Sonoma County rides construction wave: American AgCredit HQ, Graton casino hotel, two big warehouses

Sonoma County is riding a wave of private construction activity, from a big, ultramodern lender headquarters to a $175 million '4.5-star' casino hotel to sizable warehouse projects for a space-hungry market.

The new 120,000-square-foot headquarters for American AgCredit and local agricultural nonprofits makes a striking statement at the entrance to the business parks on the road to Charles M. Schulz–Sonoma County Airport.

The three-story building at 400 Aviation Blvd. north of Santa Rosa is one of the most ambitious projects undertaken to date by TLCD Architecture, according to Don Tomasi, principal of the Santa Rosa-based firm and a speaker at the Business Journal's Construction Conference on May 18. General contractor Jim Murphy & Associates, also of Santa Rosa, started construction in December 2014.

Another striking statement of the lender's ties to the soil, is a large rammed-earth feature wall in the lobby. The wall was constructed at the beginning of the project, and the two bent-angle steel-and-glass sections of the building was constructed around it. Such a wall is made by putting varying types of soil in a form with a binding agent, then tamping, or ramming, the soil down.

Combined with the glazed and metal exterior of the building are perforated reddish-brown-colored zinc panels. Besides providing a modern yet earthy look, the panels are designed to shade the interior of the building from sunlight, thus dramatically reducing energy costs for cooling.

The building is full of modernesque features. Many of the floors are raised, allowing ducts and cabling to be routed underneath. A number of interior walls are movable partitions, giving the lending institution flexibility to reshape the interior quickly. Connecting the semicircular portions of the split building on the second floor are skybridges with channeled-glass walls, allowing diffused views of the outside and the interior courtyard.

CADER CORPORATE CENTER and VICTORY STATION

Sonoma County faces a future with not enough space for businesses to produce, store and ship products, because of an eight-year lack of significant construction, according to a developer of two such projects.

Jose McNeill III of Fairfield-based McNeill Real Estate Services is leading development of two warehouse projects with nearly 300,000 square feet each. He spoke at the conference about the Cader Corporate Center project in Petaluma and the Victory Station project south of Sonoma.

The just-over-19-acre Victory Station property at 22801 Eighth St. E. at the northwest corner of Highway 12 and Eighth Street East south sold to a group led by McNeill. VSP LLC bought the land from Sonoma Valley Business Park LLC for nearly $4 million on April 29.

'This is the last great industrial site in Sonoma County,' McNeill told conference-goers about Victory Station. He noted that land to build industrial space is still available at Westwind Business Park near Charles M. Schulz–Sonoma County Airport north of Santa Rosa.

After the financial-system crunch of 2008, much entitlement of land for construction in California stopped, McNeill noted. Community concerns over environmental and traffic impact can make such entitlements in the North Bay take as long as a decade. Investors often want a shorter timeframe for returns, so entitled land and existing buildings have become the focus.

'There's not a lot of patient capital that is willing to wait that long,' McNeill said.

The estimated $32 million Victory Station project would have about 260,000 square feet of warehouse space in a concrete tiltup structure with 25 truck-dock doors and some office space. Washington Capital Management has brought in investors to back the project.

Wine-focused Scott Laboratories and dairy producer Clover-Stornetta Farms in late January signed 10-year leases for 58 percent of the 259,600-square-foot Cader Corporate Center project just off Lakeville Highway in south Petaluma.

McNeill is developing the project for New York Life Real Estate Investors and McMorgan & Company, managers of a $150 million construction trade pension fund that owns the property. That fund also built a 226,000-square-foot warehouse for Windsor's Pack n' Ship Direct at Greenwood Business Park last year.

Project general contractor Devcon Construction of San Jose broke ground on the Cader project in early February, and building is scheduled to be complete in late September or early October, according to Ross Berry, senior director in the San Francisco office of New York Life Real Estate Investors, which is co-managing the project for owner MNCVAD-Ind Petaluma CA LLC.

There are 110,000 square feet left to fill, but local real estate experts, but serious lease discussions are underway for much of that.

GRATON RESORT & CASINO HOTEL

Instead of a decade to complete, the $175 million, 342,000-square-foot addition to Graton Resort & Casino in Rohnert Park is expected to be done by year-end, roughly 14 months from the start of construction, according to conference speaker Joe Hasson, general manager. The project reached the half-way point with a topping off ceremony April 26.

But really, the project is part of a master plan that property owner Federated Indians of Graton Rancheria started more than 10 years ago, he said. Though the tribe's sovereignty makes it different from other North Bay developers, it has taken steps and made agreements other project owners don't, such as paying $13 million a year to Rohnert Park and county of Sonoma for services and paying fees to the state.

Also keeping the project on track is Las Vegas-based Red Rock Resorts, formerly Stations Casinos, which owns 17 casinos in Vegas and manages two, one in Michigan and Graton, Hasson said.

Hasson was asked to comment on the financial health of the resort and casino. He noted that millions in annual contributions are being made to both the county of Sonoma and the city of Rohnert Park. And he compared the proforma earnings of MGM's Mandalay Bay resort at about $38 million with the last reported public filing in 2014 on a note, since paid off, showing upwards of $55 million in earnings before interest, taxes, depreciation and amortization, or EBITDA.

'We're doing better than that,' Hasson said.

He called the hotel quality '4.5 stars.' Certainly, a lot is going into the 200-room addition. The construction cost for the hotel, amenities and new meeting center works out to $875,000 per room, Hasson said.

A significant reason for building the hotel is to expand the reach of the resort, Hasson said. Right now, visitors largely are coming from the Bay Area and Monterey Peninsula, and the resort is booking select guests in rooms at hotels around Sonoma County.

'We're too far removed from SFO to be national or international,' he said. 'Once we have a hotel, we will get more of those.'

The hotel will have its own entrance, as well as one from the casino, plus 20,000 square feet of event space, with the ability to seat 1,500 to 2,000 for events and concerts. The current events center in the casino building has 9,000 square feet.