Cobalt REIT II.

Funded by seven institutional investors, REIT II holds enough promise for Cobalt to tap about $80 million of equity and leverage it to $250 million to $300 million for the development of roughly five million sf of light-industrial in the next three years, according to Lewis D. Friedland, managing partner of the Dallas-based investment group. Leading the development push is Dirk P.D. Mosis III, the REIT's San Antonio-based managing director, with Aaron Reynolds, senior associate in the headquarters office as the program's financial analyst.

The first ground-ups are the 348,460-sf, five-building Freeport Ninety in Stafford, TX, a 25-acre development with Avera Capital Partners of Houston as its partner; 238,112-sf Shiloh 400 Business Center in Alpharetta, GA, a three-building project on 18 acres with Charlotte, NC-based Crescent Resources LLC as the partner; and a 54,000-sf building on 5.3 acres at Diamond Lake in Rogers, MN, with Cobalt in a one-off development role. The spec buildings will come on line in the fourth quarter.

"The trend around the county almost everywhere are big boxes, but if you look at the lease volume in 2007, 95% were 50,000 sf and below," Friedland points out. "That means a vast majority of construction targets a small percentage of lease transactions." He says research also shows that the 350,000 sf and up category has had zero rent growth while the under 300,000-sf crowd has picked up 15% in two years.