In Preparation For Model 3, Tesla Inks Largest Warehouse Deal In San Francisco Bay Area History

7 months ago by Steven Loveday 37

Tesla’s Newest Acquistion at Oak Logistics Center, makes this reportedly the largest industrial deal of all time in the San Francisco Bay Area.

Tesla quietly acquired more warehouse space in the San Francisco Bay Area, about 20 miles from its Fremont Factory, in the immediate direction of travel toward the Tesla Gigafactory.

Tesla

Tesla’s New Warehouse Space

The massive deal is comprised of 1.3 million square feet of space over three different buildings. This space adds up to about one quarter of the size of Tesla’s Fremont factory.

The property is located in Livermore, at the Oak Logistics Center. Robert Ferraro, one the the property’s landlords, shared:

“It’s the largest East Bay industrial deal of all time that I know of. At least in the last 30 years.”

Tesla doesn’t have a reputation for making stingy, or mediocre choices. The company just raised $1.2 billion, which is about 20 percent more than it had planned. The property type and location were too good for Tesla to pass up, and reportedly, the Silicon Valley automaker beat out Amazon on the lease deal. Ferraro continued:

“It shows the huge demand for new designed buildings with all the bells and whistles. We call it flight to quality and the tenants are willing to pay above typical market rents to have the best quality buildings.”

Construction at the new site finished in June of 2016. It is part of a substantial $100 million development project, covering 72.6 acres of Class A industrial space. Tesla has previously signed a deal to lease two warehouses at the location, but now is adding the third, making them the sole lessee of the total property. The company leased buildings 1 and 3 prior to the project’s completion. Now the automaker has secured building 2.

Oak Logistics Center – Building 1

Oak Logistics Center – Building 3

Although neither party has committed to officially revealing the total cost, reports show that the lease costs about $6.84 per square foot, totaling $8.9 million per year.

Source: Bizjournals, Trammel Crow Company

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37 responses to "In Preparation For Model 3, Tesla Inks Largest Warehouse Deal In San Francisco Bay Area History"

  1. Kdawg says:

    Here’s a link to the property. They have a little video describing it.

    http://properties.cbre.us/livermore-oaks-logistics-center/index.html

  2. JyBicycle says:

    $6.89 is expensive has hell for a warehouse space.

    1. (⌐■_■) Trollnonymous says:

      I know right?!?!?!?!?

    2. Ocean Railroader says:

      Tesla should build a giant warehouse over one of their parking lots at their factory and move the parking into a underground parking deck or on the roof of the new warehouse to save money and space.

      The Bay Area is known for it’s over priced warehouse space.

      1. ijonjack says:

        Maybe someone got Greased really Good on the Side .. Musk should keep his Eyes Peeled & Check Everything Ten Times… Scammers are all around Us!…

    3. TL says:

      Actually, $6.89/SF is a good deal for new warehouse space outside of Silicon Valley… less than 0.57/SF/Month for the location.

  3. Spider-Dan says:

    “The company just raised $1.2 billion, which was nearly a million more than it had planned.”

    So they were only planning on raising $1.199 billion, then?

    1. SJC says:

      “..$1.2 billion, which is about 20 percent more than it had planned.”

      Livermore and Tracy both have LOTS of warehouse space.

      1. Spider-Dan says:

        Apparently the writer decided to update the post without listing a correction. Bad form.

        My quote was from the original version of the article.

  4. unlucky says:

    Whether it’s in the direction of travel of the Gigafactory depends on which route you are taking. It’s not on the immediate direction of travel on the shortest Interstate path to the gigafactory. Although since they also have some space in the central valley already they probably would drive this route instead of the other, slightly shorter one.

    The shortest route would go up to I-80.

    BTW, Faraday Future just cancelled their plans for a factory in Vallejo, which is on that other route.

    http://www.sfgate.com/business/article/Faraday-Future-pulls-plug-on-Vallejo-electric-car-11025990.php

    1. georgeS says:

      Seems like the route would be perfect to test a new Tesla semi truck!

    2. Pushmi-Pullyu says:

      The (more or less?) direct rail connection between the industrial park near Reno, and Fremont, was cited as one reason Tesla chose that location for the Gigafactory. Of course, they still need to put in a spur line to connect the Gigafactory to the railroad.

      So perhaps a better question about this warehouse space is this: How close are those warehouses to the local rail line?

