MINNEAPOLIS—Brennan Investment Group, LLC, a private real estate investment firm, has just acquired a 355,185-square-foot distribution facility at 8201 54th Ave. N in suburban New Hope leased to Dedicated Logistics Warehousing, LLC, a warehousing, fleet management, and logistics company. The Rosemont, IL-based Brennan has been on a buying spree as it seeks to take advantage of the burgeoning US industrial economy. The company has decided to focus on growing markets and facilities like this one that tenants consider critical to their operations.
Few metro areas are as attractive as the Twin Cities. It has an extraordinarily low unemployment rate, currently 3.3% according to the Bureau of Labor Statistics, the lowest of any large metro region in the US. And its industrial sector has seen 17 consecutive quarters of positive net absorption, with an overall occupancy of 94.8%.
"The acquisition of the Dedicated Logistics facility was funded through our recently launched $300,000,000 net leased joint venture with one of Arch Street Capital Advisors' institutional clients," said Michael Brennan, chairman and co-founder of Brennan Investment Group. "We are excited to add this property to our growing portfolio."
This is the partners' fourth venture, but the previous three were substantially smaller, each less than $200 million, and Brennan told GlobeSt.com that the boost in funding reflects their growing confidence in the US economy.
And the economy is strong enough that Brennan feels comfortable buying class B product. Dedicated's warehouse, for example, has 18' clear ceiling height. Brennan's recent purchase of 23 properties scattered throughout the region for $164 million is another good example. Since 2010, Brennan has acquired over $800 million in industrial real estate. The company's current portfolio spans 22 states and encompasses over 20-million-square-feet.
The key criteria of Brennan's net lease joint venture are: location in the top 100 US markets; remaining lease term of at least 13 years; strong credit, with non-investment grade credit permitted; significant facility investment by the tenant. Company officials will consider investing in all industrial facility types, including manufacturing, assembly, R&D and distribution.
In the coming year, "we expect our acquisition volumes will significantly exceed 2014 levels," said Robert Vanecko, Brennan's managing principal and the head of the firm's single-tenant, net lease division.
Brennan is just one of many investors looking to capitalize on the resurgence in the industrial economy. The pace of deal making has accelerated throughout the country. In the first half of 2012, investors spent $15 billion on industrial product, according to an Avison Young analysis of data from Real Capital Analytics, with warehouse and distribution buildings the most popular. But for the first half of 2014, this amount had increased to $23.2 billion, a boost of 54.7%. And the Midwest saw its total industrial investments increase from $2.3 billion to $3.8 billion, and its national share increase from 15.1% to 16.5%.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
