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Supply-chain troubles assist Prologis on latest industrial lease in Oakland
TireHub locks down third warehouse in East Bay, sees bigger inventory as hedge against rising costs
A trio of big names came together to offer another example of the East Bay’s industrial sector remaining hot amid signs that the overall real estate market and economy are cooling–with an assist to recent snags in the supply chain.
Industrial giant Prologis has leased a 60,000-square-foot industrial center it recently redeveloped in Oakland to a distribution operation co-founded by the Goodyear Tire & Rubber Company and Bridgestone Americas Inc.
The building sits on nearly three acres and will be used as a warehouse.
Ongoing bottlenecks have pinched supply chains across industries during the pandemic, prompting some companies such as TireHub to lock into warehouse facilities. The strategy calls for holding more inventory as a hedge against rising costs of shipping and gaps in production or deliveries.
TireHub signed a 10-year lease on the location, a deal that starts in October 2022. It is the tire distributor’s third facility in the East Bay, joining locations in Hayward and Benicia.
San Francisco-based Prologis purchased the facility located at 6345 Coliseum Way in 2016 for $4.2 million. Details on the cost of its redevelopment were not disclosed.
This acquisition comes on the heels of an approval for a 60,000 square-foot industrial development being planned in Livermore.
Demand for industrial space has remained high throughout the pandemic and continues into 2022. Warehouse and distribution space has been particularly hard to come by in the East Bay, as longer timelines to approve permits has not allowed supply to catch up to demand.
According to a Q2 report by CBRE, which represented Prologis in the Oakland lease, industrial real estate is expected to remain well positioned even if the current economic headwinds continue in the East Bay.
https://www.cbre.com/insights/briefs/thriving-us-industrial-market-well-positioned-to-withstand-economic-headwinds
Leasing activity year-to-date through April is up by 7 percent from the same period in 2021, led by distribution operations. Total leasing volume for the full year is expected to be the second strongest on record.
“Taking rental rates were up by 16 percent year-over-year in Q1 2022,” said the report. “Landlords are expected to further raise rents in undersupplied markets, passing on increased debt service and other costs to their tenants.”