      1. hpver says:

        It’s just off the 580 freeway. I didn’t see any rail lines in that area on Google maps. If recollection serves, there are a lot of hills in the area, which might limit heavy rail. Makes me wonder how they’ll handle transport and exactly what the facility will be used for.

      2. Paul Smith says:

        Maybe Musk will tunnel to it to avoid traffic.

    3. Spider-Dan says:

      On the subject of pedantic discussions of NorCal highways:

      I-80 doesn’t run through Fremont. The closest it gets is about 25 miles to the NW (Oakland); if you’re headed to the Gigafactory, I-80 is about 65 miles to the NE (Fairfield).

      As far as Livermore goes, if you’re leaving Fremont and you take I-680 N to I-580 E to Livermore, then continue east and take I-5 N to Sacramento (to rejoin I-80), it’s all of 7 miles longer than just taking I-680 N to Fairfield and I-80 E to Sac.

      tl;dr: It’s completely fair to describe Livermore as “on the way to the Gigafactory.”

      1. (⌐■_■) Trollnonymous says:

        There’s also the Lathrop facility.
        So it looks like they have a nice corridor for them in place.

        Taking any freeway through the bay area will suck @s$.

      2. unlucky says:

        I didn’t I say it wasn’t fair to call it on the route to the Gigafactory. Also, if you’re going to be pedantic, you shouldn’t forget I-205.

        And as I said, since they already have property in the central valley (Lathrop) they would surely take this route.

        As to Pushy’s comments about rail, the new warehouse is well under half a mile from the railroad. They would have to put in a spur, but not a long one.

        There is a railroad that goes from Fremont through to Livermore. However, it runs a very non-optimal path. It goes from the switching yard behind the Tesla plant through the park by Lake Elizabeth. It then turns and follows CA-84 (the narrow part) through Niles Canyon to Sunol, then turns north by I-580. It turns northeast through Pleasanton and turns east to go through Livermore. You can see the route on this map as it parallels the ACE commuter line essentially the whole way.

        http://www.acerail.com/Getting-You-There/Transit-Map/ACE_Transit_Map-1

        The Tesla plant isn’t on the purple line, but a bit past where the line goes through the Fremont station it enters Niles Canyon and then the lines would be parallel. The new warehouse would be near the “Vasco Road” spot. The one they already have in the Central Valley is near the Lathrop/Manteca spot. If you continued North of Stockton it would keep going up to Sacramento where you would turn into the mountains to go up to the Gigafactory in Reno.

        However, it’s not really an optimal route. It has a lot of elevation change for trains. Even loaded trucks have to slow down on the route from Fremont to Livermore. Normal freight trains going from Fremont to Reno would go up the East side of the bay to Oakland then go up the Sacramento River (by I-80) to Sacramento and avoid all elevation changes.

        I’m sure Tesla can make this route work, although it would require a real commitment to not using trucks because otherwise trucks would do it in far less time and taking a far shorter path due to no switchbacks and switching.

  5. Pushmi-Pullyu says:

    From AP Newswired:

    Friedmount, Californica — Telsa Inc.’s CEO Elong Muskrat said “TLSA shorters today are rejoicing. Telsa has recently acquired significant warehouse space in which to store all of Telsa’s excess production, which according to their long-running conspiracy theory, Telsa has been selling on a gray market and/or as fleet sales. Telsa’s addition of a new corporate sales website will also make their tinfoil hat babblings seem slightly less crazy the next time they repeat them.” Wall Street firm Morgan Livingston presumably has analysts, some of whom say that long-time investors in TLSA should sell their stock at fire-sale prices today!

    1. (⌐■_■) Trollnonymous says:

      Wait, it’s not April 1 yet!!!!

      LMAO

      1. Pushmi-Pullyu says:

        Thanks 🙂

        Right after I posted that, it occurred to me that it was too bad I couldn’t have waited 5 days for the perfect time to post it!

        Well, I’ll have to look for an excuse to re-post on that date. 🙂

  6. (⌐■_■) Trollnonymous says:

    Tesla should exit the bay area soon…….lol

    http://www.sfexaminer.com/robots-take-human-jobs-supervisor-kim-proposes-robot-tax/

    1. Ocean Railroader says:

      Honesty if I had my way that robot Tax would be universal and it would be used to fund universal health care.

