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By Owen Rouse, Jr., Manekin LLC

New options, new rules for industrial


The strength of industrial as a favored an asset class is not in dispute. Institutionally backed capital is trying to deploy across the industrial spectrum as capital tries to enter the field or double down on their existing investments. Public to private mergers are coming across the screen more frequently as are large scale private transactions driven by “industrial aggregators”. So what does this mean for investors, occupiers, and landlords?Investors Competition to place capital into the industrial asset class has never been more competitive. Declining capitalizations rates (even across credit classes) combined with newly formed capital source including offshore dollars has created a moving target. Combined with relatively small transactions it becomes increasingly difficult to “move the needle” in terms deployed capital.The quest for the “last mile” or “last touch” facility continues as buildings get amended to suite occupiers and the real estate models get worked out. This last touch concept may be the next big thing that can bring life to older but infill buildings.The good news for some investors is that longer term leases may become the norm to absorb amortized capital or protect occupiers by fixing their rental costs over a longer period of time. This may allow investors layer in favorable levels of debt, pushing overall yields upwards .Occupiers E-commerce driven occupancies need advanced logistics management software (investment) and perhaps material handling equipment (major investment).


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