'Unprecedented' – vacant US warehouse space near zero and rents soaring
With space in short supply and rents continuing to rise, US companies in need of ...
Property giants are scooping up logistics portfolios in anticipation of continuing clamour for warehouse capacity in a booming market fuelled by e-commerce.
CBRE Group, the world’s biggest industrial real estate player, is leading the charge with the $4.9bn acquisition of the logistics portfolio of Hillwood Investment Properties.
The move, announced on Tuesday, was described as one of the largest industrial real estate transactions in history.
It comprises 57 properties and development projects, with over 2.6 million square metres of warehouse space. The lion’s share of this capacity – 1.76m sq metres – is in the US, the rest in the UK, Germany and Poland.
On the same day this week, New York-based BEB Capital announced a joint-venture with real estate private equity firm Rockpoint Group. They intend to spend up to $1bn on industrial properties in the north-eastern US.
And on 1 December, investment management firm Blackstone Group expanded its logistics footprint with the purchase of 124 logistics properties for $2.8bn from Cabot Properties.
Blackstone, which has a diversified investment portfolio, bought 102 logistics properties in the US – a total footprint of 1.41 million sq metres – and in a separate transaction with Cabot, acquired 22 properties in Europe, adding another 205,000 sq metres.
“The logistics sector continues to benefit from strong tailwinds driven by e-commerce,” said David Levine, senior MD of Blackstone.
The e-commerce sector has also fuelled a frantic acquisition spree of final-mile logistics facilities by logistics real estate operator Realterm.
Following the purchase of two, in Atlanta in mid-December, it bought an 18,580 sq metre warehouse in Denver on Wednesdau this week, and four more properties the following day. Located in Kentucky, Michigan and Illinois, this latest quartet of final-mile warehouse acquisitions adds over 50,260 sq metres of space to Realterm’s rapidly expanding footprint.
And more consolidation in the warehouse sector is likely: according to a report published last year by commercial real estate firm JLL, demand for warehouse space in the US has gone up 22% year on year, with vacancy rates dropping to historic lows.
CBRE is very upbeat on the outlook for the sector in 2022. Pointing to economic recovery and the impact of stimulus projects, it has predicted US GDP to grow 4.6% this year, which it expects to translate into a banner year for investment in commercial real estate. Investment volume should rise between 5% and 10%, its analysts estimate in the company’s 2022 US Real Estate Outlook, published last month.
For the industrial and logistics sector, they predict “another banner year, propelled by e-commerce growth and retailers storing more inventory as a hedge against supply chain disruptions”. CBRE underscored its bullishness over the logistics arena last June by establishing a global logistics unit.
According to JLL, the market has some way to go before a downturn. It estimates that over 93 million sq metres of warehouse space will be added in the US by 2025.