Fort Worth-based Fort Capital's industrial division is only six months old, but it is on an acquisitions tear. The goal: to own and operate 2M SF by Q3 2019.
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Six months after making its first industrial acquisition, Fort Capital now has 400K SF of Class-B, Class-C and vintage cold storage space under its belt throughout Dallas-Fort Worth.
Spurred into the market by the addition of former Transwestern principal Sarah LanCarte, the Fort Capital team is gunning for the acquisition of 1.7M SF more industrial by Q3 2019.
“We know what our financial capabilities are and what our team can do. We owned zero SF of industrial in June of this year, and by the end of the year when we close on the remaining buildings, we will be at almost 700K SF in the first six months…so we think 2M SF is more than achievable,” Fort Capital President and CEO Chris Powers said.
What is driving Fort Capital’s investment in the industrial market?
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Powers believes infill, Class-B and Class-C industrial properties are an overlooked asset class in DFW with enormous upside. His company’s strategy to capitalize on these hidden gems is a twofold, now-and-later approach hinging on amassing property close to the metro.
The first phase of the strategy, the now, focuses on improving these infill properties with better management practices. Powers is confident in the company’s ability to make money off these acquisitions because he sees strong, stable demand for industrial space coming down the line as the metro grows.
“I am not saying [I] agree with it or disagree with it, but the argument is out there that retail is dying, and big-box companies are shrinking … you could take all the retail out of the world and sell everything over Amazon; all of those products are still going to need to be stored somewhere,” Powers said.
The second phase, the later, is a land-based strategy. Industrial acquisitions often come with a handsome chunk of land on the side, and as Fort Capital continues to snap up these tracts, close to the Dallas and Fort Worth metros, it is positioning itself to pivot these properties into other property types whenever it feels the need to do so.
Powers said people need only look at what has happened in Uptown, West 7th in Fort Worth and the Dallas Design District to see that industrial and light industrial properties can be flipped (or not) and leased to breweries, eateries and artisans looking for cheap space to turn into a destination.
“Some of these spaces will become more widely accepted as places for the businesses of today … and that is because the rents are so much cheaper in industrial and light industrial than they are to be on Broadway and Broadway,” Powers said.
According to him, his company's moves are far from speculative. Fort Capital is not banking on a boom so large that its industrial lots turn into multifamily properties, though that would be nice. Powers said the new industrial assets will be used for their intended purpose for as long they need to, and when it is time to shift, they will shift.
“We take a long-term view on everything, and if you look out 10 years and with how some of these areas are growing they could eventually become a covered land play down the road,” Powers said.
CORRECTION, Nov. 6, 3:39 p.m. ET: An earlier version of this article incorrectly portrayed Fort Capital's current portfolio size. It has been updated and tweaked to represent its focus on Class-B and C acquisitions.
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