Tag Archive for: prologis

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South Florida Industrial Asking Rents Rise In The Fourth Quarter

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South Florida’s industrial market ended the fourth quarter of last year with a seismic shift in ownership of 1.4 million square feet in Miami-Dade and Broward counties.

Boston-based Longpoint Partners acquired 25 industrial buildings in eight cities from Conshohocken, Pennsylvania-based Seagis. Longpoint’s $262 million portfolio purchase clocked in as the priciest industrial deal of 2023 — a sign that South Florida warehouses remain a top target for institutional investors.

Industrial properties arguably represent a safe bet, given historically low single-digit vacancy rates and a continuing trend of rising asking rents, according to a recent CBRE report.

The tri-county region experienced a slight uptick in empty warehouse spaces in the fourth quarter, even though tenant demand remains high — except in Broward. Still, industrial landlords kept increasing asking rents, the report shows.

Miami-Dade County

In the fourth quarter, the vacancy rate rose to 3.2 percent, compared to 2.6 percent during the same period of 2022, CBRE found. The average asking rent rose to $15.50 a square foot from $15.05 a square foot in the third quarter. It also increased by nearly 16 percent compared to $13.37 a square foot during the fourth quarter of 2022.

Miami-Dade’s slight increase in vacancies was due to nearly 5.4 million square feet of new industrial space becoming available last year, the report states. About 80 percent has been leased to date.

San Francisco-based Prologis scored one of the biggest industrial lease signings of the fourth quarter. Packing and shipping firm Ameriworld Fulfillment signed a new 10-year lease valued at $25.2 million for 124,000 square feet in an industrial complex near Miami International Airport owned by Prologis.

Broward County

The vacancy rate in Broward remained relatively unchanged, hitting 3.5 percent in the fourth quarter, compared to 3.7 percent during the same period of 2022, CBRE found. The average asking rent jumped by 20 cents to $15.65 a square foot, compared to $15.45 a square foot during the third quarter of last year. It also increased by roughly 11 percent compared to $14.14 a square foot during the fourth quarter of 2022.

During the second half of last year, tenant demand was relatively weak in Broward, but the county has a limited supply of industrial space, which led to the average asking rent increasing, the report states.

In October, All Glass Production signed the second biggest industrial lease of 2023. The glass manufacturing company leased a nearly 250,000-square-foot warehouse at South Florida Logistics Center in Pembroke Pines. The property is owned by Denver-based Sagard Real Estate.

Palm Beach County

Palm Beach County experienced the largest increase in available space, with the vacancy rate hitting 4.2 percent in the fourth quarter, compared to 2.3 percent during the same period of 2022, the CBRE report shows.

The average asking rent rose by 25 cents to $15.75 a square foot, compared to $15.50 a square foot in the third quarter. It also increased by 7.5 percent compared to $14.65 a square foot during the fourth quarter of 2022.

Palm Beach County’s industrial sector experienced a gradual slowdown last year, with vacancies rising during four consecutive quarters, CBRE found.

Bush Brothers Provision Company, a meat packing and distribution company, signed a lease to move its headquarters into a 42,100-square-foot space at Royal Palm Logistics Center, a new industrial project in Royal Palm Beach developed by Orlando-based McCraney Property Company.

 

Source: The Real Deal

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Prologis Anticipates Industrial Rents Will Increase 10% This Year

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The industrial sector experienced a moment of worry several weeks ago amid the mounting economic and financial sector turmoil. That moment appears to have passed, based on Prologis’ Industrial Business Indicator, which moved back into expansionary territory in April with a score of 56.2, after falling to its lowest level in 30 months for March.

Prologis, too, apparently is feeling sanguine about the sector, tweaking its forecast to a 10% increase in rents for the year, given that there has been 275 million square feet of net absorption and deliveries of 445 million square feet to date.

Prologis’ research also reported that the utilization rate stabilized in the 85% to 86% range, which is considered good for logistics users. The rate averaged 85.6% in the first quarter of this year and was close but a slightly lower 84.9% for April, which translates to an absence of shadow space.

