Amazon finds taker for 300K sf industrial sublease in East Bay

A West Coast trucking business subleased a 300,000-square-foot industrial facility in the East Bay from Amazon just months after the e-commerce company put it on the market, highlighting the demand for such properties as the region’s project pipeline sinks to a historic low.

Dependable Highway Express agreed to rent the building in San Leandro from Amazon, the San Francisco Business Times reported. The Los Angeles company is subleasing the building at 200 Halcyon Drive for five years, the publication said. Amazon’s lease on the property ends on May 31, 2027, meaning Dependable is probably renting it through the rest of that term.

The company touts itself as a leader in West Coast “less than truckload” freight shipping, products or goods that don’t need a full trailer. It has a 250,000-square-foot warehouse and distribution center a mile away that’s fully available for lease and would be demolished and replaced with a slightly larger industrial project under plans on file with the city of San Leandro. It has 14 service centers providing overnight shipping services in California, Nevada and Arizona, according to its website.

The short time that the Halcyon Drive building spent on the market underscores the high demand for industrial properties in the East Bay amid a historically low amount of warehouse and distribution square footage being built there.

The region has about 21.5 million square feet of active tenant requirements compared with about 1.6 million square feet of industrial projects under construction, the Business Times reported, citing data from JLL. That imbalance seems set to last through the foreseeable future, as only about 5 million square feet of warehouses and distribution centers are on track to be built through 2024, the publication said.

Amazon made almost 1 million square feet of industrial properties available for sublease in the last quarter after spending the past few years steadily expanding its footprint across the Bay Area, the Business Times said. Most of that is in the East Bay, where it put a 507,000-square-foot building in Hayward on the market after failing to obtain occupancy permits, the publication said.

While Amazon intended to use the property as a last-mile delivery station, the city’s planning commission rejected its plans in March 2021. The project wouldn’t have generated any direct sales tax revenue and would’ve had a “significant” impact on the city’s roadway infrastructure, Hayward’s acting principal planner wrote in a report to the commission.

The company is also seeking tenants for the 136,800-square-foot structure next door to the one Dependable subleased. Its lease runs through May 2027, according to the property’s online marketing brochure.

[San Francisco Business Times] — Matthew Niksa