Dive Transient:
- Prologis, a San Francisco-based actual property funding belief, introduced Monday that it acquired almost 14 million sq. ft of business properties from New York Metropolis-based Blackstone, one of many world’s largest funding administration corporations, in a $3.1 billion deal.
- The acquisition worth, funded by money, represents an roughly 4% cap fee within the first yr and a 5.75% cap fee when adjusting to at the moment’s market rents, in keeping with a firm press launch.
- A Prologis spokesperson instructed Building Dive that regardless of an general cooldown within the industrial market, historic low emptiness nonetheless defines logistic market situations.
Dive Perception:
A cooling industrial market didn’t deter the world’s largest industrial property firm from making the $3.1 billion deal. The Blackstone industrial portfolio acquisition expands the corporate’s presence in key markets, together with:
- Atlanta.
- Baltimore.
- Washington, D.C.
- Southern California.
- San Francisco.
- Dallas.
- Las Vegas.
- New York.
- New Jersey.
- Phoenix.
- South Florida.
Prologis now plans to carry 100% of the acquired properties, which match “completely” into its portfolio and long-term strategic plan for development, in keeping with the corporate. Its 1.2 billion-square-foot portfolio of logistics actual property now stretches into 19 international locations.
But demand for industrial area tumbled 40% within the first quarter of 2023, in keeping with the most recent industrial analysis from Newmark, a New York Metropolis-based industrial actual property advisory agency.
The REIT reported throughout its final earnings name that roughly 99% of the models throughout its 1.2 billion-square-foot portfolio are both leased or in negotiation, additional underscoring the tightness of business markets. Prologis additionally shared that larger rates of interest might make new developments more durable to pencil for some corporations, which might preserve a lid on provide.
New development begins within the industrial sector plunged 38% yr over yr, in keeping with Newmark. Kyle Roberts, govt managing director at Newmark, expects to see considerably much less product delivered beginning halfway by 2024 attributable to tightened credit score situations.
However, Roberts agrees that markets with enticing consolidation environments, like manufacturing hubs, will nonetheless boast sturdy demand at or barely under peak cyclical demand. For instance, Prologis pegs that for each $1 billion invested in Mexican factories, that may generate about 5 to 10 million sq. ft in native logistics demand, in keeping with a current Prologis analysis report.
The transaction is at the moment anticipated to shut by the tip of the second quarter, in keeping with Prologis.