It also found that the true months of supply (TMS) number—the time it would take to absorb available supply at the current demand run rate–increased to 30 months, up five months from the fourth quarter. The markets and submarkets with the biggest construction pipelines should have the largest TMS increases and lead to variations in availability, as well as rent growth, depending on locations.

“Macroeconomic crosscurrents may lead to some delayed decision-making, which could push demand from 2023 into 2024,” Prologis concluded. “The U.S. vacancy rate should drift up to the low-/mid-4% range by year-end, well below the historic average.”

If supply drops off sharply in 2024, it may raise the potential for demand to outpace supply and pull the vacancy rate down to the mid-3% range by year-end 2024. Also affecting the longer-term prospects next year is a 40% drop in construction starts due to increased costs and a lack of financing. Prologis suggests customers may face a narrow window to act as projects get done this year but decrease next year, particularly in highly desired locations.

Some markets are also expected to experience more interim vacancies due to an abundance of speculative space under construction. Such possibilities include Dallas, Phoenix, Savannah and Austin. Beside such markets, vacancy rates may remain below 2019 levels, in part due to the existence of few unleased buildings available.

 

Source:  GlobeSt.

What Landlords Can Learn From The World’s Largest Industrial Property Owner

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Industrial properties have long been a favored investment for those seeking stable cash flow with minimal effort. Often featuring “triple net” leases, tenants cover expenses such as taxes, insurance, and maintenance.

Due to low vacancy rates, most industrial landlords primarily focus on collecting checks. However, the rise of e-commerce has transformed the industrial landscape. Online purchases require an intricate network of warehouses and distribution facilities, which has led logistics companies to demand more from their landlords in terms of building improvements and additional services, and they are willing to pay for these enhancements.

The sustainability movement has further intensified the need for industrial landlords to expand their offerings, as logistics giants like Amazon and UPS have committed to aggressive decarbonization goals. Consequently, industrial property owners must adapt to the evolving market demands and expectations driven by the growing influence of e-commerce and an increasing emphasis on environmental responsibility.

All this adds up to industrial real estate going from the property type with the least amount of tenant collaboration to one with the most in just a few decades. To meet this challenge, large industrial owners have transformed their businesses into much more of a partnership model. The largest of these industrial and logistics landlords is Prologis. They own over 1.2 billion square feet of space across the globe. Rather than just lease out space to their tenants, they work with them hand in hand to try to tailor properties and services to help them advance their business goals.

Prologis collaborates with logistics firms, such as Amazon, to support their expansion and enhance their distribution networks. They specialize in creating and managing custom logistics centers and leasing space in their properties worldwide. Beyond this, they offer a comprehensive range of services, called Prologis Essentials, including warehouse racking, renewable energy production, electric vehicle charging infrastructure, and workforce solutions, making them a sought-after partner for both large and small logistics operators.

By outsourcing these supplementary tasks, logistics companies can efficiently scale their networks and transform capital-intensive investments into manageable operating expenses. While Prologis is already a critical component of the global logistics infrastructure, the company aims to further expand its role and impact.

To continue to grow what services they offer, Prologis has also created a venture investment arm that makes strategic bets on companies that they think will be able to add value to their tenants.

“We spend a lot of time talking to our clients to understand what their pain points are and how we can help them either by providing a service or introducing them to new tech solutions,” said Will O’Donnell, Managing Director at Prologis Ventures.

So far Prologis has invested in 42 companies in every stage of growth from seed to Series A rounds. Recent investments include Solarcycle, a company that repairs, refurbishes, and reuses solar panels, and Strivr, a virtual reality training platform.

“We spend the time doing our homework on technologies and piloting with companies so when we introduce them to our clients, they know they’ve been vetted,” O’Donnell said.

Right now Prologis is seeing a lot of demand for carbon reduction solutions from their clients.

