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Investors Are Targeting Smaller, Last Mile Warehouses

Surging demand has some developers struggling to keep up new warehouse supply in Atlanta.

Investors are taking aim at smaller industrial properties that cover the critical last mile that e-commerce firms need to make same-day delivery a reality.

These warehouses tend to be smaller, less efficient and older than bulk facilities, and until now they’ve largely sat idle on the market, CoStar reports. Cabot Properties recently sold $1B worth of these properties to DRA Advisors, and considering experts said the deal would not have been so hot a few years ago, it highlights the sector’s revival as rising prices for larger facilities make these properties more attractive.

Investors are racing to take advantage of the sector before rents rise to match those of more modern facilities, and they have good reason to hurry. Light industrial properties experienced 10.4% rent growth in Q4 2016 from a year before, much higher than the 6.4% rent growth across the industrial market as a whole.