CHICAGO—As reported last week in GlobeSt.com, the North American big-box sector just finished a historic year, as speculative deliveries soared past build-to-suits, and users quickly moved to fill in much of the new space. And experts from Colliers International, which just released its latest Big Box Market Report, say the expansion will likely continue. Furthermore, the appetite among investors for these properties, defined as distribution buildings with more than 300,000 square feet and clear heights of 28' or greater, is unlikely to abate.

“Institutional money is flowing into the industrial market, especially the distribution sector,” Jack Rosenberg, Colliers' national director, logistics and transportation, tells GlobeSt.com. In fact, so many investors are trying to establish a foothold that “in 2016, we think that there was about $100 million in equity looking for class A distribution buildings that was not able to get placed.”

The intensity of the competition, which pushed down the average cap rate to just 5.3%, has changed how investors approach deals. “Institutional investors are trying to capture the best product far earlier,” Rosenberg says. Instead of concentrating their efforts on stabilized buildings, many have decided to buy long before tenants agree to occupancy.