The Blackstone Group Buys GLP

The Blackstone Group Buys GLP

Fall 2019

The Blackstone Group buys GLP: A Look at Big Industrial Buys

Just when you thought the industrial real estate buying spree had hits its peak, another big deal closes. The recent high water mark was closed by The Blackstone Group in its acquisition of GLP’s US warehouse portfolio. Click here for more.

This involved 179 million square feet of urban logistics assets, for $18.7 billion, breaking the record as the largest private commercial real estate transaction globally. Blackstone’s focus on logistics is directly correlated to the growth in e-commerce, a coveted sector that is projected to see at least 10 percent annual growth.

The Blackstone Group is one of the largest real estate private equity firms in the world today with $157 billion of investor capital under management.

What does this acquisition mean for the industrial real estate market? The CoStar Group, a leading commercial real estate research and analytics firm, gives a closer look at the deal, including the properties involved.

Industrial Real Estate: Prologis to Acquire Liberty Property Trust for $126 billion

In another mammoth industrial acquisition, Prologis has plans to buy Liberty Property Trust for $12.6 billion, securing a bigger presence in Lehigh Valley, Chicago, Houston, Central PA, New Jersey and Southern California. Click here for more.

The board of directors of each company unanimously approved the transaction.

According to Prologis, the industrial real estate acquisition comprises:

  • 107 msf logistics operating portfolio; 87 percent overlap with key markets
  • 5.1 msf of logistics development in progress
  • 1,684 acres of land for future logistics development with build-out potential of 19.7 msf
  • 4.9 msf of an office operating and development portfolio
Multifamily Investment: Foreign Investment Keeps Going

Multifamily Investment: Foreign Investment Keeps Going

October 2019

Foreign Investors Drive Multifamily

In Chicago skyscraper race, multifamily is outpacing office, as Millennials flock to the urban environment.

Foreign investors continue to focus on the multifamily investment, despite a pull back in other asset classes, according to a Real Capital Analytics report. Foreign investors spent $16.1 billion on U.S. apartments over the last 12 months, end in Q2 2019, with Canadian buyers as the most active

Industry experts note that this activity is being driven by the low volatility seen in this sector and the continued movement toward renting versus home-buying in the U.S.

As ongoing demand for apartments has reduced vacancy in many markets, investors keep moving in. They also are attracted to the diverse rental stream from a variety of tenants, an environment that is viewed as less volatile than a single tenant office building, for example.

As noted by National Real Estate Investor, cross-border multifamily sales volume rose 10 percent, year-over-year, to $16.1 billion

Foreign Investors want Class A Assets

Foreign investors were focusing on bigger deals with more expensive, Class A assets. The average sale during the past 12 months, ending with Q2 2019, was $43 million per community. The average cap rate was 5.3%.

The low down on Grocery Store Cap Rates

Looking for more commercial real estate industry intel? Click here for more from RCA on the wide spread of cap rates among grocery store brands.

DLA Piper Forecast: CRE Strong, Opportunity Zones Still Hot

DLA Piper Forecast: CRE Strong, Opportunity Zones Still Hot

Commercial Real Estate News Update

September 2019

DLA Piper Survey: Strong CRE Outlook, Opportunity Zones are Strong

Commercial real estate executives are feeling positive about the industry’s future, according to DLA Piper’s annual State of the Market Survey. The survey shows that 50% of executives have a bullish outlook on the market, while 38% are taking a neutral position and just 12% feel bearish. Respondents noted that Opportunity Zones and ecommerce should drive investment in the coming years, while coworking may dwindle and property technologies could have less impact in coming years. Read more in Commercial Property Executive.

More on the DLA Piper Summit

DLA Piper’s real estate forum, in its 15th year, gathered intel from many of the industry’s key companies. Executives from Blackstone, Brookfield, USAA Real Estate, Ventas, The Cohen Group, Hines, Wells Fargo, Goldman Sachs and others met in Chicago to discuss a variety of topics, from interest rates and policy to proptech and industry outlooks. Here are the key comments of note:

Wells Fargo — the $3.5 billion mortgage business is seeing delinquencies at an all-time low at 1 percent. This compares to a 9 percent delinquency at the peak of the great financial crisis.

Citigroup — While many reference the length of this economic cycle and question what inning we are in, Citigroup executives note that baseball is not limited to nine innings. As an aside, baseball fans can check out this article for a recap of the many ways to slice and dice the longest baseball game, the longest double header, etc.

Goldman Sachs & Co — Their investment banking division noted that many studies point to loan-to-value improving ratios in CMBS’. As for Goldman Sachs, they are focused on markets they like, sponsors they like, with perhaps a slightly riskier loan to get to the right cost of capital.

