Retail to Industrial Conversion in Sacramento

An experienced commercial real estate lender, Peachtree Group originated a $20.5MM development loan for a retail to industrial conversion in Sacramento, California. The property is located in the infill Northgate submarket of Sacramento where there is no new land or new supply coming online and the existing industrial buildings have a market occupancy above 95%.

Peachtree's fully funded basis will be $131 PSF in a market where newer properties are trading for over $200 PSF and construction costs for new buildings are $180-190 PSF.

The Sponsor is a fully integrated real estate investment and development company headquartered in Los Angeles, CA that partners with institutional investors. They currently own and operate over $3 billion in total assets and specialize in developing and constructing mixed-use projects. The Sponsor currently has over 3,000 multifamily and build-to-rent residential units in development and over 1MM SF of commercial space in Sun Belt markets across the US.

The property is located in the Northgate submarket of Sacramento, considered one of the best industrial submarkets in all of California where rents are consistently increasing with submarket averaging near $11 per square foot with market occupancy above 95%.

The property is right off the exit from Interstate 80 which has an average daily volume of 144K vehicles.  The submarket offers interconnectivity to major ports, international airports, and overnight courier hubs.  With its proximity to Interstate 80 and Interstate 5, there is convenient travel throughout Northern California and into Reno.

The Sacramento International Airport (5.5 miles from the Property) returned to pre-pandemic levels, servicing nearly 12 million passengers. Passenger traffic is forecasted to increase by 4.3% annually through 2041. SMF’s $1.3B expansion project will increase efficiency and capacity in preparation for the region’s expected growth over the next decade.