Should We Wait for the Other Shoe to Drop?

Paul Ellis, CEO of Foundry Commercial

ORLANDO— Foundry Commercial has been steadily building its industrial platform in Orlando with projects like Princeton Oaks and Crews Commerce Center. Together, the industrial projects are worth over $88 million. Why the push? Foundry, which spun off from CNL, points to the e-commerce revolution. Specifically, it’s the so-called “last mile” issue that e-commerce companies must face in order to secure same-day delivery. GlobeSt.com caught up with Paul Ellis , CEO of Foundry, about how the Orlando market is ripe for these developments. He also shares his perspective on the greater e-commerce/commercial real estate trend in general? GlobeSt.com: How is e-commerce practically impacting industrial real estate? Ellis: It is still relatively new so the changes are dynamic.  We see it effecting all aspects of industrial real estate, some users are actually able to be more profitable within a smaller footprint, some like Amazon and Walmart need increasingly larger footprints to deliver.  The impact is also very tied to retail and we are seeing a blending of concepts as e-commerce becomes more and more the standard.  The industrial component is absolutely linked to the retail delivery model both in store and on-line. GlobeSt.com: What opportunities do you see in industrial real estate? Ellis: We are in a development cycle in most markets right now and the intra-city opportunity vs the regional distribution center is becoming more and more of an opportunity as users work on the “last-mile” aspects of their delivery model. GlobeSt.com: What challenges do you see? Ellis: The uncertainties about the economy remain the biggest challenge, while the fundamentals remain very positive there remains caution and pain from the last recession. Users and investors alike seem to be waiting for the next “shoe to drop” and that can cause a “self-fulfilling prophecy” and we could see a slowdown. We believe if it does occur it is likely to be minor but something we need to continuously monitor. GlobeSt.com: What distinguishes your industrial platform from others? Ellis: What distinguishes us as a platform is the breadth of investment in our projects by our partners. Rather than have one entrepreneur or large public company as the sponsor of any project, almost 100% of our partners are invested and provide the execution (leasing, development and management) of each project. There is a tremendous incentive for success and our capital goes in side by side with our institutional customers and JV partners.