Bridge Hires Transwestern Leader To Chase East Coast Industrial Acquisitions

Eight months after launching a new industrial division, Bridge Investment Group has hired Greg Boler away from Transwestern to lead its push to buy and develop distribution centers in Gateway markets along the East Coast.

Boler, formerly a partner with Transwestern Development Co., has been named the managing director of the Eastern region for Bridge Logistics Properties, an arm of Bridge Investment that launched soon after the commercial real estate company went public last year.

In an interview this week, Boler told Bisnow his new role will focus on what he described as infill locations in Gateway markets from Georgia to New Jersey, including redevelopments in places like Nashville, Atlanta, New Jersey, Pennsylvania and Baltimore.

During his six-year tenure at Transwestern's development arm, Boler helped to grow the firm's industrial portfolio from 700K SF to 7.1M SF and $1B in value across five states, he said.

“Development is the focus right now. It is very hard to acquire existing buildings because of the cap rate compression,” Boler said. “Fortunately, the rent growth is in a good place where you can do that now. Especially in the Southeast, where you couldn't do that before.”

Just before its July initial public offering, Bridge formed BLP, hiring two former Brookfield executives to head up the effort: Jay Cornforth and Brian Gagne.

Cornforth, a 25-year industry veteran, previously headed up Brookfield's global logistics platform and served as CEO of industrial development giant IDI while it was owned by the Canadian private equity giant. Under his tenure, Cornforth grew Brookfield's logistics platform to a 100M SF portfolio.

BLP currently has four offices, in New Jersey, Atlanta, Southern California and Dallas, with 25 CRE professionals on staff, Cornforth told Bisnow.

Bridge is best known for its suburban office pursuits, amassing 14.2M SF in properties throughout the U.S. The firm also controls 24,300 apartment units and 11,600 senior housing units. Bridge had roughly $28.7B in assets under management at the end of June, according to an August Securities and Exchange Commission filing.

While Cornforth and Boler declined to get into specifics on Bridge's industrial pipeline, the firm is positioned to spend more than $1B over the next year in acquisition and development with its joint venture arrangement with Townsend Group. Townsend, a global asset manager for pension funds and other institutional investors, deployed $400M into BLP last year, an amount that rises to $1.2B after leverage, Cornforth said.

Industrial real estate has become the belle of the ball of the commercial real estate sector this cycle, especially as the pandemic forced many consumers to shop online. Companies continue to reconfigure their logistics networks to better meet the demand for home delivery.

Cornforth said the runway for industrial remains lengthy, a reason why Bridge feels confident it isn't too late to take its first dive into the industry.

By 2023, absorption is expected to reach 885M SF, according to Cushman & Wakefield, even with Amazon's plans to scale back its own rampant warehouse growth. While developers are projected to deliver more than 930M SF of new warehouse space through 2023, the U.S. vacancy rate is expected to hover just above 4%, well below the 10-year average of 5.8%, according to Cushman & Wakefield.

“I still feel like we're early innings when you look at e-commerce penetration compared to other countries in the world,” Cornforth said. "That's a significant tailwind of demand."

As of the third quarter of 2021, e-commerce sales accounted for 13% of the $1.65T in total retail sales in the U.S. E-commerce as a percentage of total retail sales in China is expected to reach 55.6% this year, according to a 2020 estimate by eMarketer. E-commerce retail sales in the United Kingdom now account for 36% of all retail sales, according to the International Trade Administration.

Companies also continue to secure extra storage space in the U.S. to compensate for their lean just-in-time inventory methods amid the supply chain crisis, which is fueling demand in the near term, Cornforth said. These fundamentals have contributed to a feeding frenzy among investors.

“Industrial remains an under-allocated asset class for many institutional investors,” he said.

Most large investors especially want a big capital outlay in a portfolio, a goal that is typically achieved by purchasing a bulk of distribution centers at one time. Blackstone, for instance, paid $2.8B for a 17.5M U.S. portfolio from Cabot Properties in November, and CBRE Investment paid nearly $5B last month to acquire a 28M SF global logistics portfolio from Hillwood Investment Properties.

While the overall industrial development pipeline is expected to be robust, Boler said new industrial projects are increasingly becoming a challenge to start as municipalities look to block development. Counties and cities that previously welcomed big-box industrial development are balking at new projects, Boler said, mainly due to the extra truck traffic being dumped on roads.

“Folks are now saying, 'OK. We think we're good. We have enough warehouses,” Boler said. “That allows the additional barrier to entry. As that is being curbed because it's harder to develop now, it allows the existing product to push on rents.”