Three months after starting construction on a nearly 160,000-square-foot warehouse in Hayward, Duke Realty has pre-leased the industrial building to the France-based global logistics and supply chain company CEVA, according to Kevin Hatcher at CBRE, who helped broker both sides of the deal.
As demand outpaces supply for industrial space, logistics and manufacturing companies are racing to scoop up limited inventory, according to a second-quarter report by JLL. Relief may not come soon as “headwinds persists especially as municipalities place more strict use restrictions on warehousing and distribution,” the report found. At the same time, prospective renters are seeking up to 6.2 million square feet of additional space in the East Bay market.
“Due to limited options, strong competition and use restrictions around logistics and ecommerce, corporate occupiers have limited options in the Bay Area,” the report said.
Asking rents have increased by 11.5 percent to $1.26 per square foot. According to the report, breaking ground on new construction will not happen until late 2023 or early 2024, which has driven up rent and increased pre-leasing activity in a tight market.
Duke is capitalizing on the demand and securing a tenant before construction is completed. The property is 157,725 square feet and is located at 24493 Clawiter Road. It has a 36-foot minimum clear height, 24 dock-high doors, 65 trailer parking stalls and 79 car spaces. The property is also in a central location within 40 minutes from 80 percent of the Bay Area market.
Duke also announced two other facilities will begin construction in May. One is a 303,000-square-foot development in San Jose and the other a 154,000-square-foot one in Richmond.
Earlier this year, Duke was acquired by San Francisco-based logistics specialist Prologis in an all-stock deal totalling in $24 billion, or $61.68 per Duke Realty share. With the deal, Prologis acquired more than 160 million square feet of industrial space across the U.S. Prologis currently controls 1 billion square feet of logistics space. The company said it will hold 94 percent of Duke’s portfolio and exit one market.
The acquisition was the most expensive in Prologis’ history. In 2020, the company bought Liberty Property Trust for about $13 billion. That deal included about 108 million square feet of logistics space, as well as 1,750 acres of land for future development and 5 million square feet of developments in progress.
In 2018, Prologis purchased DCT Industrial Trust for $8.5 billion, a deal that added 71 million square feet of industrial space to Prologis’ portfolio.
CBRE’s Hatcher was joined on the deal by Bob Ferraro, Michael Barry and Chris van Keulen from the CBRE Oakland office as listing agents for the property. Ferraro and Barry represented CEVA as well and were assisted by Brad Meyer, Daniela Neukam and Travis Price from CBRE Cincinnati, where CEVA maintains its U.S. headquarters.
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$26B Prologis-Duke deal ends cold war