Nathan VonGunten, Director
GRS Group
(330) 267-4405
[email protected]
It’s no secret that the industrial sector of commercial real estate is hot right now, so it doesn’t come as much of a surprise that some major mergers are happening in the space right now.
Blackstone’s Blackstone Real Estate Partners VII just purchased REIT Gramercy Property Trust for $7.6 billion. The deal gives it 81 million square feet of properties, most of them single tenant. This follows Blackstone’s January acquisition of Pure Industrial Real Estate for about $2 billion.
In April, Prologis, the largest industrial REIT, acquired DCT Industrial Trust for $8.4 billion. It added 71 million square feet to Prologis’ 683 million square feet.
Now there is speculation that some other big industrial firms could get snapped up. One analyst says to watch Duke Realty, Eastgroup, Liberty Property, Industrial Logistics, Monmouth Realty, Plymouth, Rexford Industrial, Select Income, Stag Industrial and Terreno Realty as potential targets.
One analyst interviewed by National Real Estate Investor said, other than industrial’s strong performance, REITs in the sector have gained investor interest because they are performing well in comparison to retail and office REITs.
Investors are now looking beyond portfolios and large-asset transactions and considering smaller industrial assets for purchase, properties that are 200,000 square feet or less, due to the sector’s popularity, a Cushman & Wakefield executive told GlobeSt. These are often in high-demand areas that are constrained by space and don’t have room for larger developments. Buyers are now also considering secondary markets beyond places such as California’s Inland Empire, New Jersey and other industrial-heavy locales, to fulfill their acquisition appetites.
At this rate, industry demand, at least development wise, is outpacing supply. This, coupled with the demand for faster distribution, has caused developers to look for land closer to city centers, and they are starting to build multi-level industrial projects. Prologis is building the first such U.S. development from the ground up in Seattle and has done similar work with several projects in Asia.
Industrial has been the number-one-ranked property sector in PwC’s “Emerging Trends in Real Estate” report for the last four years, with major demand due to e-commerce that have led to historically low vacancy rates. Returns have also been in the 12 percent range, heating up the transaction market during that time.
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.