Rockpoint, BEB Capital Form $1B Industrial JV

The US industrial and last-mile logistics sector continues to be red-hot, and with the growth of e-commerce accelerating during the pandemic, there are high expectations that strong demand in this asset class will continue.

Those are the sentiments of  Lee J. Brodsky, CEO of BEB Capital.

His company, an investor and developer of industrial assets throughout the East Coast, and real estate private equity firm Rockpoint Group, have launched a programmatic joint venture to focus on this asset class. 

The JV will target an investment pipeline of up to $1 billion of industrial assets in the Northeastern United States, with a primary focus in Long Island, NY.

The partnership has assembled nearly 660,000 square feet of industrial assets to date, including the recent Long Island, NY, acquisitions of 44 Ramsey Rd. in Shirley and 100 Marcus Blvd. in Hauppauge.

Seeking Instant Gratification

Reid Berch, a principal based in Avison Young’s Long Island office who specializes in the industrial sector, tells GlobeSt.com that the Northeast continues to be an attractive market for last mile investors due to the region’s density and cash flow. 

“Higher net worth customers have a need for instant gratification, which is a key driver of demand for functioning last mile logistics properties that are in close proximity to customers,” Berch said.

Long Island Industrial Market ‘Running Strong’

The investment is, obviously, good news for Long Island, David McKelvey, tax and business consulting partner at CPA firm Friedman LLP, based in its Long Island office. “This segment of the Long Island real estate market has been running strong,” he tells GlobeSt.com. “Current commercial/industrial property owners should see and realize significant gains in value of their industrial properties.

He adds that the industrial space and industrial zone sites on Long Island have continued to have upward price pressures “and this will continue and accelerate the pace for the foreseeable future.”

McKelvey also noted that there are many new Class-A warehouses that are already in the works and BEB had already been active lately with their Hauppauge acquisition.

High Demand Expected for at Least 5 More Years

BEB’s decades of real estate management and investment experience has enabled the firm to forge strong relationships with longtime industrial users and tenants in the Northeastern United States. 

The portfolio thus far consists of nearly 100% leased industrial assets with a diversified tenant roster of credit and regional logistics, distribution and warehousing, and e-commerce tenants.

E-commerce companies require, on average, approximately 1.25 million square feet per $1 billion of online sales, three times that of traditional retailers. The domestic e-commerce market alone will require upwards of an additional 250 million square feet of industrial space in the next five years just to keep pace with the growing demand.