Dermody Properties Lands First Tenant at Sacramento Project

A major automotive parts supplier inked a deal for roughly 40 percent of the space at the new industrial development.

LogistiCenter at Southport, West Sacramento, Calif.
LogistiCenter at Southport. Image courtesy of Dermody Properties

Dermody Properties has signed its first tenant for LogistiCenter at Southport, the signature industrial project in West Sacramento, Calif., that the company is developing in partnership with Tom Schaal and Mark Heavey of Schaal Realty Advisors.

LKQ Corp. preleased 152,900 square feet at the development, which will offer nearly 380,000 square feet in the high-demand Northern California market.

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Presently taking shape on a nearly 23-acre site, LogistiCenter will soon debut at 3520 Carlin Drive within the 650-acre Southport Industrial Park, a premier business campus that is currently home to the likes of General Electric and a host of other Fortune 500 companies. With vehicle parts provider LKQ’s new claim on space, LogistiCenter is now roughly 40 percent preleased. The early commitment is indicative of the high demand for industrial space in the Sacramento region, which Dermody claims exceeds that of any other market in Northern California currently.

For starters, the Sacramento region is a natural draw for industrial property users; its location at the intersections of I-80 and I-5 allows for convenient distribution of product to all four borders of North America, as noted in a fourth quarter report by CBRE, the firm overseeing leasing of LogistiCenter at Southport. However, the list of demand sources extends beyond the area’s coveted location.

“Companies are drawn to the region’s strong workforce and affordable rental rates relative to the Bay Area. We anticipate the demand to remain strong, especially with specific industries such as e-commerce,” George Condon, partner, West Region, with Dermody Properties, told Commercial Property Executive. “Plus, the average age of Sacramento’s industrial base is greater than most industrial markets in the country. E-commerce users, in particular, value the additional functionality of Class A buildings.”

Michael Lyons of CBRE represented Dermody in the lease transaction for the LogistiCenter space, while CBRE’s Jacob Bobek stood in for LKQ. Deacon Construction is overseeing the building of the project.

Answering the call

With marketwide vacancy at 4.2 percent in the fourth quarter of 2020, the metropolitan Sacramento industrial market is quite tight, according to the CBRE report, which also notes that a shortage of supply is translating into a great opportunity for speculative development. Dermody is capitalizing on the opportunity. “Sacramento’s economy continues to diversify,” Condon said. “We remain focused on finding well-located land to develop new Class A warehouses like LogistiCenter at Southport. For example, this summer, we anticipate breaking ground on LogistiCenter at West Sacramento, a two-building development on 22 acres of land.” LogistiCenter at West Sacramento will occupy land that is also within the Southport Industrial Park; Dermody acquired the acreage in December 2020 for the two-building, 387,000-square-foot project.

Dermody has been plugging in the gap between supply and demand across the country with new projects. In February, the company announced plans to develop LogistiCenter at Woolwich, a 1.2 million-square-foot facility in Gloucester County, N.J. And Dermody expects to deliver the 155,000-square-foot LogistiCenter at Miller Road, an e-commerce-ready property in metropolitan Atlanta, in the third quarter of 2021. Dermody and partners expect development of LogistiCenter at Southport to reach completion by the close of the first quarter of 2021.

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