Twelve months into a cold storage conversion in Stockton and the first tenant just signed

Seven year NNN with 3% bumps on a cold storage asset in Stockton is genuinely hard to replicate right now.

Carry on a vacant cold storage shell in Stockton was brutal in 2023-2024, ammonia liability alone was probably killing your insurance line. What were you running monthly on that? We had a 22,000 sf refrigerated box in Modesto sit six months and the carry was north of $28k/month once you folded in the specialty coverage.

The one thing I have never seen work is underwriting an ammonia system retrofit off a contractor's phase one estimate without getting a mechanical engineer to scope the compressor room independently first. Every single time the compressor room is "fine" until it isn't, and you end up exactly where you ended up, $680k over because nobody priced the rebuild before close. That number is not unusual, I coordinated a cold storage deal in Modesto in 2022 where the mechanical overage alone was $590k on a similar vintage shell.

The $0.72 NNN in Stockton on a seven year is solid given where the market was sitting through most of 2023 and into early 2024. What I would be watching right now is whether your lease has a co-tenancy or exclusivity clause buried in there, because regional produce distributors sometimes try to slip in exclusivity on refrigerated dock access that can complicate your options if you ever carve out a second tenant in a future phase. I have seen that kill a refinance when the lender's counsel flagged it eighteen months after signing and the borrower had no idea it was in the document.