Case Study

Summary

Napa Logistics Park is located in American Canyon within Napa County, and is comprised of 218 gross acres with the potential to create 2.9 million square feet of warehouse/distribution space for wine and non-wine related users.  Napa Logistics Park is situated adjacent to an active rail line serviced by Union Pacific Railroad which benefits companies seeking rail access to/from the Port of Oakland – 34 miles from the site.  Napa Logistics Park benefits from direct access to Highway 29, and has access to Interstate 80 from Highways 12 and 37 to the north and south, respectively. The completion of the Highway 12 road-widening improvements has transformed Napa Logistics Park into a premier regional logistics location within Northern California.

Situation

  • For more than 50 years, one family owned the property for cattle grazing land.
  • In 2000, Berringer Vineyards acquired 268 acres consisting of the subject site to facilitate wine production.
  • During their ownership, Berringer determined that approximately 50 acres was deemed excess land, and subsequently sold this portion of the site to Panattoni.
  • In 2004, Berringer was acquired by Fosters (Australia) who subsequently cancelled the project.
  • In September 2006, RREEF’s CalSMART fund acquired the Property, and entitled only 40 acres for a warehouse of 646,000 SF with the remaining land un-entitled.
  • In 2009, CalPERS transferred the CalSMART portfolio to Canyon Capital.
  • In 2012, Canyon Capital had sold all of the properties in the CalSMART fund except for this land, and engaged a broker to market the property to a small group of investors.

Results

  • Since its inception, the North Bay industrial submarket had been perceived as a tertiary market within the Bay Area, with institutional investors favoring infill submarkets located in the East Bay, South Bay and Peninsula.
  • With limited land sites remaining for industrial development within the Bay Area, Orchard Partners was attracted to the property due to its size and inexpensive cost.
  • On a relative basis, growing scarcity of large warehouses exceeding 200,000 SF helped this segment perform very well within the Bay Area.
  • After careful research, Orchard Partners concluded that large warehouse buildings designed for logistics would provide a lower cost alternative for tenants struggling to find space in the infill submarkets of the Bay Area.
  • Bolstered by these observations, Orchard Partners acquired the property off-market with its capital partner, DivcoWest, in May 2014.
  • Concurrent with its construction of Phase I consisting of a warehouse building of 646,000 SF upon 38 acres, the partnership sought entitlements of Phase II containing 120 acres of developable land and a wetland preserve and park infrastructure located upon 60 acres.
  • Unique to its entitlements are the potential inclusion of rail service from Union Pacific, foreign trade zone status, building clear heights of up to 100 feet, and air cargo access to the Napa County Airport.
  • In 2017, IKEA leased Phase I, and this building was marketed and sold to DWS (RREEF) in 2018.
  • In March of 2019, the partnership closed on a recapitalization of Phase II with DWS (RREEF).
  • Following construction and leasing of Phase II, Divco and Orchard sold its majority interest to DWS at the end of 2021.