EXCLUSIVE: Velocity Venture Partners, Walker & Dunlop Buy 3 Suburban Philly Distribution Centers
In a deal that has a little bit of almost everything that is hot in industrial real estate right now — last-mile distribution space, repurposing facilities, truck parking, Amazon — Velocity Venture Partners and Walker & Dunlop Investment Partners have teamed up to purchase three industrial properties in southeastern Pennsylvania, with total capitalization of $100M.
The buildings total 1.6M SF of value-add last-mile distribution space in suburban Philadelphia markets. All three assets were converted to multi-tenant warehouse space from former manufacturing facilities: a 700K SF former Ford Electronics plant at 2750 Morris Road in Lansdale, Pennsylvania, a 450K SF former Ford manufacturing plant at 1180 Church Road in Lansdale and a 412K SF former Vicks manufacturing plant at 330 South Warminster Road in Hatboro, Pennsylvania.
Each property has space for more than 1,300 vehicles, and the parking lots are serving as both amenity and separate income-generating assets. Amazon van drivers are using the lot at 2750 Morris Road, parking their personal vehicles during the day as they distribute from Amazon’s facility in Harleysville, Pennsylvania, and storing the delivery vans there overnight.
Large parking lots have become an increasingly important amenity in industrial over the past few years, especially in the last-mile distribution space, which requires a great deal of van, truck and trailer storage. As e-commerce has picked up, so has the need for space to put the delivery vehicles — more than 36 million commercial trucks are on the road these days, according to the American Trucking Associations — and parking space has not kept pace. That has spurred a cottage industry dedicated to building and maintaining truck parking.
Philadelphia-based Velocity has been on an industrial acquisitions tear. It doubled its portfolio of last-mile distribution space in 2020 to 4M SF, and it also just announced the acquisition of 70K SF of industrial flex space in the Philly area.
It expects to hit 7M SF to 8M SF by the end of 2021, Velocity founding partner Tony Grelli said.
Walker & Dunlop Investment Partners President Sam Isaacson said it is drawn to Velocity’s strategy of repurposing and renovating existing facilities into last-mile space.
“They are able to develop critical last-mile distribution facilities in strong locations with easy access to a number of major metropolitan areas,” Isaacson said. “That mix of attributes makes it possible to bring leasable last-mile distribution space to market in one to six months, versus the two to three years it can take to develop and build comparable assets from the ground up.”
Velocity has also seen strong leasing volume across its portfolio, leasing more than 1M SF in the last 12 months, according to founding partner Zach Moore. It inked deals for 550K SF combined at 2750 Morris Road and 1180 Church Road in the past six months since acquiring the assets. The leases were with third-party logistics companies and last-mile distributors expanding their presence in southeastern Pennsylvania.
UPDATE, JUNE 15, 2:49 P.M. ET: The story has been updated with additional comments and information from Velocity Venture Partners.