Prologis is planning one of the largest industrial projects on the books for Oakland, California, where tenant demand has kept asking rents steady over the past year despite an influx of new properties coming online.
The San Francisco-based developer has proposed a 430,000-square-foot warehouse, the largest industrial project in the works for the city, according to CoStar data.
"Prologis is a long term owner and has multiple projects in Oakland," the developer said in an emailed statement to CoStar News. "As a member of the local business community, we will continue to do business in Oakland."
Prologis expects to ramp up property sales and acquisitions this year as executives bet that almost all its warehouse properties will remain leased and rents will keep rising in the face of economic uncertainty. The investor and developer owns more than 1.1 billion square feet of warehouses and other industrial buildings.
The nearly 29-acre property at 3600 Alameda Ave. is the former site of the Owens-Brockway glass recycling facility and currently holds several buildings totaling north of 1.1 million square feet pending demolition to make way for the proposed project, according to planning documents filed with the city.
“The Oakland industrial market has seen new deliveries in the last quarter, opening up more supply for a historically tight market,” said Bob Ferraro, an executive vice president at CBRE, in a statement to CoStar News. “Vacancy increased due to new supply, but asking rents remained stable as tenant demand picked up at the end of the year.”
The East Bay market got 2.4 million square feet of new supply in 2023 and another 1.3 million is expected in 2024, according to CoStar data. The influx of supply has raised the vacancy rate to 6.4% from 4.2% since 2022, though rents have also climbed 2% higher. The East Bay commands 40% more value on rents than the national average, according to CoStar.
Duke Realty purchased the Oakland property in 2021 and was planning its own redevelopment before Prologis picked up the plans as part of its $26 billion acquisition of Duke in 2022. The proposal is headed for a planning commission vote at the end of this month.
Prologis has been at the receiving end of the East Bay's tenant demand. The company secured the two largest new tenants in the market last quarter, according to a market report by Cushman & Wakefield, signing a 200,584-square-foot lease with Torani for its building at 1919 Williams St. in San Leandro and a 128,168-square-foot deal with Lansum International in Oakland at 650 85th Ave.
While some markets in California's Bay Area are attracting new types of industrial tenants like electric vehicle companies, Oakland is seeing the most demand from logistics tenants and third party fulfillment companies, according to CoStar data.
Elsewhere in the East Bay in Alameda, Prologis is nearing a deal to buy the former Raiders training facility with Oakland Pro Soccer for $24 million. The deal was approved by Oakland’s City Council last month and will head for a final vote at a Board of Supervisors meeting at the end of this month.
If the deal closes, Prologis will lease the site to the Oakland Roots and Oakland Soul soccer clubs for the near term, according to city filings. The site is zoned for commercial manufacturing, though, and Prologis could eventually redevelop it for industrial uses, according to media reports.
"Our boots-on-the-ground expertise allows us to be nimble and make strategic decisions that are good for our customers and the community," Prologis said in a statement.