Click here for more.

Industrial News: Shipping Costs and Blackstone Buys Big

Industrial News: Shipping Costs and Blackstone Buys Big

August 2019 News Update

What’s Happening in the Commercial Real Estate Sector?

Shipping Costs Rule the Day:

The cost of shipping goods via truck is coming down, making it more comparable to shipping by train, according to a recent savings index by the Journal of Commerce (JOC). As C-Suite executives focus on paring down transportation costs, this could have an impact on decisions to use intermodals versus trucking to increase efficiency. See this Connect Media story for more.

Dallas Development Boom Continues

A new development boom continues in Dallas as AllianceTexas developer Hillwood plans to build two new speculative industrial buildings in Fort Worth and Northlake. The 810,000 sf building and 460,000 sf building are part of a 2600-acre master-planned industrial park. There are no signs of slowing in this hot Southwest industrial market. See this Bisnow story for more.

Blackstone Group Buys Big in New York City

The Blackstone Group is negotiating the purchase of a portfolio of 11 buildings near JFK Airport from TA Realty, according to Crain’s New York. This follows news that Amazon is looking for millions of square feet of infill space to tap into last mile customers.


Amazon Expands in Atlanta

July 2019

Here’s a list of recent news around the country:

Amazon recently confirmed that it will open a new 700,000 square foot fulfillment center just outside of Atlanta in Gwinnett County. This shows the increasing popularity of the Atlanta industrial market, which is among the top 5 markets in the U.S. for new construction. Click for more on Amazon.

Blackstone affiliate Link Industrial Properties closed on its acquisition of an 8.8 acre site in Medley, FL. The property, on the far western edge of Miami-Dade County, should be idea for a new development to support demand in the tight Miami industrial market.  Link Industrial Properties was part of Gramercy Property Trust, which was purchased by Blackstone in 2018. Find out more from The Real Deal. 

Port Activity Continues to Dominate Industrial

Connection to major US ports continues to drive many investment deals, such as this one by CenterPoint Properties. The firm acquired a 3.5-acre rectilinear concert yard in Compton, CA. that offers proximity to major freeways as well as ports of Los Angeles and Long Beach. The yard’s shape and size allows high efficiency for storing equipment and using it to boost product throughput in the southern California industrial market.

Midwest Multifamily Rental Updates

Midwest Multifamily Rental Updates

July 2019

A look at the multifamily sector shows that apartment rents are still on the rise throughout the country, but two-bedroom apartments are gaining ground faster than one-bedroom apartments. A article on multifamily research by ABODO shows  that the median rent for a one-bedroom apartment in the U.S. stands at $1,082,  while the average two-bedroom in the U.S. will cost a renter $1,357 per month.  The cost of a two-bedroom has risen 6.6% since January, while the rent for a one-bedroom has increased 4.45% from  a year earlier.

The relatively modest rent changes can be attributed to a stable economy where inflation is tame and the Fed decided not to raise interest rates. This could translate to more home sales, keeping multifamily demand in check.

Across the Midwest, Cleveland was a big winner with one-bedroom rents climbing from $760 to $802 over the last month and two-bedrooms rising from $761 to $790.

Columbus saw a decrease in rent in one-bedroom apartments from $1,065 to $970, while Nashville saw drops in two-bedroom rents from $2,009 to $1,915.

Experts expect that rental prices will stay steady or increase slightly barring any major geo-political events in the near future.

Real Capital Markets Office Report: Investors Watching Coworking Impact

June 2019

Real Capital Markets Report: Office Investment Still Steady

Investors Move Outside Urban Core; Coworking a Risk to Investment Values

At the halfway point of 2019, many investors remain cautiously optimistic about office investment activity, predicting that it will remain consistent into 2020. Real Capital Markets’ Mid-Year Office Investor Sentiment Report also noted cautions about the growth of coworking space. Will it impact investment values, particularly in the event of a market downturn?

As noted in this story by Commercial Property Executive, a vast majority (87%) of RCM survey respondents said coworking was a moderate to high risk to investment values. Of that total, 37% said the market could be saturated. Investors are watching this segment, given its rapid expansion and exposure to any market downturn.

The report also noted:

  • Value add is a big draw for investors — Survey participants were feeling positive about value-add assets in suburban markets, especially those with easy access to cities and highways and near communities with good schools. Some investors said that location was more important than building quality. Suburban assets and those in secondary markets were seen as a good relative value when compared with trophy assets, where pricing was higher.
  • Coworking is helping the market by pushing vacancies down, creating an incubator mindset where larger owners can help grow relationships. It is also opening the way for further disruption in office leasing, where quicker, less expensive leasing becomes more of the norm.
  • Operational challenges, including the cost of tenant improvements, are a concern. Tenant improvement costs in some markets, for example, have jumped to $110 per square foot from $60 to $80 per square foot.

