Industrial has had a good run as a top real estate investment target, especially in major markets, and the sector is still drawing strong interest among investors. Illustrating the point are two recent sizable industrial portfolio deals totaling 15.2M SF.

Broadstone Net Lease, a division of Broadstone Real Estate, has acquired a portfolio of 23 industrial and office/flex assets for about $735.7M, and AEW Capital Management and the Blackstone Group have each acquired part of a 96-property industrial portfolio for a total of just over $1B.

The Broadstone deal includes about 6.9M SF, with an average remaining lease term of 11.5 years, with average annual rent increases of about 2.2%. The portfolio is occupied by 19 different tenants in 14 states and British Columbia, and has a mix of warehouse, distribution, manufacturing, cold storage and office/flex assets. The seller in the transaction remained private.

The deal brings Rochester, New York-based Broadstone's industrial holdings to 688 properties totaling about 27.2M SF — the property type will now represent roughly 41% of its holdings, more than any other. Other major property types for the REIT are retail (27%) and healthcare (18%).

In the other recent transaction, TA Realty, on behalf of one of its closed-end funds, sold an 8.3M SF logistics portfolio to two separate buyers for $1.04B. AEW Capital Management snapped up 28 Texas properties, while funds managed by the Blackstone Group acquired 68 assets across 10 metros in the U.S. The TA Realty portfolio has more than 325 tenants and is about 91% occupied.

Blackstone cited e-commerce as a driver of its interest in industrial.

“Logistics remains our highest conviction investment theme,” Head of Real Estate Americas Nadeem Meghj said in a statement. “The portfolio we are acquiring from TA Realty is another example of last-mile logistics assets that will help meet the growing e-commerce demand.”

The deals come within a broader context of demand for industrial space, especially driven by e-commerce companies, but also food and beverage and home improvement companies, according to CBRE's second quarter 2019 report on the U.S. industrial market.

The demand exists despite concerns over global trade tensions, which could theoretically derail demand for industrial space, at least in some markets, as shipments to and from China slow down.

Nevertheless, U.S. supply chain indicators remain healthy, CBRE reports, citing data from the Federal Reserve Bank of St. Louis. Compared with early 2012 (on a scale where Q1 2012 = 100), industrial production is about the same as it was then, but consumer spending is over 110 and business inventories are at at nearly 120.