Instacart To Build Fulfillment Centers Near Supermarkets

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Instacart is the latest company seeking to cash in on the industrial real estate boom, making plans to build its own fulfillment centers for supermarkets.

The grocery delivery company will begin developing an undetermined number of fulfillment centers over the next year, according to the Wall Street Journal. The centers would be able to hold between 10,000 and 50,000 items.

Instacart plans to use robots to retrieve items in the fulfillment centers and employees to pack and deliver them. It’s unclear how much Instacart is planning on spending.

The company saw business surge during the pandemic, as consumers turned to online ordering to avoid going to grocery stores. Shoppers are beginning to return in-person, however, leading Instacart to adjust its strategy. Fulfilment centers offer the possibility of speeding up orders — a necessity when it comes to groceries — and cutting costs.

Instacart raised almost $700 million in 2020 and is valued at $39 billion. The company has plans to go public.

Warehouses have been one of the hottest commodities in real estate as e-commerce giants and smaller companies alike look to cut costs and accelerate deliveries. From January through May, first-year base rents on leases of at least a year grew almost 10 percent, with larger warehouses seeing even sharper increases.

 

Source: The Real Deal

Changing Migration Patterns, New Consumer Preferences Are Driving The Self-Storage Rally

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The self storage sector is thriving thanks to changing migration patterns and evolving consumer behaviors that owe largely to the COVID-19 pandemic, pushing the niche asset class “from a laggard to a leader,” according to senior economist Thomas LaSalvia of Moody’s Analytics REIS.

The sector’s pre-COVID woes are well-documented: too much development, which began in earnest at the end of the Great Financial Crisis, pushed rents and occupancy rates down with a vengeance.  And while net absorption averaged 196,000 units per year from 2019 through 2019, “this wasn’t enough to balance the inventory gains that averaged 311,000 units per year during the same period,” LaSalvia writes: during that time, vacancy rates pushed up to 14.5% from 10.4%.  And since the asset class has a low barrier of entry for investors, he says, it tends to have higher peaks and lower valleys than other sectors.

“At the end of 2019, the market was in one of these valleys,” LaSalvia recently told Scotsman’s Guide.  “The COVID-19 crisis turned out to be the shot in the arm needed to jolt the sector out of its malaise. During the early stages of the pandemic, the self-storage market gained stability that it maintained throughout the course of 2020.”

Specifically, construction slowed down and netted only 40,000 units completed by the end of Q1 2021.  Meanwhile, net absorption grew to more than 100,000 units during the same period and vacancy plunged 90 basis points to 13.7%. Annualized rent growth grew to 2.9%.

Investors are increasingly seeing the self-storage sector as an opportunity to diversify, and overall self-storage sales tallied $7.7 billion last year, one-third higher than 2019 numbers. Single-asset sales rose 13% year-over-year to $3.5 billion, and the number of unique investors also rose to an all-time high by year’s end.

LaSalvia attributes the change in part to changing migration patterns, as well as negative economic pressures and changing consumer tastes.

“The pandemic has undoubtedly accelerated the acceptance of a remote-work lifestyle. This phenomenon has prompted migration, a well-cited and rational factor for self-storage use,” LaSalvia says. “Moving forward, self storage will continue to reap the benefits of migration and catch the tailwinds associated with a strong economic recovery. As people adjust to post-pandemic life, many will find new locations to better fit their new lifestyles.”

 

Source: GlobeSt.

 

Relocations To The Rescue: New-To-Market Tenants Could Fill Empty Office Spaces

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South Florida has attracted solid corporate relocations and new regional offices this past year, but experts say an even bigger wave of big tenants is about to flood the market.

Prominent companies, such as Goldman Sachs and Microsoft, reportedly have deals in place, but aren’t ready to announce them yet.

Miami-based Related Group is best known for luxury condominiums, but office space is becoming a bigger part of its development strategy due to demand, President Jon Paul PĂ©rez said. The company fully leased the extra office space in its new headquarters building in Coconut Grove and filled the new Annex office building in Wynwood with new-to-market tenants including D1 Capital and Founders Fund. Now, it’s fast-tracking another office building as part of a mixed-use project in Wynwood, and it’s in discussions with a single tenant that could lease the entire 140,000-square-foot office building,

“Related is planning on Terminal Island in Miami Beach,” PĂ©rez said. “I thought I made the wrong decision pre-Covid because it was only Live Nation in the Annex and it was quiet. But now we are looking to build more office.”

As the Related Group seeks opportunities to build office, location and amenities will be key, VP Nicholas PĂ©rez said. Executives want to be near their homes and great schools, and have access to fitness centers, private elevators and outdoor spaces.

Once Related’s Coconut Grove office filled up, many tenants looking for space there shifted their interest to his office building at 3480 Main Highway, said Raoul Thomas, CEO of Miami-based CGI Merchant Group.

“CGI bought the building during the pandemic with 25% of the space available. It’s now fully leased with rents 15% higher than expected when he purchased it last year,” Thomas said.

Tenants from the Northeast are signing longer leases than most South Florida companies and spending more on office interior improvements. He’s signed over 10 out-of-market financial firms to deals in Coconut Grove and Coral Gables.

“We bought 300,000 square feet of conventional space over the past two years and we’ve taken massive advantage of that,” Thomas said. “I wish I had more office properties now.”

New York-based Related Cos. found tremendous traction leasing office space in West Palm Beach over the past six months, said Gopal Rajegowda, managing partner for the Southeast. Its new 360 Rosemary building has leased 95% of its 300,000 square feet. It plans to break ground on One Flagler, another 300,000-square-foot office, in October because demand has been strong. Most tenants are companies from the Northeast and Midwest.

“The companies are choosing West Palm Beach because it’s near the town of Palm Beach, where many wealthy executives buy homes, and its access to the Brightline passenger rail and the airport, Rajegowda said. “A lot of these companies were looking pre-Covid, but during Covid it accelerated the discussions and they were willing to do transactions. Many of them are setting up satellite offices. They aren’t fully moving here.”

Many companies are right-sizing their office space to reflect a partially remote workforce, but also creating larger workstations for employees and keeping a little extra space in case there’s a rebound in in-office work, said Matthew Goodman, a managing director with JLL in Miami who specializes in tenant representation. The net effect is a smaller office footprint, but companies want to be flexible in case new hires prefer to work in the office. That will lead to more available office space as companies contract, but Goodman is confident it will be filled by relocating businesses.

 

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81.1-Acres Zoned For 1 MSF Industrial Development Sell For $63.32 Million

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Cushman & Wakefield arranged the sale of an 81.1-acre parcel of land zoned for up to 1 million square feet of industrial development located in Jupiter.

The final sale price was $63,325,000.

Located at Palm Beach Park of Commerce, the property is 100% leased to Insurance Auto Auction, a globally recognized company in the auto-salvage industry duopoly, and will serve as a mission critical location in the tenant’s South Florida operations.

The property is located less than one mile from the Bee-Line Hwy, providing exceptional access throughout Palm Beach County, Treasure Coast, and greater South Florida via Interstate 95 and the Florida Turnpike.