Investcorp Buys US Industrial Portfolio for $380M

Investcorp, buoyed by the promise of the sector, has added to its industrial holdings by acquiring 89 industrial properties totaling near 2.2 million square feet in Los Angeles, Dallas, Phoenix, and Seattle for $380 million.

The properties bring the company’s US industrial holdings to $2.8 billion with 27 million square feet in more than 385 buildings.

The firm now has a 95% leased portfolio of Class B industrial warehouses with tenants from a wide range of industries including technology, industrial services, business and administrative services, and maintenance and contracting services.

“Our latest acquisitions capitalize on the strong demand for industrial properties as supply-demand balance is expected to drive exponential rent growth,” said Investcorp Commercial Acquisitions Principal Michael Moriarity.

Rents for modern warehouse projects with the average for new construction are poised to cross the $10 per square foot mark—or have already crossed it in at least six of the nation’s prime industrial warehouse submarkets, Newmark noted in a report that came out lately.

Northern New Jersey ($18.50), Puget Sound ($16.44), Los Angeles ($16.20) and Inland Empire ($10.20) have exceeded the $10 milestone. Chicago and Miami are on the cusp.

The current disruptions throughout global supply chains are also helping to propel the rent increase by furthering the ‘pull-forward’ of the industrial cycle in that procurement departments and buyers are doubling their product and supply purchases and storing them in domestic warehouses just to meet the holiday season’s anticipated demand, C.J. Follini, principal, Noyack Capital Partners told Globe St.

Tenants are absorbing the higher rents through substantial savings on transportation costs achievable in these key locations.

Given the combination of high rents and limited development, infill and redevelopment projects will become increasingly common in prime submarkets.

Indeed, industrial real estate has one of the strongest investment outlooks as investors pencil in aggressive rent gains into their valuation models, John Chang, Senior Vice President and National Director Research Services at Marcus & Millichap has said recently.

In deciding where to put their money, he said investors have been keen on the supply chain issues of recent months as businesses are stockpiling increased inventories to mitigate shipping and delivery risk.