LOS ANGELES—Industrial build-to-suit projects are dominating the net lease market this year. According to Douglas M. Longyear, managing director of capital Markets in the net lease group at Cushman & Wakefield, there is more than 51 million square feet in build-to-suit industrial net lease projects that have delivered this year and another 67 million under construction that will be completed before the end of the year. That is a total of 118 million square feet of net lease industrial build-to-suits to hit the market this year.
“That is a huge number, and we are expecting that number to potentially increase in 2017 and 2018, depending on what is going on in the economy,” Longyear tells GlobeSt.com. “A lot of this activity is being driven by ecommerce. We are estimating that more than 20% of the absorption today is attributable to ecommerce requirements. That trend is going at a strong clip because the non-Amazons of the world are trying to figure out how to service the retail customer through online sales, and they are making big investments in their supply chains.”
Longyear plans to discuss the topic in depth tomorrow at Net Lease West in Downtown Los Angeles. “We've got a fantastic panel,” he says. It includes Michael Fitzgerald, SVP of sale-leaseback acquisitions at VEREIT Inc.; Zachary Pasanen, VP at W. P. Carey; and Robert G. Vanecko, managing principal at Brennan Investment Group.
In addition to discussing the build-to-suit net lease market, the panel will also discuss sale leaseback, delving into the deal structures, lease terms and pricing. Like build-to-suits, sale leasebacks have also seen an increase this year. While the deal structures are similar, the drivers for these transactions are much different. “The motivations for people doing sale leasebacks can vary,” says Longyear. “The owners of these properties essentially have capital tied up in these properties. If they don't have debt on them, they are probably carrying these properties at a low basis. The properties are worth more than what they are carrying at. So, they can sell these properties and lease them back for the long term, which will free their capital up.”
The panel will also advise on underwriting non-investment grade tenants, because not every deal is going to have a household name tenant. “A lot of properties that are sold have either investment grade companies or companies that have well known brand names, but in reality, there are companies that are not household names and don't have investment grade credit,” adds Longyear.
Join us at Net Lease West in Downtown Los Angeles tomorrow to hear more about this topic and more.
Hear from the net lease sector's top leaders as they explore current and emerging trends and provide their outlook for continued success in this space. Join us at RealShare Net Lease West on Nov. 1 and 2, where you'll meet the top owners, investors, brokers and financiers in the net lease and sale-leaseback community. Learn more.
LOS ANGELES—Industrial build-to-suit projects are dominating the net lease market this year. According to Douglas M. Longyear, managing director of capital Markets in the net lease group at Cushman & Wakefield, there is more than 51 million square feet in build-to-suit industrial net lease projects that have delivered this year and another 67 million under construction that will be completed before the end of the year. That is a total of 118 million square feet of net lease industrial build-to-suits to hit the market this year.
“That is a huge number, and we are expecting that number to potentially increase in 2017 and 2018, depending on what is going on in the economy,” Longyear tells GlobeSt.com. “A lot of this activity is being driven by ecommerce. We are estimating that more than 20% of the absorption today is attributable to ecommerce requirements. That trend is going at a strong clip because the non-Amazons of the world are trying to figure out how to service the retail customer through online sales, and they are making big investments in their supply chains.”
Longyear plans to discuss the topic in depth tomorrow at Net Lease West in Downtown Los Angeles. “We've got a fantastic panel,” he says. It includes Michael Fitzgerald, SVP of sale-leaseback acquisitions at VEREIT Inc.; Zachary Pasanen, VP at W. P. Carey; and Robert G. Vanecko, managing principal at Brennan Investment Group.
In addition to discussing the build-to-suit net lease market, the panel will also discuss sale leaseback, delving into the deal structures, lease terms and pricing. Like build-to-suits, sale leasebacks have also seen an increase this year. While the deal structures are similar, the drivers for these transactions are much different. “The motivations for people doing sale leasebacks can vary,” says Longyear. “The owners of these properties essentially have capital tied up in these properties. If they don't have debt on them, they are probably carrying these properties at a low basis. The properties are worth more than what they are carrying at. So, they can sell these properties and lease them back for the long term, which will free their capital up.”
The panel will also advise on underwriting non-investment grade tenants, because not every deal is going to have a household name tenant. “A lot of properties that are sold have either investment grade companies or companies that have well known brand names, but in reality, there are companies that are not household names and don't have investment grade credit,” adds Longyear.
Join us at Net Lease West in Downtown Los Angeles tomorrow to hear more about this topic and more.
Hear from the net lease sector's top leaders as they explore current and emerging trends and provide their outlook for continued success in this space. Join us at RealShare Net Lease West on Nov. 1 and 2, where you'll meet the top owners, investors, brokers and financiers in the net lease and sale-leaseback community. Learn more.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Kelsi Maree Borland
