"We believe strongly that the largest distribution markets in the country—-Los Angeles, Chicago, New Jersey and South Florida—-are positioned to outperform over both the near and long-term," says Bob Savage, president of KTR, in a prepared release. "Having investment infrastructure on the ground in these markets is an important element of our strategy to exploit the advantages of local operating expertise."
SVP Brian Milberg has relocated from KTR's New York City headquarters to direct the company's initiatives in the Chicago area, a market in which he has been a key player in acquiring and developing more than five million sf since 2005. VP Brian Gagne has moved from the suburban Philadelphia office to oversee the new one in Newport Beach, CA.
Gagne tells GlobeSt.com that KTR's focus companywide will be on both acquisition and development. In terms of development, "90% of what we do is spec development versus BTS, so we are not afraid to jump on a land opportunity," he says. "We have an internal infrastructure that allows us to work efficiently through both new development and redevelopment opportunities. In fact, we have a development pipeline for our first fund of over six million sf around the country, all of it industrial. Fundamentally we believe that speculative development is a superior strategy when incorporated with existing building acquisitions and redevelopment/repositioning efforts in order to achieve an attractive overall portfolio with long term value sustainability."
Within Southern California, KTR's immediate goal is "to expand our portfolio into southern Los Angeles County including the Downtown and South Bay markets," Gagne says. "Our first asset purchase was in Pomona, and we are focused on the San Gabriel Valley as well. We have also been looking closely at the Western Inland Empire and the Mid Counties markets. These markets all have the hallmarks of superior logistics infrastructure, high barriers to entry and are very liquid markets. In these ways they are similar to other markets where we have had success like Northern New Jersey, Miami and Chicago/O'Hare."
In a prepared release, Don Chase, partner in charge of KTR's suburban Philadelphia-based investment team, comments, "as the largest industrial property market in the US, LA obviously offers enormous opportunity for KTR and is an essential market for us in the long run. Of course, competition for investment opportunities and the resulting impact on pricing makes it a challenging market to penetrate, but we expect to replicate the success we have had as a firm establishing market leadership positions."
Milberg did not return calls by deadline seeking comment on goals for the Chicago office. However, in a release, John DiCola, partner in charge of KTR's New York City-based investment team, calls Chicago "a critical market" and says that Milberg has done "a tremendous job building relationships and finding off-market investment opportunities in the Chicago market over the past few years, despite considerable competition from more established players."
Since the beginning of 2008, KTR has expanded its portfolio by approximately three million sf, with acquisitions including a 735,600-sf distribution facility through a sale-leaseback with Supervalu at 3700 Industrial Rd. in Harrisburg, PA. The Supervalu deal, announced in early April, was preceded by the Pomona, CA deal, the 1.1-million-sf acquisition of White Rose Inc.'s dry and cold storage facilities at 380 Middlesex Ave. and 580 Port Carteret Dr. in Carteret, NJ, the purchase of a 305,000-sf Dominick's warehouse at 4404 W. District Blvd. in Chicago and a 121,000-sf sale-leaseback at 1531 N.W. 12th Ave. in Pompano Beach, FL.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
