Western Real Estate Business

JUL 2018

Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.

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30 • July 2018 • Western Real Estate Business www.REBusinessOnline.com and logistics research. "As ecommerce expands further into the grocery busi- ness, the resulting growth of the food supply chain and demand for new, climate-controlled warehouse space could very well be the new oppor- tunity that investors and developers have been seeking." The ratio between industrial and retail cold storage space may further shift in the coming years as online grocery sales are anticipated to grow from 3 percent of all grocery sales in 2017 to 13 percent by 2024, FMI/ Nielsen cites. Based on that projection, CBRE believes demand for as much as 35 million square feet of cold storage space will shift from retail properties to industrial. Larger concentrations of food-grade, cold storage facilities oc- cur in states with substantial agricul- tural production, large populations or both, the report notes. With that in mind, California is likely to have the most industrial cold storage space (nearly 400 million cubic feet), fol- lowed by Washington State (271 mil- lion). "The challenge is the high barrier of entry, cost and lack of availability in many parts of markets, such as Cali- fornia," adds Art Rasmussen, CBRE's industrial expert and senior vice pres- ident for its Food Facilities Group. "Because of that, growth companies will need to rely even more on pub- lic refrigerated warehouses. These fa- cilities often do not require long-term contracts and can bridge the growth gap." Coastal Demand One player getting into the cold storage game in California is LBA Realty. The firm purchased the Los Angeles Food Center (LAFC), a 267,000-square-foot cold storage facil- ity near Downtown Los Angeles, for $57.8 million in April. The 10.6-acre site is located at 2652 Long Beach Ave. in Vernon, about three miles south of Downtown Los Angeles in Southern California's primary food manufac- turing and distribution submarket. The sellers, a joint venture between Dedeaux Properties and Barings Real Estate, which sold the asset on behalf of an institutional investor, renovated more than 192,000 square feet of the center's fully racked freezer and cool- er rooms with clearance heights up to 30 feet, as well as refrigerated dock areas. "The repositioning, lease up and sale of LAFC resulted in a successful cold storage investment for a Barings- sponsored, value-add investment ve- hicle," says Mike Zammitti, head of U.S. Equity for Barings Real Estate. LAFC is also one of the largest cold storage facilities in Los Angeles with 65 dock-high loading positions and deep concrete truck courts of up to 190 feet. The facility's location makes it ideal for last-mile distribution. The center is within 20 miles of Los An- geles International Airport, the ports of Los Angeles and Long Beach and a 10.3 million population within a 25- mile radius. "With consumers wanting fresher and higher quality food, the need for well-located and efficient cold stor- age is critical to the rapid movement of perishable product," says Brett Dedeaux, president of Dedeaux Prop- erties. "The size, location and func- tional layout of the Los Angeles Food Center allow users to streamline the truck loading and off-loading process to expedite last-mile distribution." The buyer and seller were repre- sented by CBRE's Jack Fraker, Darla Longo and Barara Emmons Perrier. Activity is also boisterous in Wash- ington, the second most in-demand market for industrial cold storage space. The Joshua Green Corporation (JGC) agreed to purchase a major- ity stake in Bellingham Cold Storage (BCS), which provides storage, han- dling and logistics solutions to a wide range of food customers, this past June for an undisclosed sum. The company is the largest portside cold storage facility on the West Coast, handling more than 600 million annual pounds of products ranging from seafood to berries to various packaged foods. Af- ter this sale, the Seattle-based, private- ly-held investment company will own a majority of BCS, while the seller, the Talbot family, will remain as share- holders. "We like Bellingham, and we believe that JGC's financial strength will en- able Bellingham Cold Storage to think strategically about its opportunities and to invest for its long-term growth in support of both existing and future customers," says Stanley McCam- mon, JGC's president and CEO. "We look forward to collaborating with BCS's management team and the Port of Bellingham on the development of those opportunities." The company website notes that JGC pursues long-term investment opportunities that allow its experi- ence and resources to combine with existing business relationships and employee groups. BCS maintains two, 25-acre campuses in Bellingham. One is situated on the waterfront under a long-term lease from the Port of Bellingham. The facility's deepwa- ter dock gives