“The supply chain only represents about 5 percent of the costs for retailers but has a strong carbon footprint, so it is something that retailers are very willing to pay for,” O’Donnell explained.

Prologis has hired a Chief Sustainability and Energy Officer who is solely focused on how to provide energy solutions to clients.

 

Source: propmodo

 

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In Record South Florida Deal, Equus Pays $240M For Industrial Complexes

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Equus Capital Partners dropped $239.2 million for warehouse complexes across Broward County, surpassing 2021’s largest industrial deal in South Florida.

The properties include 16 warehouses, spanning 23 acres in total. The majority of the warehouses are located in Pompano Beach along SW 5th and 6th Court as well as five miles away along NW 30th Place. Only three are in Fort Lauderdale.

Equus’ purchase approximates to $240 a square foot, according to property records.

The deal appears to be tied to Equus’ $900 million purchase of a 5.4 million-square-foot industrial portfolio across the Sun Belt and East Coast from warehouse giant Prologis earlier this week.

Equus nabbed a combined $483 million in financing from Morgan Stanley, according to property records. But it’s unclear whether the loans are tied to the Broward County purchase only or the portfolio acquisition since the actual mortgage documents are not publicly available.

Representatives for Prologis and Equus did not immediately respond to a request for comment.

The sale is yet another sign of South Florida’s sizzling industrial market thanks to strong leasing demand. Net absorption rose to 10.3 million square feet in 2021, more than doubling the square feet absorbed the year prior, according to data compiled by Newmark. In the last quarter, the vacancy rate dropped by 0.4 percentage points to 3.4 percent, while asking rents grew by $0.39 to $10.14 a foot.

The complex ended up in Prologis’ hands also through a portfolio deal. In 2020, the San Francisco-based company paid $13 billion for Liberty Property Trust, the previous owner of the properties, which were completed in 1991.

The Broward County sale is not only the biggest South Florida industrial sale of 2022 so far in gross terms, but also tops 2021’s highest sale by $56 million, according to The Real Deal’s tally. In last year’s top industrial deal, CenterPoint bought a Hialeah park for $184 million.

 

Source: Commercial Observer

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South Florida’s Industrial Squeeze Has Brokers Sounding Alarms

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After receiving unsolicited offers to buy its 8.6-acre industrial site in Medley last year, KDD Properties decided to list it and see how many institutional investors would line up with competitive bids.

“There were no less than 25 offers from various public and private pension funds and institutional investors,” Sky Groden of JLL, which marketed the property, told The Real Deal. “The deal ended up transacting at 25 percent higher than the unsolicited offers.”

Prologis, the behemoth industrial developer that dropped $43 million to acquire 29 acres of industrial properties in areas close to Miami International Airport last year, placed the winning bid. In December, the firm closed on the Medley property, which consists of a fully leased, 43,700-square-foot building and 5.5 acres of trailer truck parking.

“More and more, industrial developers and institutional investors are looking at truck stops and construction equipment yards, like the Medley site, that offer vacant land that can be developed,” Groden said.

With a limited number of big industrial properties for sale across South Florida, even major players are turning to smaller buildings on large parcels. There’s a rush to wheel and deal for any existing warehouse properties as the sector continues to outperform all others, commercial real estate experts say.

 

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Investors ‘Back With A Vengeance’ As Warehouse Demand Surges

As shopping centre and high street landlords survey the wreckage left by coronavirus, warehouse owners are facing a different problem: how to deal with record demand.

The pandemic has pushed more consumers online, prompting a rush for warehouse space, from small “last-mile” delivery sites near city centres to cavernous “big-box” distribution centres

Amazon has led the charge. The company, which has added an eye-watering $600bn to its market capitalisation this year as sales have jumped, is inking lease agreements on mammoth warehouses around the world. It has committed to opening 33 “fulfilment centres” in the US this year, an additional 35m square feet spread from Atlanta to Arizona.

