IRG Lands Full-Building Lease in Central Valley

Industrial Realty Group has leased its full 507,028 square-foot facility at 2201 Cooper Ave. in Merced, Calif., to a regional agricultural manufacturer.

IRG acquired the property from Quad/Graphics in 2023 for $20 million, or $39.5 per square foot, according to Yardi Matrix information.

Completed in 1978, the building sits on a roughly 43-acre site near California State Route 59 and U.S. Route 99, about 3 miles northwest of downtown Merced. Companies in the surrounding area include Jain Farm Fresh Foods, ABC Supply Co., and Tank Holding, among others.

The building encompasses approximately 65,000 square feet of office and support space, including private offices, conference rooms, technical areas, a large cafeteria and restrooms.

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The warehouse has two interior rail spurs and three exterior rail spurs, with direct service from Union Pacific and BNSF. It also has expandable 12-kV electrical service and an on-site MID electrical substation.

Additional features include 27 dock-high doors with mechanical levelers, four grade-level doors and clear heights ranging from 19 to 37 feet. Column spacing is primarily 30 by 63 feet. The property also includes approximately 360 parking spaces, along with trailer parking.

Older industrial assets gain traction

Aging industrial properties are attracting more investor interest due to their existing infrastructure, functional layouts and proximity to established business corridors. With acquisition and construction costs still elevated, buying an older asset at a significant discount can be an attractive alternative, as recent industrial market trends show.

The pricing gap with Class A properties, however, must be wide enough to cover capital improvements, lease-up risk and lower rents. Rather than repositioning these assets as Class A facilities, investors can offer functional, cost-effective space in locations where tenants want to operate.

National industrial rents averaged $9.12 per square foot in May, up 5.2 percent year-over-year, while vacancy stood at 8.8 percent, according to the latest Yardi Matrix report. In the Central Valley, rents rose 4 percent year-over-year to $7.02. The region posted the highest vacancy rate among the top 30 markets, landing at 14.5 percent.