Getting and Marketing Industrial Property

NEW YORK CITY—A company in Cincinnati, OH retained Colliers International as the exclusive listing agent for a 190,000 square-foot, pristine, Class A industrial property in New Windsor, NY. With the address of 500 Hudson Valley Ave., the property is close to New York’s Stewart International Airport and an hour north of New York City.

Built in 2002, the facility sits on a 20-acre site and has 25-foot clear heights, eight loading docks and one drive-in. Plus, the zoning would allow expanding the structure up to 350,000 square feet.

CBRE’s recent US industrial and logistics report showed the sector going strong though Q4 2018. Absorption exceeded new supply by 6.3 million square feet. The powerhouse brokerage stated, “This marked the 35th consecutive quarter of positive net absorption—the longest streak since 2001.” Availability declined by 10 basis points from Q3 to 7%. This was the lowest level since Q4 2000. The vacancy rate stayed at 4.3%, its lowest level since CBRE began tracking industrial product in 2002.

Colliers listed the leasehold of the property set to expire in Dec. 31, 2098 with a $15 million price tag. What went into the firm’s landing this industrial assignment?

For Ben Davis, a brokerage associate in Colliers’ Cincinnati, OH office, industrial property is his expertise. The owner LSI Industries is a publicly traded lighting company. As just one example of their diverse production, they manufacture lighted canopies which shelter pumps at gas stations.

Due to the nature of their manufacturing and warehousing, LSI owns industrial products incidental to their core business. For the last five years, Davis has cultivated a long-term relationship with LSI. Colliers has provided full-service assistance with the company’s real estate needs across the country including CA and TX.

This recent listing wasn’t a real estate driven decision. “It was a business decision. They uncovered efficiencies by moving the lines that they had at this plant to facilities that they have around the country,” says Davis. “The cherry on top is the stakes were incredibly valuable.”

For this project, he brought on Enzennio Mallozzi, managing director, investment sales and Robert Lella, managing director, both in Colliers’ Stamford, CT office. They tag-teamed providing on-the-ground, local expertise. Davis emphasizes it’s not a transactional deal. It’s about understanding a company’s business. By encouraging transparency and openness, “you can help them get in front of things they need down the road,” Davis adds.

Mallozzi lists what they are considering to find the right buyer. They look at the buyer’s wherewithal to close the deal, their financial standing and deal terms. Colliers tries to avoid a lot of different contingencies, many ways out of the deal. They look for limited due diligence, a quick close and sizable earnest money. They assess whether the buyer will get things done and perform based on representations and not look for a retrade down the road. “When you have an investment that is so well located and really checks the boxes for what the market needs and demands right now, you can drive it to be very competitive. And the terms get to be very aggressive,” says Mallozzi.

The leasehold was created because the town of New Windsor had a large tract of land around Stewart International Airport. They arranged for a real estate developer to subdivide the land. Leaseholders could do a build-to-suit, using and operating the property for a 99-year term.

With this deal a buyer would come in and purchase the remaining 80-year leasehold for $15 million. In New York City’s boroughs with industrial leases marketed at $80 per square foot paying four to five years rent would be equivalent to the long-term leasehold at the 500 Hudson Valley Ave. property, says Mallozzi.

“E-commerce is a trend that has legs and will continue. Furthermore, the population in New York continues to grow. A lot of the historical, industrial neighborhoods are gentrifying. The space is disappearing, becoming multifamily and medical office,” he adds. “The businesses that operate in these industrial spaces still need somewhere to operate.”