“It's not for a hands-off buyer,” he says. Brennan will seek to extend the leases, as well as fill up any vacancies. “We've built up the management infrastructure to deal with this type of acquisition.” Since 2011, through multiple ventures, Brennan and Arch Street has acquired over $1 billion of single tenant, net leased, industrial assets. This acquisition marks their sixth joint venture. Brennan's current portfolio spans 25 states and encompasses over 33 million square feet.

One of the reasons the company's officials approach the industrial market with such confidence is that “there are a lot of engines driving demand,” according to McKibben. The expansion of e-commerce has, of course, gotten a lot of the credit for the nation's industrial boom by creating the need for last mile distribution centers and new bulk distribution buildings. But the auto and homebuilding industries, which have long supply chains, have also staged comebacks, fueling networks of suppliers that need industrial space.

“The fundamentals of industrial real estate are still very strong,” he says. “And the banks have kept things in check” by refusing to finance the type of runaway development seen during the last boom. “They have recent memories of what happened.”

And this continuing vitality has increased the comfort level of many players in the market. A few years ago, due to its familiarity with the industrial sector, Brennan probably would have been interested in these properties, McKibben says. But “this is a value-add portfolio, and it would have been more difficult to finance the deal and convince partners to invest in this strategy.”

CHICAGO—The US industrial market keeps getting stronger, and many investors have set their sights on value-add portfolios. Brennan Investment Group, a US real estate company, and a client of Arch Street Capital Advisors, LLC, a Greenwich, CT-based real estate investment advisory firm, recently took another step into this market segment by acquiring an 11-building portfolio located in eight states and totaling 2,497,982 square feet. The price was $100 million. The seller was an institutional owner.

Brennan has been one of the more active buyers over the past few years, but most of the buildings in this latest portfolio have shorter leases than the company usually acquires, and one property in New Hope, MN, is currently vacant.

“This is a more roll-up-your-sleeves type of acquisition,” Scott McKibben, chief investment officer of Rosemont, IL-based Brennan, tells GlobeSt.com. But he believes it's worthwhile. “If these were 15-year leases, the cap rate would have been much lower. We have a higher risk, but we will also get a higher return.”

The portfolio includes three industrial properties in Greater Milwaukee, two in the Minneapolis region, and one each in the Chicago, Pittsburgh, Birmingham, Grand Rapids, Quad Cities metro areas, and an office building in Jacksonville. Two more vacancies will soon open up, McKibben adds, but the rest are single-tenant buildings that play an important role in the renters' operations. The Grand Rapids location, for example, is a Tesla Motors manufacturing plant.

“It's not for a hands-off buyer,” he says. Brennan will seek to extend the leases, as well as fill up any vacancies. “We've built up the management infrastructure to deal with this type of acquisition.” Since 2011, through multiple ventures, Brennan and Arch Street has acquired over $1 billion of single tenant, net leased, industrial assets. This acquisition marks their sixth joint venture. Brennan's current portfolio spans 25 states and encompasses over 33 million square feet.

One of the reasons the company's officials approach the industrial market with such confidence is that “there are a lot of engines driving demand,” according to McKibben. The expansion of e-commerce has, of course, gotten a lot of the credit for the nation's industrial boom by creating the need for last mile distribution centers and new bulk distribution buildings. But the auto and homebuilding industries, which have long supply chains, have also staged comebacks, fueling networks of suppliers that need industrial space.

“The fundamentals of industrial real estate are still very strong,” he says. “And the banks have kept things in check” by refusing to finance the type of runaway development seen during the last boom. “They have recent memories of what happened.”

And this continuing vitality has increased the comfort level of many players in the market. A few years ago, due to its familiarity with the industrial sector, Brennan probably would have been interested in these properties, McKibben says. But “this is a value-add portfolio, and it would have been more difficult to finance the deal and convince partners to invest in this strategy.”