The single tenant Office/Industrial market is highly competitive today, however, this competitiveness varies due to the nature of the tenant and the relevant market. High credit tenants in primary – especially urban – markets are among the highest in demand. According to Costar the market for single tenant NNN investments is averaging 10,000 transactions a quarter.
A majority of those were Retail spaces, Corporate and Regional HQ’s in Primary and Secondary Markets. Of these primary markets, none is more interesting than Washington DC. Many Investors and Corporations have excess cash holdings and seek less volatile investments than the open stock and bond markets.
This trend has been realized through the increased activity of Institutional Investors, Private Equity Groups, and both publicly and privately traded REIT’s D.C. is particularly fascinating with the inclusion of Government and Government Contracting Tenants such as SAIC, Booz Allen, Lockheed Martin, Northrop Grumman, etc.
Generally considered some of the most desirable tenants in terms of longevity and credit, Contractors are frequently subject to shorter leases (5-7yr periods depending on the time frame of their contract), but they also tend to renew due to the nature of the space amenities they often require. Government (Federal or State) tenants are typically a highly favored tenant as well.
Investors however must be comfortable with a “non appropriation of funds” clause which the government entity may exercise because of budgetary constraints. The DC metro, particularly Northern Virginia, has many prospects for advancement, such as: » Several New Developments in the Ballston/Rosslyn corridor through Arlington (attracting tenants into new facilities who seek proximity to DC).» Phase I Dulles Metro Rail expansion scheduled to be in operation in 2013 should help the Dulles/Tech Corridor and Tyson’s Corner. » BRAC’s (Base Realignment and Closure) southward shift along the I-395/I-95 corridor south to Stafford and Fredericksburg.
It is anticipated that these shifts will draw strong investment grade tenants into these areas in the form of regional headquarters, manufacturing facilities, single tenant satellite operations and those who need proximity to either the tech or DOD (Department of Defense) base. Each of these developments should be considered as having quality single tenant investment opportunities in the coming 12-18 months.
www.calkian.com
Showing posts with label industrial. Show all posts
Showing posts with label industrial. Show all posts
Wednesday, January 25, 2012
Wednesday, September 14, 2011
Industrial Real Estate Booms
Industrial real estate booms in front of expected consumer spending hikes
The same signs of increasing consumer spending that are expected to boost the retail real estate market are already positively impacting the industrial real estate market. The New York Times cited Cushman & Wakefield data that shows the vacancy rate in industrial properties declined in the first half of the year to 9.7 percent, year-to-date leasing activity is up 27 percent from a year ago, and sales volume in the first half of the year grew nearly 160 percent compared to the same period a year ago. Several companies have been especially aggressive in acquiring industrial properties, including Clarion Partners, Terren Realty Corporation, Morgan Stanley, the Cabot Group and CenterPoint Properties.
http://therealdeal.com/newyork
The same signs of increasing consumer spending that are expected to boost the retail real estate market are already positively impacting the industrial real estate market. The New York Times cited Cushman & Wakefield data that shows the vacancy rate in industrial properties declined in the first half of the year to 9.7 percent, year-to-date leasing activity is up 27 percent from a year ago, and sales volume in the first half of the year grew nearly 160 percent compared to the same period a year ago. Several companies have been especially aggressive in acquiring industrial properties, including Clarion Partners, Terren Realty Corporation, Morgan Stanley, the Cabot Group and CenterPoint Properties.
http://therealdeal.com/newyork
Tuesday, January 25, 2011
Blackstone Bets on Industrial Property
Net lease market News
Blackstone bets big on industrial property rebound
In six months, the private equity firm's real estate arm, Blackstone Real Estate Advisors, has amassed a portfolio of 275 industrial properties, spanning about 45 million square feet.
It might more than triple its holdings to about 150 million square feet, according to an industry source with knowledge of the plans, but who is not authorized to talk about them.
These warehouses and distribution facilities -- sometimes as large as 17 U.S. football fields -- sit beside highways, near airports and shipping ports throughout the United States. The hulking concrete shells are stuffed with televisions, shampoo, soft drinks and other goods headed for stores. Tenants include shippers, manufacturers and retailers.
"Industrial real estate in the private market has been cheaper than other property sectors," said Green Street Advisors analyst Steven Frankel. "Industrial last year had not recovered at nearly that same pace as apartments, or hotels or the majority of other sectors. Pricing looked very attractive on a relative basis."
SOURCES:http://www.reuters.com/article/idUSTRE70O68920110125
Net Lease Industrial Assets it has been estimated that as much as $97 billion will be invested in the US commercial market by global investors in 2011. DTZ, a British-based real estate services firm, stated this represents a 54% increase from their December 2009 prediction. In short, growing confidence in real estate investment will pull investors off the bench – leaving the industrial sector poised to benefit. However, investors scrambling to find viable and profitable net lease investments are running into a short term problem. There is a lack of both current supply and new industrial construction in the pipeline.
Investors want quality, top rated tenants in the strongest urban markets. These investments are increasingly rare. However, “Mission Critical” net lease industrial assets are available - investors may just need to rethink their criteria. These properties often have existing permitted industrial uses, are located in and around quality commercial markets, and provide goods and services unique to their businesses. The real values of these investments are not only the tenant, or even the property, but the permitted use so critical to the nature of the business. Sellers are willing to sign long-term leases at higher returns than current market rates because these properties are so critical. Increasingly, investors are overlooking traditional analytics and considering these investments. With intelligent investment they can provide a highly profitable return.
Blackstone bets big on industrial property rebound
In six months, the private equity firm's real estate arm, Blackstone Real Estate Advisors, has amassed a portfolio of 275 industrial properties, spanning about 45 million square feet.
It might more than triple its holdings to about 150 million square feet, according to an industry source with knowledge of the plans, but who is not authorized to talk about them.
These warehouses and distribution facilities -- sometimes as large as 17 U.S. football fields -- sit beside highways, near airports and shipping ports throughout the United States. The hulking concrete shells are stuffed with televisions, shampoo, soft drinks and other goods headed for stores. Tenants include shippers, manufacturers and retailers.
"Industrial real estate in the private market has been cheaper than other property sectors," said Green Street Advisors analyst Steven Frankel. "Industrial last year had not recovered at nearly that same pace as apartments, or hotels or the majority of other sectors. Pricing looked very attractive on a relative basis."
SOURCES:http://www.reuters.com/article/idUSTRE70O68920110125
Net Lease Industrial Assets it has been estimated that as much as $97 billion will be invested in the US commercial market by global investors in 2011. DTZ, a British-based real estate services firm, stated this represents a 54% increase from their December 2009 prediction. In short, growing confidence in real estate investment will pull investors off the bench – leaving the industrial sector poised to benefit. However, investors scrambling to find viable and profitable net lease investments are running into a short term problem. There is a lack of both current supply and new industrial construction in the pipeline.
Investors want quality, top rated tenants in the strongest urban markets. These investments are increasingly rare. However, “Mission Critical” net lease industrial assets are available - investors may just need to rethink their criteria. These properties often have existing permitted industrial uses, are located in and around quality commercial markets, and provide goods and services unique to their businesses. The real values of these investments are not only the tenant, or even the property, but the permitted use so critical to the nature of the business. Sellers are willing to sign long-term leases at higher returns than current market rates because these properties are so critical. Increasingly, investors are overlooking traditional analytics and considering these investments. With intelligent investment they can provide a highly profitable return.
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