3050 – 3080 S. Vallejo St.
Shallow Bay Light Industrial
16,912 sq ft, (6) small units 2,100 to 3,200 sq ft each, concrete, wing-t exterior
- Small-unit industrial is a good performing asset in economic downturns and stays fully occupied nearly all of the time.
- The building was purchased with a projected net annualized return of 10.42%.
- Purchased April of 2018 for $1,521,000 (no leverage utilized)
- The building only had 16,230 sq ft accounted for in the leases but was being taxed on 16,912 sq ft. This difference provides an opportunity to increase the leasable square footage.
- Leases in place are gross leases with significantly below market rates.
- 3 of the 7 units are up for renewal this year.
- We will stagger leases going forward to reduce a potential large amount of turnover.
- Another risk is tenant credit. We are trying to improve credit for each time a unit becomes available.
OUTLOOK & EXIT
- The property is trending towards the scenario of new tenants, which provides a projected annualized net return of 10.64%.
- We evicted one tenant and are building-out that unit.
- One other tenant gave notice. With current leases significantly below the market, having a new tenant sign will significantly increase the lease rates.