Raith Capital Partners Sells 3M-SF of Industrial Assets in the Midwest
The Midwest industrial markets are enjoying an unprecedented amount of investment from tenants, developers and investors that once may have overlooked the region.
Raith Capital Partners sold 12 industrial assets totaling nearly 3 million square feet in the Midwest to three separate buyers for almost $140 million.
Plymouth Industrial REIT, STAG Industrial and Legacy Investing bought the 12 properties located in Cleveland and Fort Wayne and Bloomington, Ind. JLL Capital Markets, which marketed the properties on behalf of Raith Capital Partners, closed the sale.
Plymouth Industrial REIT purchased the 10-building, 90-percent-leased portfolio, totaling 2.1 million square feet in the greater Cleveland area. STAG Industrial acquired a single-tenant, 764,177-square-foot, Class A bulk distribution center in Fort Wayne, Ind. Legacy Investing bought a 125,000-square-foot manufacturing and distribution facility.
The JLL Capital Markets team representing the seller was led by Senior Managing Director and Co-Head of JLL’s Industrial Capital Markets group John Huguenard, Managing Director Sean Devaney, Senior Director Kurt Sarbaugh and Analyst Peter Moriarty. Managing Director Joe Messina and Vice President David Stecker also assisted on the project.
“Interest in Midwest industrial product remains extremely strong,” Devaney said in a statement.
Indeed, the Midwest markets are enjoying an unprecedented amount of investment from tenants, developers and investors that once may have overlooked the region, according to a report by JLL on the Midwest industrial market.
Ninety-one percent of respondents to JLL’s survey said they have seen a significant increase in interest from new developers and investors in the Midwest since the start of 2020. Seventy-five percent of respondents expect tenant requirements to increase by at least 15% in 2021.
JLL says demand is keeping up with 257.7 million square feet of new inventory in the region. In a sign that COVID-19 could be compressing timelines, 60% of survey respondents noted that tenants are showing more urgency to lease space compared to previous years.
New modern bulk product is popular in the Midwest, accounting for 70% of overall net absorption in the region. Modern bulk net absorption is 234 million square feet since 2016, which accounts for 70% of overall net absorption in the region.
Every survey respondent expected sales volume and pricing to increase in 2021. All Midwestern markets should see cap rates further compress as pricing and volume are expected to rise in 2021. While the average cap rate in the region is 6.5%, JLL says most modern bulk assets are garnering a reduction of at least 50 basis points from the market average. The company expects out-of-town investor interest to rise across the region in 2021.