In one of the largest industrial real estate transactions in history, CBRE Investment Management, an independently operated affiliate of CBRE Group, the world’s biggest commercial real estate company, is buying up a $4.9 billion portfolio of logistics properties from Hillwood Investment Properties, a real estate business founded by Ross Perot Jr.
The portfolio, which a CBRE Investment spokeswoman told FreightWaves “includes a combination of existing assets and development projects,” comprises more than 57 real estate properties and over 28 million square feet of warehouse space — about 19 million of them are in the U.S., with the rest located in Germany, Poland and the U.K. CBRE expects to close on the assets in stages.
“This milestone transaction reflects our ability to leverage the strong financial capacity of our parent company to secure compelling opportunities that help to drive strategic real estate assets solutions for our clients,” said Chuck Leitner, CEO of CBRE Investment, in a press release.
The age of fulfillment and distribution centers is upon us, and warehousing space is at a premium. Real estate services company JLL estimates that the U.S. will add another billion-plus square feet of warehouse space by 2025. Even Amazon, which by warehousing standards is about as rich as they come, is in desperate need of more space.
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With e-commerce volume and supply chain disruptions showing no signs of slowing in 2022, CBRE (NYSE: CBRE) is one of several industrial real estate investors making a bid on U.S. and global retailers’ reliance on warehouses and distribution centers to enable quicker and more reliable fulfillment.
“It’s made the price of real estate close to the consumer to be more worth it,” Leitner told The Wall Street Journal.
For example, last month another investment management company, New York City-based Blackstone Inc., acquired a $2.8 billion portfolio comprising 17.4 million square feet of warehouse space.
That’s because there are plenty of buyers for those properties right now, the most obvious ones being Amazon and Walmart. Leitner told The Washington Post that CBRE Investment Management, formerly CBRE Global Investors, is fond of the Hillwood portfolio because of how close its properties are to areas with large labor forces, advanced transportation systems and lots of consumers, all of which are attractive to retailers looking to boost their fulfillment capabilities and drive e-commerce sales.
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CBRE Investment is betting that those features will remain attractive for a long time. It established a new global logistics unit in June and within three months more than a quarter of its more than $130 billion total assets under management were logistics and industrial properties.
“Backed by a $35 billion [assets under management] global logistics platform and a skilled team with deep domain expertise, we are positioned to be one of the world’s leading investors and operators of logistics assets,” Leitner said.
For comparison, industry leader Prologis has a total of about $72 billion in logistics real estate assets with 684 million square feet of space in more than 3,000 facilities.
Another competitor, New York-based BEB Capital, also announced on Tuesday a new joint venture with real estate private equity firm Rockpoint Group that will target investments toward $1 billion worth of industrial properties in the Northeast U.S. So far, that partnership has amassed almost 660,000 square feet of industrial assets.
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