Owner dynamic changes with introduction of institutional investment as Sacramento evolves into a strong secondary market
The building was leased at the time of the sale to a single tenant, Edges Electrical Group, who has maintained tenancy at 1701 National Drive for over 15 years. The Northern California based wholesale electrical distributor has expanded its footprint within the building three times since establishing occupancy in 2007. Electrical Edges recently renewed their lease through 2031 and expanded their total footprint by 140,000 square-feet.
Colliers’ Institutional Capital Markets team, led by Executive Vice Presidents Brad Idleman, Andy Zighelboim, Kevin Moul and Bob Gilley, worked alongside the local Sacramento leasing team of Executive Vice President Mark Demetre and Senior Associate Michael Hoo to represent the seller, and buyer.
“The quality of 1701 National Drive, along with strong regional tenancy and location in the region’s premier submarket, resulted in unprecedented interest from top real estate institutions. For many this would have been their first entry into the Sacramento market,” said Brad Idleman. “The extraordinary institutional interest combined with the competitive procress, generated a record result for distribution assets in the region.”
1701 National Drive is an institutional grade asset located on a 9.14 acre parcel. Originally constructed in 2004, the property was built with state-of-the-art standards and has been maintained to compete with other high quality assets in the area. The building features 30-foot clear heights, 23 dock-high and 16 grade-level doors, 48 feet by 52 feet column spacing and 4,000 amp 277/480v phase power with sprinklers and skylights throughout. The property is perimetered by a paved, fenced-in yard with ample space for truck and employee vehicle parking. 1701 National Drive’s is located near the Sacramento region’s main traffic arteries, Interstate-5 and Interstate-80, providing tenants the ability to operate in and around the Northern California market.
Historically, Sacramento’s industrial ownership has primarily consisted of private capital investors, as institutions overlooked the region due to the market’s size. The last 18 to 24 months have dramatically changed that narrative, and is demonstrated by the fact that institutional transactions have increased over 60% in the last two years. Moreover, regional warehouse distribution assets located in Natomas have proven to be the strongest performing asset this cycle.
The Sacramento region’s performance over the last several years combined with the COVID accelerant has resulted in the third highest population migration growth in the country, strong industrial fundamentals with historically low vacancies and double-digit year-over-year rental growth. These positive activities follow a national trend of narrowing gaps between primary markets and secondary markets with strong fundamentals.
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Allison+Partners for Colliers Northern California