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- Terreno paid $25.9M for a 65,000-sq-ft industrial building at 201-395 Mendell Street in San Francisco's India Basin neighborhood.
- The property is 100% leased to four tenants through May 2031, with an estimated stabilized cap rate of 5.5%.
- The deal deepens Terreno's footprint in supply-constrained coastal markets where new industrial supply is structurally limited.
Terreno Realty acquires a 65,000-sq-ft San Francisco industrial property for $25.9M, fully leased through 2031 at a 5.5% stabilized cap rate.
Lead
Terreno Realty Corporation closed the acquisition of the India Basin Commerce Center at 201-395 Mendell Street in San Francisco, California on June 4, 2026, paying approximately $25.9 million for a 65,000-square-foot fully leased industrial property — the latest transaction in the company's systematic build-out of its San Francisco real estate portfolio.What Happened
The acquired asset is a single-building industrial distribution facility constructed in 1979 and situated on 3.8 acres in San Francisco's southeastern India Basin district. The structure provides 17 dock-high and 10 grade-level loading positions — a configuration well-suited to last-mile delivery and urban logistics — along with parking for 95 vehicles.
Four tenants occupy the entire 65,000 square feet, with all leases running through May 2031, providing immediate and stable income from the close of the transaction. Terreno Realty placed the estimated stabilized cap rate at 5.5%. In-place rents at the property are indicated between $2.20 and $2.25 per square foot per month, above the broader San Francisco industrial average asking rate of $1.82 per square foot recorded in the first quarter of 2026.
Strategic Context
The Mendell Street acquisition fits directly within Terreno Realty's long-established playbook: acquiring infill industrial property in six major U.S. coastal markets where land scarcity and urban density limit competing new supply. The company's target markets — Los Angeles, Northern New Jersey/New York City, the San Francisco Bay Area, Seattle, Miami, and Washington, D.C. — share the characteristic that industrial development pipelines remain thin relative to tenant demand.
As of late 2025, Terreno owned 307 buildings totaling approximately 20.2 million square feet, complemented by 44 improved land parcels covering roughly 146 acres and six properties under active development or redevelopment. The India Basin transaction adds to a portfolio already anchored in the Bay Area, where Terreno has established operational depth and local market relationships.
San Francisco's industrial vacancy rate stood at 8.3% in the first quarter of 2026, with net absorption turning positive at 155,156 square feet — signaling recovering occupier demand in a market that saw some softening during the broader technology sector slowdown of the mid-2020s. The city's geography — bounded by water on three sides — makes meaningful industrial land addition structurally implausible, reinforcing the asset-scarcity logic underpinning the acquisition.
Financial Position and Market Reaction
Terreno Realty Corporation (NYSE: TRNO) carries a market capitalization of approximately $6.8 billion. Shares have traded within a 52-week range of $53.00 to $67.55, reflecting sustained investor confidence in the company's coastal industrial strategy. The $25.9 million transaction is modest relative to the scale of Terreno's overall portfolio, but consistent with its preference for stabilized acquisitions — fully leased assets that deliver immediate cash flow without lease-up execution risk.The multi-tenant structure at India Basin Commerce Center distributes income concentration across four occupants, while the synchronized 2031 lease expiration schedule gives the company a defined horizon for potential repositioning or re-leasing at market rates.
Outlook
Terreno Realty's India Basin deal affirms continued institutional conviction in San Francisco real estate as a durable industrial property investment market, separate from the challenges that have weighed on the city's office sector. With Bay Area industrial vacancy below 10% and absorption posting positive readings through early 2026, the 5.5% cap rate on the Mendell Street asset reflects competitive but defensible pricing. Terreno's established presence across all six target coastal markets positions the company to capitalize on further infill acquisition opportunities as they arise. Mentioned tickers: TRNOStrategy
