3300 Industrial Drive — Tesla Build-to-Suit
A vacant industrial parcel that had sat idle for over twenty years — entitlement costs made traditional development infeasible. We identified that neighboring 3286 Airway Drive (leased to Tesla) needed additional parking to satisfy City sales-permit requirements, and structured a tenant-funded build-to-suit that turned a no-income lot into a stabilized asset.
The Challenge
3300 Industrial Drive was a vacant industrial parcel in Santa Rosa's primary industrial corridor that had remained undeveloped for more than twenty years. The owner had always intended to build for his own operations, but every attempt to move forward ran into the City of Santa Rosa entitlement and permitting process.
When the development requirements were fully priced, the budget made the proposed building financially infeasible. Like many industrial landowners in Northern California, the owner was caught between entitlement costs that made traditional development uneconomical and a slow municipal approval process that delayed any viable project — while the land generated no income.
The requirements that broke the budget:
- Public sidewalk improvements
- Street lighting and frontage work
- Bio-swales and stormwater infrastructure
- Site grading and drainage engineering
- Landscape and site material requirements
The Action
The opportunity came from next door. 3286 Airway Drive, leased to Tesla, needed additional parking to satisfy the City sales-permit requirements that would let Tesla expand vehicle sales tied to its existing service facility.
We opened discussions with the owner of 3300 Industrial Drive about a build-to-suit parking facility leased to a national tenant. He had been approached by brokers for years and had never seen a scenario that justified the development cost. After multiple conversations and a detailed underwriting analysis, we presented a structure in which the tenant funded the majority of the site improvements through the lease, producing stable long-term cash flow for the owner.
Making the numbers work required:
- Structuring a build-to-suit development for Tesla
- Accounting for all civil engineering, grading, paving and site infrastructure costs
- Negotiating a lease that let the owner recover development costs through rental income
- Aligning the construction timeline with Tesla's operational requirements and City approvals
Negotiations nearly stalled on pricing. Because the location was strategically important to the tenant, we were able to renegotiate terms into a structure that worked for both parties.
The Result
The final transaction was a 10-year triple-net lease with Tesla, giving the owner a stabilized, income-producing asset on land that had never produced revenue.
Key outcomes:
- A build-to-suit parking facility supporting Tesla's Santa Rosa operations
- A 10-year NNN lease with a national credit tenant
- Approximately 7% annual cash flow on the completed project
- Full recovery of development costs through the lease
Just as important, the tenant-funded development completed all major site improvements and entitlements. If the tenant ever vacates, the owner keeps a fully entitled, improved industrial parcel ready for vertical construction at a significantly reduced cost.
The lease took the property from an underutilized lot valued at roughly $800,000 to a stabilized investment asset worth approximately $3,000,000 more on execution — a case of tenant-driven development unlocking value that conventional development could not.
Other case studies
3286 Airway Drive — Industrial Conversion & National Tenant Lease
A warehouse shell marketed as retail sat unsold for months in one of Sonoma County's most active industrial corridors. The property was zoned Light Industrial and surrounded by logistics and service users, but it was priced and marketed to a retail tenant pool that barely existed there. We underwrote it as an industrial investment instead, acquired it below market for an investor client, and repositioned it — ultimately securing a 10-year NNN lease with Tesla.
Read the full case study →3310 Industrial Drive — Distressed Redevelopment
A former cannabis facility, partially demolished and generating no cash flow for years, with out-of-state owners who could no longer manage it — sold into a softening industrial market. Rather than a traditional sale, we targeted experienced developers and value-add investors and procured an offer from a developer already working with a national build-to-suit tenant.
Read the full case study →400 Tesconi Circle — Industrial Lease-Up & Long-Term NNN Tenant
An owner who had outgrown a small industrial building with a large yard wanted to keep it as an investment rather than sell — which meant landing a quality tenant on a long lease in a slowing market, while still moving out. We marketed early, found the one tenant whose unusual requirement matched the site, and structured a 10-year NNN lease that started above market.
Read the full case study →