Construction has begun for an industrial building on 20 acres located at 22801 East 8th Street East in the county of Sonoma, according to sources familiar with the project. The all-in development costs of the project are around $125 per square foot or $31.25 million.

McNeill Real Estate Services is the developer on this project. Its capital partner on the project is a limited liability company managed by Seattle-based Washington Capital Management, Inc. on behalf of its clients.

All of the 250,000 square feet in the project will be developed as distribution warehouse in a single building. The office component in the project could be up to 30,000 square feet. The plan is to have the property leased to a single tenant, which will likely be to a wine industry related tenant or supplier. The leasing efforts on the project will be done by Cushman & Wakefield. One of the listing agents is Steve Leonard, a managing director in the Larkspur office.

Construction on the project was started this week. The expectation is that the project should be completed by the end of the third quarter next year. Devcon Construction is the general contractor with RMW as the architect and Adobe Associates as the civil engineer.

In the county of Sonoma, the market for industrial space remains very tight. Current vacancy is less than 2.5 percent. A main reason for this is a lack of new development happening in the marketplace. The project on East 8th Street East will represent one of the first projects to be constructed over a 10-year period.

This project in Sonoma County will represent the third industrial development that the McNeill Real Estate has been involved with in the past few years. One of these projects was the development of the 250,000 square foot Cader Commerce Center in Petaluma. The other was the 305,000 square foot Greenwood Commerce Center in Napa. Both of these properties were developed with capital coming from the New York Life Real Estate Investors. The asset in Napa has been sold to San Diego-based IDS Real Estate Group for around $30 million.