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Nuveen Acquires 29M SF Industrial Portfolio From Blackstone

Investment giant Nuveen Real Estate, formerly TH Real Estate, has acquired more than 100 industrial properties in 12 U.S. markets from another investment giant, Blackstone Group. All together, the deal involves about 29M SF of logistics space.

4024 Rock Quarry Road, Dallas, one of the assets acquired by Nuveen

According to the buyer, the portfolio is valued at about $3B and is made up of urban infill, light industrial and bulk logistics assets. The properties are largely in well-established industrial markets, including Southern California, northern New Jersey, Dallas, Chicago, Baltimore and Washington, D.C. Eastdil Secured served as adviser to Blackstone in the deal.

“We believe that the industrial sector will outperform as supply remains constrained in certain markets and e-commerce tailwinds remain prevalent,” Nuveen Real Estate Managing Director and Head of U.S. Industrial Sector Graydon Bouchillon said in a statement.

Bouchillon said the deal would broaden the company's logistics holdings across distribution hubs, including coastal markets with high barriers to entry.

Nuveen isn't the only major investor that has cited e-commerce as a factor in industrial demand. In September, Blackstone — a vigorous buyer as well as seller in the sector — said e-commerce is driving its interest in industrial as well.

Yet not everyone is so sanguine about the continued expansion of the industrial sector, even as e-commerce grows. Absorption is now expected to average 37M SF per quarter for the next two years, according to Manhattan College's Hany Guirguis and New York University's Joshua Harris, authors of the NAIOP 3Q 2019 Industrial Space Demand Forecast

That would be a significant slowdown from the average 60M SF of quarterly net absorption experienced during 2017 and 2018, the report notes.

The reasons for the decrease include a slower U.S. economy, along with global trade tensions. Still, Guirguis and Harris predict that because new industrial space completions are also slowing down, there will not be an oversupply, and rents and vacancy rates will remain stable in many markets.

Nuveen manages about $17.2B of industrial properties globally, with most of its holdings domestic. The firm’s U.S. industrial property investments now total $15B, including both equity and debt in the sector.

Nuveen Real Estate is an investment management arm of pension fund TIAA. All together, Nuveen has about $125B in assets under management in the United States, Europe and the Asia-Pacific region. As a whole, TIAA has about $930B in assets under management.