The Blackstone Group Buys $19 Billion GLP Portfolio

June 2019

The Blackstone Group Buys GLP $19 Billion Portfolio

In the largest private real estate transaction in history, Blackstone Real estate has acquired a 179 million square foot logistics portfolio from GLP for $19 billion. The portfolio includes urban infill assets in 36 major metropolitan areas.

According to Reuters, the deals comes as investors are spending billions of dollars to buy industrial assets that support e-commerce activity. This deal nearly doubles the size of The Blackstone Group’s U.S. industrial footprint. The key is logistics, which focuses on helping industrial businesses move products from A to B. This buy allows The Blackstone Group to tap into GLP’s logistics platform, which includes clients such as Amazon, Walmart, and others. Check out these stories for more:


Connect Commercial Real Estate Media

According to PERE News, the portfolio has assets that have below market rents, which will give The Blackstone Group an advantage in the long term.

Senior Housing Investment Outlook: $2.8 B in sales, stable activity ahead

Senior Housing Investment Outlook: $2.8 B in sales, stable activity ahead

May 1, 2019

The senior housing sector is redefining itself, following several years of robust sales and construction activity. According to a new Real Capital Markets Report, activity slowed in early 2019, but investors are confident in the long term outlook.

RCM’s report incorporates the sentiments of investors across the U.S., as well as statistics from Real Capital Analytics (RCA) and the National Investment Council for Seniors Housing & Care (NIC). The report notes that U.S. investment sales in this sector totaled $2.8 billion in the first two months of 2019, down from $3.0 billion in the same period in 2018. There were $15.2 billion in sales in 2018. Sixty-six percent of investors and other real estate professionals interviewed for the report believe that activity in 2019 will be comparable to the total sales for 2018.

As noted in Senior Living News, investors are looking at operational issues, including focusing on strong operational partners. Given the challenges with shrinking profits and shortages of skilled labor, a strong operating partner is a must. Investors also are looking at the long-term view of this sector.

“Perspective is an important attribute for all commercial real estate investors, including those focused on the senior housing sector,” said Tina Lichens, Chief Operating Officer, RCM. “The sector as we know it today is vastly different from five years ago and rapidly changing. There remains considerable demand and capital in the market, yet investors need to look at the long-term as the market redefines its new normal.”

RCM Senior Housing Outlook

Highlights of the RCM Senior Housing Snapshot are:

  • The investor profile has shifted—with private investors leading the way, followed by institutional investors.
  • Construction activity has slowed—Newly constructed senior housing units declined by 14.8 percent from 2017 to 2018, according to NIC; experts consider this a needed slowdown to reach supply/demand equilibrium.
  • Strong operating partners a must—Over 61 percent of investors agree that a strong operating partner is important due to the challenges finding skilled labor, and managing costs and shrinking profits.
  • Long-term view is key—experts remain bullish on senior housing, but say that investors should look at the long-term, as they work through an oversupply of new construction in many markets.
What’s Trending in Commercial Real Estate?

What’s Trending in Commercial Real Estate?

April 17, 2019

From U.S. port activity to foreign investment and multifamily investment, here’s a roundup of recent commercial real estate news:

New Jersey Industrial Market Update

Port activity continues to drive the New Jersey industrial market, which is seeing consistent demand, rising rental rates and record low vacancy rates. This success is tied to the market’s prime East Coast location, which is ideal for e-commerce, light manufacturing and other distribution businesses. Here’s a New Jersey industrial market recap looking at current activity and the importance of the market’s port, air cargo, and major transportation network — from Avison Young’s Matt Turse.

Midwest Market Update: Industrial Activity Moves into Wisconsin

Industrial development continues to push into Wisconsin, with Amazon leading the way. After completing a 1.5 million-square-foot fulfillment center in Kenosha, the ecommerce powerhouse broke ground on a 2.5 million-square-foot fulfillment center in suburban Milwaukee. This movement isn’t a surprise, given the economic benefits to locating in Wisconsin versus Illinois. For more on the Wisconsin growth, including the capital markets perspective from Avison Young’s Erik Foster, click here.


Foreign Investors Choose Industrial Versus Multifamily

Foreign investors continue to focus on the industrial sector, which edged out multifamily as the asset class of choice. This commercial real estate survey by the Association of Foreign Real Estate Professionals (AFIRE) shows 79% of those surveyed wanting to increase exposure in the industrial sector, compared with 71% who picked multifamily. The top global cities for investment stability included New York, coming in first, followed by Tokyo, Paris, Boston, Singapore and Los Angeles.