Tag Archive for: supply chain

The Pursuit Of Unclogging The U.S. Supply Chain Has Helped Industrial Investment Outperform The Rest Of CRE

Macro chain link, rusted steel. marine environment old rusty iron chain_canstockphoto13264662 770x320

If there’s one thing the pandemic shed a spotlight on, it is how the global supply chain was not ready for an influx of consumerism.

Ships were backed up at some of the world’s largest ports, meaning that hardware, car parts and furniture were absent from retailers’ usual inventory.

Richard Thompson, international supply chain director at JLL,  summed it up earlier this year when he said, “The pandemic exposed how fragile our global supply chain was when reliant on one region. A more regionalized model allows companies to be nimbler when problems arise.”

Industrial real estate investors have benefitted from the pivot to a regional supply chain focus. The asset class has outperformed almost all other commercial sectors. During the past two years, JLL found that industrial investment activity picked up across the entire spectrum as automotive companies continued diversifying their footprint. And as supply chain logistics move to nearshoring and reshoring, investors are snatching up regional industrial space opportunities, especially near busy ports.

For example, Miami-based real estate and investment firm Black Salmon, in partnership with InLight Real Estate Partners, this week announced the $103 million disposition of Hicks Transload Facility, a Class A truck terminal and trans-loading warehouse in the Port of Savannah, the country’s third busiest port, as well as the disposition of Rex Distribution Center in Atlanta, Georgia.

“There was a tremendous amount of volume in Savannah and the state has invested billions into the port, so we found there was a lot of opportunity for us and it was just a matter of finding the right property,” Black Salmon Managing Director Stephen Evans told Benzinga. “The site in Savannah was perfect for a truck terminal. This wasn’t about warehousing. The trucks come in on one side, empty their containers and then transfer the materials to the next destination.”

According to a June report from Motley Fool, industrial commercial real estate has grown 10.3% in the past 12 months, led by demand for logistics space and limited available real estate. The vacancy rate for industrial is also the lowest in commercial real estate (CRE) at 4.3%. That performance, which is outshining the multifamily and office sectors, is fueling the present and future investment strategies of companies like Black Salmon and InLight.

“Our firm focuses primarily on industrial real estate, although it’s a type of CRE which has a different set of fundamentals that we’ve been working with since the beginning of the company,” InLight Principal Matt DiLeo said.

DiLeo also noted that industrial investors for specific property uses aren’t necessarily looking for new, high-end properties.

“We are building a value add and bridging the gap with the older facilities who need a tenant that doesn’t necessarily need all the bells and whistles,” DiLeo said.

As for the future of industrial investment, Evans is bullish and says he has already raised funding for the next year of targets.

“If I were to pick one single product type today to invest in, it would be industrial,” Evans said. “E-commerce has been the huge disruption in the industrial supply chain, and capitalizing on that disruption and how it impacts the space, has allowed us to reap the benefits.”

 

Source: yahoo!finance

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

What Landlords Can Learn From The World’s Largest Industrial Property Owner_hand taking notes with pencil_canstockphoto25766284 770x320

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