BKM Capital Partners and Kayne Anderson Real Estate, the real estate investment arm of alternative investment management firm Kayne Anderson, have formed a $1.5B joint venture partnership targeting light industrial real estate.

The $1.5B commitment from Kayne Anderson Real Estate will focus on the acquisition and repositioning of small- and midbay industrial properties, according to a release from the partnership.

"We’ve spent over a decade building an operating platform designed explicitly for small-bay industrial, which is both operationally complex and highly fragmented," BKM Capital Partners CEO and Chief Investment Officer Brian Malliet said in a release.

"With Kayne Anderson’s support, we can now bring that model to scale across new markets with a partner who shares our long-term view," Malliet added.

The partnership is zeroing in on "middle-market properties" with either below-market rents, high vacancy, operational inefficiencies or all of the above, according to the release.

Acquisitions have already been made, including the $550M recapitalization of a nine-property, 2.1M SF West Coast portfolio and the acquisition of five properties — more than 1.2M SF. altogether — in Las Vegas and Phoenix.

Though the overall industrial market is experiencing some softness, the partnership pointed to the U.S. light industrial market's vacancy rate of 4.1% in Q4, a record low, which was driven by demand for these spaces from e-commerce, last-mile logistics and smaller manufacturers.