoStar, a slight increase from the $313 per foot reported last year.
Neither REDCO nor Blueprint responded to CoStar News' requests for comment.