Industrial real estate has been booming with the rise of e-commerce. After all, products bought online have to come from a warehouse somewhere.
Vacancies overall have dropped to historic lows, while rents have risen to historic highs. Those conditions can produce strong activity for investors buying and selling industrial properties.
Major markets such as New York, Los Angeles, Chicago and Dallas draw most of the attention, according to CoStar’s U.S. industrial market report. Over the past year, sales volume has grown by 6.3%.
Big mergers and acquisitions over the past year drove sales, notably Canadian company Ivanhoe Cambridge acquiring IDI Logistics last November for $3.5 billion and then forming a 50-50 joint venture with fellow Canadian firm Oxford Properties Group this year. The deal involved 111 existing properties, 35 development projects and land for future development.
This and other billion-dollar deals helped boost sales performance in various cities outside the major industrial markets.
Using CoStar data, here are the top 10 cities for industrial sales volume growth over the past year.
10. Kansas City, Missouri: 59.7%
Industrial real estate sales through the first half of this year were better than any other year in the past decade for the large transportation hub. More than $265 million in real estate switched ownership, according to CoStar’s Kansas City market report.
About half of the sales involve one building, an underground warehouse in Independence, Missouri. The building was part of a 54-property portfolio that private equity firm Blackstone Group bought for $1.2 billion.
9. Honolulu: 62.9%
Many of the sales involved buildings occupied by their owners, according to CoStar’s Honolulu market report. The report noted that the largest institutional investors, such as real estate investment trusts, haven’t bought much because Honolulu doesn’t have much new high-end product. Most investors are local or from California. The largest deal over the past year involved Oahu Publications, owner of the Honolulu Star-Advertiser, selling the building housing its printing press for $40 million and leasing it back from the buyer.
8. Portland, Oregon: 63.2%
Sales volume in the first half of the year exceeded the same period last year in what is largely a regional distribution market. Sales were helped along with five properties in the area being part of a multistate portfolio that sold to RReef America Property Trust, a real estate investment trust.
According to the CoStar’s Portland market report, most sales, however, carry price tags under $10 million. But over the past year sales volume has hit $902 million, second most in the top 10.
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Article by: Richard Lawson | CoStar | July 29, 2109