Real Estate Roundup is a weekly rundown of developments in the world of industrial real estate used for logistics and transportation. This week: Prologis, Brookfield and Greek Development aggressively pursue industrial real estate development.
The COVID-19 pandemic has unquestionably had a negative impact on various facets of the economy, from the pace of new job creation to the value of hotels and retail stores.
What doesn’t seem to have slowed much is the appetite of large real estate investment trusts to gobble up industrial properties and build new ones.
Prologis Inc. (NYSE: PLD), the San Francisco-based real estate investment trust, in September acquired a 70,000-square-foot warehouse in Chicago’s Near West Side district for $12 million, according to Crain’s. Based on the warehouse’s location near the Fulton Market District, Prologis may convert the facility to last-mile warehouse space.
Just south of the Near West Side property, the McKinley Park and Bridgeport neighborhoods of Chicago also have recently drawn interest from last-mile warehouse developers. Logistics Property Co. is building a 138,000-square-foot urban distribution center in the area.
Also in Chicago, Brookfield Properties this summer acquired a 220,000-square-foot industrial facility that’s leased to a transportation and logistics services company, according to a media report. Brookfield described the property as a last-mile facility with good access to the Chicago market.
That deal followed a transaction that Brookfield closed earlier this summer in Southern California. Brookfield paid $64 million to buy two industrial warehouses in Carson from an electrical conduit manufacturing company, according to Real Deal.
In suburban Philadelphia, Advance Realty Investors and Greek Development (named for CEO Frank Greek) have partnered to build Logan North Industrial Park. The 415-acre site, located in Logan Township, New Jersey, will feature more than 3 million square feet of Class A warehouse and distribution space with close access to transportation infrastructure and large Northeastern U.S. markets.
Advance and Greek have partnered on other projects in the region, including the 4.1 million-square-foot Linden Logistics Center in northern New Jersey.
In Denver, the private real estate investor Brennan Investment Group this month acquired a 147,000-square-foot facility located at the intersection of Interstate 70 and Interstate 225. Brennan purchased the facility from BlueLinx, a distributor of building products, and leased the building back to the company.
Blackstone, one of the world’s largest private equity funds, in August bought a total of eight industrial properties in metro Miami, according to Real Deal. Blackstone paid $93.5 million to buy the portfolio from Elion Partners.
In Seattle, CenterPoint Properties acquired a 276,000-square-foot industrial property in Kent, Washington, for $44.5 million. The warehouse had been owned by document-management company Iron Mountain. The facility is located near two Amazon fulfillment centers and Boeing Industrial Park.
Finally, the ultimate fate of surplus retail real estate also indicates the value placed on industrial warehouses and distribution centers. Retailers, faced with an unprecedented drop in foot traffic, find themselves with millions of square feet they can’t use.
While there are myriad legal considerations for making this change, according to the law firm Goulston & Storrs, some retailers are seeking to convert empty buildings into warehouses and distribution facilities. The location of some empty malls in areas with high levels of automobile traffic could give e-commerce providers a leg up in the last-mile wars.
Still, retailers probably shouldn’t get too excited that warehouse conversions will be the answer to their problems. Prologis last month estimated that retail conversions will likely be difficult to accomplish and that far less space will be converted than some have predicted.
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