520 E. Todd Road — Industrial Sale & 1031 Exchange into a Black Bear Diner
After 25 years operating at the property, the owner had to choose between leasing it out or selling and reinvesting. Leasing looked attractive on the surface but carried unknown improvement costs, frontage upgrades and lease-up risk in a softening market. We sold at peak-market pricing to a buyer who valued the yard, and exchanged the equity into a net-leased Black Bear Diner in Napa.
The Challenge
The owner had operated at 520 E. Todd Road for more than 25 years and was weighing the long-term plan for the asset: lease it to a new tenant, or sell and reinvest the equity.
Leasing looked attractive given historical demand in Santa Rosa's Southpoint industrial corridor. A deeper underwriting pass told a different story.
A lease-up would likely have required:
- Significant building and site improvements
- Potential City of Santa Rosa frontage upgrades, including sidewalks and curbs
- Leasing commissions and tenant-improvement costs
- Extended marketing and lease-up timelines
- Ongoing landlord responsibilities and property management
Those unknown costs made the income projection uncertain, the North Bay industrial market was beginning to soften, and the owner — approaching retirement — wanted stable income with minimal management.
The Action
We concluded the highest-value strategy was to sell and execute a 1031 exchange into a stabilized net-leased property.
Before going to market we identified what actually drove the property's value. Buyers tend to focus on building square footage; the real advantage here was the combination of warehouse, office improvements and a large, functional yard.
The attributes we led with:
- A fully fenced and secured yard
- Extensive yard space for industrial operations
- A fully lit site with existing infrastructure
- Zoning that allowed a wide range of industrial and service users
Where maximum building coverage narrows a property's audience, the extra yard widened it — contractors, logistics companies and service operators who need outdoor storage and staging. Even in a cooling market we found a buyer who had been actively searching for exactly that, and negotiated a peak-market price. In parallel, we sourced a replacement property aligned with the owner's retirement goals: a nationally branded Black Bear Diner in Napa.
The Result
A locally operated industrial property became a passive investment with zero landlord responsibilities.
Key outcomes:
- Sale of 520 E. Todd Road at strong market pricing
- A completed 1031 tax-deferred exchange
- Acquisition of a Black Bear Diner property in Napa
- A 10-year triple-net lease with an established national restaurant operator
Compared with the leasing scenario, the exchange produced higher annual income, no maintenance responsibilities, lower operational risk and long-term income backed by a national brand. The former owners are now retired and traveling full-time on the income from the net-leased property.
Other case studies
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