Multifamily has been dethroned as the top allocation in JLL Income Property Trust’s portfolio.

Roughly 38% of JLL IPT’s portfolio is now made up of $2.8B in industrial assets. Following that is residential with 36%, or $2.3B.

The REIT holds $7B in assets under management. Across 141 properties, the entire portfolio encompasses 23M SF and is 95% leased.

The REIT targets last-mile logistics facilities near airports, train lines and seaports, JLL IPT CEO Allan Swaringen told Bisnow in March.

Multifamily investment isn't totally out of the question, but JLL IPT has been offloading assets in the sector to deploy that capital elsewhere.

“We can buy warehouses today where the cash-on-cash return is 5.5% to 6.5%, yet apartments today are trading where the cash-on-cash return is 4.5%. It’s a better option for us to get higher returns in today’s market,” Swaringen said to CNBC.

Macroeconomic conditions are making industrial plays even more appealing for the firm, Swaringen told CNBC.

The Iran war is boosting U.S. defense spending and manufacturing, raising demand for industrial facilities. Companies across sectors are increasing storage and warehouse space to build extra inventory in response to the tension in the Middle East and varying climate conditions, Swaringen said.

Elevated transportation and energy costs are also driving industrial strategy. Swaringen told CNBC the REIT’s 64 warehouse assets located within 5 miles of transportation hubs can claim higher rents in a positive market and attract tenants during a downturn.

He pointed to leasing taking off last year, boosting rent growth. That absorption, paired with a major drop-off in construction, is putting industrial on the road to stabilization after a pandemic-era boom in new supply and leasing downturn.

There were 174M SF of new leases recorded in the first quarter, the best Q1 performance since 2022, according to Cushman & Wakefield. Meanwhile, only 54M SF in new projects came online.

Those inked deals helped rents climb 5.2% in the last year, Yardi found, and as of May, they average $9.12 per SF.

In March, JLL IPT lined up a $1B credit facility with 10 lenders to aid in acquisition deals across multiple sectors, including industrial. The next month, it acquired a 720K SF Indianapolis distribution portfolio for $62M.

Even though JLL IPT's emphasis on industrial is working out, other real estate investment trusts haven't been so lucky. Three years in, BGO decided to dissolve its 29-asset industrial REIT in May after failing to pull investor interest. It lost over $6M in two years, and its 9M SF portfolio was facing upcoming maturity dates.

BGO said the portfolio has been strong, with 98% occupancy at the end of 2025, and its institutional partners have remained on in a direct ownership structure.

UPDATE, JULY 1, 1 P.M. ET: This story has been updated with comments from BGO about its REIT.