Timothy Kidd is a director at GRS Group. He can be reached at 323.853.0488 or via email at firstname.lastname@example.org
If there is any concern about decreased commercial real estate property values going forward, and a possible coming recession, it doesn’t seem to be that prevalent in the industrial sector. Major deals and potential transactions are making a splash so far in 2019.
Industrial Logistics Properties Trust, which went public last year, bought two portfolios in February for $905.3 million. One of the purchases is 18 industrial properties form Cole Office & Industrial REIT, while the other is a group of eight assets in the Cincinnati and Indianapolis areas. Amazon and FedEx are the largest tenants in the groups.
Not yet transacted as of writing this is the portfolio of Industrial Property Trust, which is reportedly valued at $3.5 billion and up for sale. Owned by Black Creek Group, IPT is made up of 240 warehouse properties. During its most recent quarter, the entity recorded just under $60.7 million, up from just under $56.7 million in the same year-ago period. NOI increased seven percent, rising to $44.7 million, but IPT recorded an overall net loss of just under $1.6 million, though it was less than the $5.5 million lost during the same three months a year ago.
The potential sale of IPT comes after half of industrial owner IDI Logistics was acquired by Oxford Properties Group for $1.7 billion late last year. The other half of the company, which owns 111 assets is owned by REIT Ivanhoe Cambridge.
These major deals come after industrial commercial real estate had a very strong year in 2018. A Cushman & Wakefield report (download here) on its fourth quarter found that leasing absorption reached a record high of 284.9 million square feet during 2018. Another record was its historic-low vacancy rate, coming in at 4.8 percent, which is well below a five-year average of six percent. Asking rents were at $6.14 per square foot at the end of the quarter, up from $5.84.
Meanwhile, there is plenty of construction on the horizon, and Cushman says that the market is not overbuilt, due to the continuing expansion of e-commerce and third-party logistics companies. There is currently 275.9 million square feet under construction, much of that speculative. Much of that growth is taking place in five key markets: California’s Inland Empire, Chicago, Dallas, Eastern Pennsylvania and Houston.
Cushman expects another good year for industrial, with secondary markets getting increased leasing and development traction and tenants looking to fill smaller urban spaces to fulfill “last-mile” distribution for same-day delivery.
About GRS Group
GRS Group is a leading provider of commercial real estate (“CRE”) services worldwide. With offices across the United States, Europe, and affiliates around the globe, GRS Group provides local market knowledge with a global perspective for institutional real estate investors, occupiers and lenders worldwide. The GRS Group team has evaluated and advised on over $1 trillion in CRE transactions.
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