      But in the scheme of things robots are extreamly highly productive so a tax unless it was a monster tax wouldn’t throw Tesla off a 300 foot tall rock wall.

      Besides they could always add a human tax credit pure human at the factory.

      1. (⌐■_■) Trollnonymous says:

        If I were a manufacturer and that popped up and taxed me, the first thing I would do is move the builds out of the country.

        Taxes and Labor rates are why they left country the first time.

        1. Ocean Railroader says:

          My solution would be to tax the living daylights out of imports if they do that. In that it’s been going on far to long for the Haves thinking they can get away from us American Workers by running over seas to get slave labor.

          1. unlucky says:

            If you do that, the other companies will tax everything the US exports.

            Plus look around your house, how much of your stuff is made in the US? Let alone made in the US from US parts?

            Laborers buy imported stuff too. Taxing imports would hurt them a lot.

          2. (⌐■_■) Trollnonymous says:

            Kind of like how GM is going to build the CT6 in China then ship them to the US?

            http://insideevs.com/general-motors-to-import-plug-in-hybrid-cadillac-ct6-from-china-to-sell-in-u-s/

  7. Roy_H says:

    I guess I don’t know the car business. What are they going to use this for? Parts? Half built gliders (frame, battery, motor)? Finished cars waiting for delivery? I thought the Fremont factory was huge with extra space. JIT manufacturing is common place and considered desirable because it eliminates the cost of large storage. New cars would be sent asap to their destinations if in USA (loading a ship might be a different situation, but this location doesn’t seem to fit that either).

    1. ItsNotAboutTheMoney says:

      It’s temporary storage for gaming the tax credit.

      They’re building hundreds of thousands of Model 3 right now, will sell their 199,999th car December 31st and then start shipping from the warehouse in massive quantities, thus being able to get a total of about 1.2M tax credits before they run out.

      1. Pushmi-Pullyu says:

        Wait a few days. It’s not April 1 yet.

      2. DJ says:

        That would maybe make sense if they just leased a huge parking lot right? No need to keep them all fancy and parked inside 😉

    2. Pushmi-Pullyu says:

      Roy_H said:

      “What are they going to use this for? Parts? Half built gliders (frame, battery, motor)?”

      Possibly various purposes. Tesla will be building the Model 3 powertrain at the Gigafactory and the gliders at Fremont, so they need some place to put the two together. Maybe that will be done at the Fremont assembly plant… and maybe elsewhere.

      Keep in mind that Tesla is scheduled to ramp up from ~76,000 cars per year to ~500,000 cars per year, supposedly over next couple of years. That’s going to take a lot more room, soon, for various things.

      Let’s also keep in mind that Tesla, unlike other auto makers, tries to keep as much of its parts and subassembly manufacturing in-house, and that includes suppliers setting up shop right inside the assembly plant. Since Tesla is in the process of greatly expanding its assembly lines’ capacity, they might well move some of the parts and subassembly manufacturing to this newly acquired space.

      “Finished cars waiting for delivery? I thought the Fremont factory was huge with extra space.”

      It was, before Tesla started installing the M3 assembly line(s). One report said that all the unused space was occupied with crates of machinery waiting to be installed on the new line(s).

      “JIT manufacturing is common place and considered desirable because it eliminates the cost of large storage. New cars would be sent asap to their destinations if in USA (loading a ship might be a different situation, but this location doesn’t seem to fit that either).”

      You can find lots of photos online of giant storage lots of new cars waiting to be shipped out. Those aren’t limited to ports. Some of those storage lots are near auto assembly plants. Snopes.com has an article on the subject (link below).

      But I question that Tesla will be stockpiling cars indoors. The cost of indoor storage for thousands of cars would be prohibitive.

      http://www.snopes.com/photos/automobiles/unsoldcars.asp

      1. unlucky says:

        Well, once the new lines are in place the crates won’t be outside in the parking lot anymore.

    3. Kdawg says:

      I think this is where they are going to put the roller coasters.

      1. philip d says:

        And the frozen yogurt buffet.

      2. ItsNotAboutTheMoney says:

        Maybe this is going to be the northern terminus for the SpaceX tunnel.

        1. ffbj says:

          Could be. I said that about a week ago.

          1. ffbj says:

            It was 4 days ago. Just in case you question the veracity of my statement:
            http://insideevs.com/tesla-model-3-75-kwh-range/