Investors Rush Into Industrial As Sector Maintains Allure
Stockbridge Capital Group and the National Pension Service of Korea have formed a joint venture to buy U.S. industrial properties, and the JV will buy a 14.3M SF portfolio of 23 logistics facilities nationwide as its first deal.
Industrial has been the sector of choice among investors this year, as the pandemic has driven demand for distribution facilities nationwide as e-commerce expands.
“I think what you’re going to see going forward is, industrial is the poster child of real estate especially, into ’21 and ’22,” said Lori Cronin, Seyon senior vice president of Southeast operations during a recent Bisnow webinar. Seyon is a Boston-based commercial real estate services company.
“I think the pandemic has catapulted us forward, several years of growth, with e-commerce,” Cronin said.
To say that industrial has been a darling among investors this year, however, means that sales volume has been strong compared with other property types, since all investment across all sectors has dropped compared with 2019.
For the four quarters ending Q3 2020, industrial property investment sales totaled $95.4B, down 14.6% compared with the same period a year earlier, CBRE reports. That compares with a drop of around 30% each for multifamily, office and retail properties over the same period, and a contraction of over 50% in sales volume in the hotel sector.
The deal is Stockbridge’s third portfolio acquisition in the industrial sector in the past 16 months, though the other two were before the pandemic. The company bought an 8.7M SF portfolio in November 2019 and a 6.4M SF portfolio in August of that year.
“We see this acquisition as a way of tapping into the rapid acceleration of e-commerce growth, one of the most impactful investment themes post-COVID, and likely of the decade to come,” Stockbridge Executive Managing Director Terry Fancher said in a statement.
Other recent industrial buys include Blackstone Real Estate Income Trust's $358M acquisition of 2.1M SF of industrial space in California, northern New Jersey and the Lehigh Valley of Pennsylvania. The portfolio includes 13 facilities, all sold by information management company Iron Mountain.
“The industrial sector continues to benefit from strong demand driven by e-commerce tailwinds," BREIT Senior Managing Director David Levine said in a statement.
In California, Rexford Industrial Realty acquired an 18-building industrial portfolio near the Van Nuys Airport in the San Fernando Valley submarket totaling 426K SF for $154.6M in cash.
Almost all of the space is leased, including the General Services Administration as one of the major tenants. The location in Van Nuys is a good one for facilitating last-mile and e-commerce deliveries, according to Rexford.