The US ecommerce giant is also the incoming tenant of a 2.3m square foot warehouse on London’s outskirts, according to people with knowledge of that deal. Amazon’s sprawling expansion is one reason why investors are sensing opportunity.

The take-up of UK logistics space hit record levels in the second quarter of the year, according to property group CBRE — despite the lockdown.

“Following a quiet few months after coronavirus hit, investors are back with a vengeance”, said David Sleath, chief executive of Segro, the dominant logistics company in the UK and a sizeable participant in Europe which last week said it had lifted first-half profit. “If you are a global institutional investor and you want exposure to commercial real estate, this is an attractive place to be.”

A decade ago, ecommerce accounted for 6.7 per cent of all retail sales in the UK, according to the Office for National Statistics. By February, the month before the outbreak, the figure was 19 per cent. By May it had hit 33 per cent. In April, 27 per cent of purchases were made online in the US, according to the commerce department and Bank of America.

Until recently, the most desirable property to own was a traditional mall. Malls had a natural moat, being difficult to develop and serving a catchment area

“That share was likely to diminish as stores reopened,” cautioned Mr Sleath, “but incoming tenants were looking to crystallise that temporary spike into increased capacity”.

“There’s a wall of cash coming into our sector,” said Marcus de Minckwitz, an investment adviser on European logistics at Savills property.

Every extra £1bn spent online means the addition of almost 900,000 square feet of logistics space, according to CBRE. New York-listed Prologis, the world’s largest warehouse company, estimates that 1.2m sq ft of space is needed for every $1bn in ecommerce sales in the US.

Gains from ecommerce tenants far outweigh the losses from bricks-and-mortar retailers, according to CBRE, one reason why Blackstone, the world’s largest private property owner, has described logistics as its “highest conviction” sector.

“Until recently, the most desirable property to own was a traditional mall. Malls had a natural moat, being difficult to develop and serving a catchment area . . . Logistics for a long time was viewed as the other end of the spectrum: not so exciting and more easily replicable,” said Ken Caplan, global co-head of Blackstone Real Estate. The rise of ecommerce had shifted that whole dynamic.”

In June 2010, Segro’s market capitalisation was less than £2bn, according to data from S&P Global. Now at £11.8bn, it is comfortably the UK’s largest listed property group; UK shopping centre owner Intu, meanwhile, has collapsed. The value of US peer Prologis has climbed a fifth this year to roughly $77.5bn.

Dozens of shopping centres in the US are being turned into industrial sites, according to CBRE, which says Covid-19 will accelerate the trend. This week, the Wall Street Journal reported that Amazon was in talks with mall owner Simon Property to repurpose department stores as distribution hubs.

Thanks to the ecommerce boom, CBRE predicts there will be demand for 333m sq ft of new space in the US by 2022 — treble its previous estimate — and expects rents to grow by about 6 per cent a year. Amazon is not the only eager tenant. Fashion retailers with a limited online presence have desperately sought space to park stock they could not shift in the pandemic.

“They already have warehouses full of clothes, then next season’s come in and they can’t stack it,” according to one UK property agent.

“But while some warehouse owners had suffered hits to rental income from retail tenants in particular, investors bidding for new sites were achieving few discounts,” said Mr de Minckwitz.

“Some indiscriminate investors were likely to get caught out, warned Mr Sleath. “There will be more retail fatalities, that will mean empty warehousing as well as shopping centres. It’s very important to think about where you place your money.”

Asset manager PGIM bought five German logistics sites last month and said it was optimistic that demand would only grow. Private equity firms are piling in too: as well as Blackstone, Meyer Bergman plans to raise €750m to invest in Europe.

“Investors needing long and strong sources of income, such as sovereign wealth funds and European pension funds, were also attracted by the sector,” said James Dunlop, a fund manager at Tritax Big Box.

“But some might come unstuck,” cautioned Adrian Benedict, head of real estate solutions at Fidelity. “There’s a flood of capital from retail to logistics. Inevitably, with every crisis, you see those poorly considered deals at the end of the cycle are the ones you really regret.”