it access to Alaska and international markets. The other fa- cility is two miles inland on Orchard Drive, near Interstate 5. A number of the firm's customers also lease sizable food-processing facilities from BCS. Total employment on the BCS cam- puses, including at on-site processors, can reach 1,500 or more in the busy summer and fall harvest seasons. NewCold, a Netherlands-based ad- vanced cold logistics company, also recently entered the Washington cold storage market. The firm opened its first U.S. cold storage facility in Ta- coma on May 24. The facility has more than 100,000 pallet locations and a storage capacity of more than 25 mil- lion cubic feet. The storage racks were assembled to hold product pallets in a low-oxygen environment, which cuts down on the risk of fire. The building will also use 50 percent less energy than conventional cold storage space. The new asset was built by Fisher Construction Group. "The unique method used to build this facility, and the technologies in- corporated within the facility are the way of the future," says Dan Powers, president and CEO of Fisher Con- struction Group. "Leading-edge tech- nologies used — in addition to the automated pallet retrieval systems — are the building itself being supported by the structure of the storage racks, which will hold the pallets of prod- ucts, the low-oxygen environment re- ducing the risk of fire from the inside entirely, and the total building design needing only half the energy con- sumed by conventional cold stores to keep the products optimally frozen." The new facility will serve as the Northwest distribution home of Tri- dent Seafoods, a vertically integrated harvester, processor and marketer of seafood from Alaska and the Pacific Northwest. "We have been investigating the possibilities of optimizing our cold chain with an automated coldstore for a long time," says Randy Furtner, CFO of Trident Seafoods. "We went through a rigorous process with New- Cold's team to make sure that the cold storage solution fulfills all our needs." Inland Activity Though California and Washing- ton may be the two most in-demand cold storage markets in the U.S., that doesn't mean activity has waned in non-coastal regions. Crystal Creek Lo- gistics recently leased 33,750 square feet of industrial space at 9250 Red Rock Road, near Interstate 395 in Reno. Crystal Creek Logistics pro- vides perishable and frozen order ful- fillment for ecommerce with dedicat- ed customer support and sustainable practices. The 33,750-square-foot facility is part of a larger 200,000-square-foot facility that features a 9,000-square- foot, state-of-the-art freezer and a 2,500-square-foot refrigeration sys- tem. The property will accommodate cold storage needs for select local and national companies, such as Patago- nia, Peets Coffee, Thrive Markets, the Farmers Dog and Califia Farms. It is one of the first cold storage fulfill- ment centers the region has received in many years. Crystal Creek was rep- resented by Joel Fountain of Dickson Commercial Group. Dave Simonsen of Kidder Mathews represented the landlord. Further east, Becknell Industrial acquired a 38.8-acre site within the Nexus at DIA master-planned busi- ness park in Commerce City, Colo., this past May for $6 million. The firm plans to build a 540,800-square-foot, state-of-the-art industrial distribution facility for a global manufacturer with more than $30 billion in annual rev- enue. Construction on the new facility has commenced and is estimated to be completed early next year. The park is a joint development be- tween Schuck Communities and CH Thompson Company. Nexus at DIA has sites for retail, hospitality, ware- house, office, airport-related business- es and multiple other uses. The prop- erty is less than a two-minute drive from Peña Boulevard and E-470, near expansion improvements being made to Peña Boulevard and Tower Road. "This transaction solidifies Nexus at DIA's presence as the new premier industrial business park in the boom- ing Northeast submarket," says Drew McManus of Cushman & Wakefield, who, along with Bryan Fry and Mike Viehmann, represented the seller, DIA Tech Center. "With the recent construc- tion completion of McLane Food's 250,000-square-foot cold storage dis- tribution facility in the park, along with Becknell's recent acquisition and the to-be-built 540,800-square-foot fa- cility, Nexus has tremendous momen- tum in Denver's growing industrial market." With ecommerce, eating out and Millennials' specific food tastes all not likely to change soon, it is safe to say the cold storage market should con- tinue to heat up for years to come. n MILLENNIALS, ECOMMERCE CAUSE COLD STORAGE BUSINESS TO SURGE LBA Realty purchased the Los Angeles Food Center, a 267,000-square-foot cold storage facility near Downtown Los Angeles, for $57.8 million in April. The 10.6-acre site is located at 2652 Long Beach Ave. in Vernon. COLD STORAGE from page 1

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