 

 

Source: SFBJ

Prologis To Buy Rival Logistics Firm For $13B

Warehouse giant Prologis is purchasing its rival Liberty Property Trust for $12.6 billion, creating a massive new player in the industrial real estate business.

Prologis aims to use the acquisition to bolster its presence in the United States amid a boom in e-commerce, according to Reuters. The company cited markets including New Jersey, Southern California and Chicago as places where the Liberty acquisition would help it establish a stronger foothold.

The deal will likely close during the first quarter of next year and help the firms save about $120 million. Prologis also plans to sell about $3.5 billion worth of its assets.

 

Source:  The Real Deal

 

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Blackstone Is Already Selling Pieces Of The $18B GLP Industrial Portfolio

The ink isn’t dry on Blackstone Group’s $18 billion buy of a U.S. warehouse portfolio, and it’s already negotiating to sell part of it.

The company, which finished its transition into a corporation this month, is drumming up interest from potential buyers for pieces of the GLP Pte portfolio, Bloomberg reported. Prologis is in private discussions to buy one such portfolio, valued at $1 billion.

Blackstone’s $18.7 billion deal for the Singaporean company’s 179 million-square-foot warehouse portfolio is one of the largest industrial real estate deals ever.

Selling non-core or non-strategic pieces of a recently required purchase isn’t uncommon. Blackstone applied the same strategy in 2007 when it sold off parts of its $40 billion acquisition of Equity Office Properties Trust.

On the whole, the warehouse sector has seen little supply, high demand and high prices, with available industrial and logistics real estate rising slightly for the first time in 34 quarters, according to a CBRE report. Demand for warehouse and distribution reached an 18-year high in 2018.

Large owners are optimistic that there will continue to be institutional investment in industrial real estate. As Prologis negotiates for a piece of Blackstone’s new holdings, it’s also in advanced talks to buy another $4 billion portfolio from Black Creek Group which spans 37.6 million square feet.

Colony Capital is weighing the sale of its $5 billion industrial in holdings on the heels of selling another warehouse portfolio for $104.6 million.

 

Source: The Real Deal

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Equity Office Pays More Than $110M For Portfolio In Broward & Palm Beach

Prologis just sold a portfolio of properties in Broward and Palm Beach counties to Chicago-based Equity Office for more than $110 million, property records show.

The portfolio includes industrial buildings in Delray Beach, Mangonia Park, Hollywood, Dania Beach, Fort Lauderdale, Pompano Beach and Coconut Creek. The deal was financed with an $83.5 million loan from Wells Fargo.

Equity Office, which is owned by the Blackstone Group, also bought properties in Seminole and Miami-Dade counties, as well as Illinois and Wisconsin. The sales in Miami-Dade County have not yet cleared records. Prologis and Equity Office were not immediately available to comment.

Records show the Blackstone affiliate picked up an industrial complex at 430 South Congress Avenue for $9.5 million and an industrial site at 1335 West 53rd Street for $4.6 million.

In Broward, industrial complexes at 3601 and 3613 North 29th Avenue in Hollywood sold for $23.5 million; properties at 3700 North 29th Avenue, 3401 North 29th Avenue and 5555 Angler Avenue in Dania Beach sold for $14.6 million; buildings at 3600 Northwest 35th Avenue, and 5535 and 5545 Northwest 35th Avenue in Fort Lauderdale closed for $12.1 million; and the warehouse complexes at 2800 North Andrew Avenue in Pompano Beach and 4801 Johnson Road in Coconut Creek sold for a combined $39.7 million.

The properties were originally owned by KTR Capital Partners, which was acquired by Prologis and Norway’s sovereign wealth fund in 2015 for $5.9 billion.

Equity Office owns a portfolio of more than 50 million square feet of office space across the country, according to its website. Blackstone acquired its assets in a $39 billion leveraged buyout in 2007.

 

Source: The Real Deal