2020 Ballot Initiatives by State

To help companies understand their potential exposure, the following are the published 2020 state ballot initiatives which could impact industrial firms and industrial real estate.


The Arkansas Transportation Sales Tax Continuation Amendment (2020) would continue to amend the state constitution to make permanent a 0.5% sales tax towards the funding of state and local tax infrastructure. For more information, click here.


The California Tax on Commercial and Industrial Properties for Education and Local Government Funding Initiative (2020) would amend the state constitution to require commercial and industrial properties to be taxed at their market value. Currently, California Proposition 13 limits all property assessments to 1% of the purchase price at the time of purchase and then the lesser of 2% or inflation per year thereafter.

Should the Initiative pass, it is estimated to cost companies and commercial real estate property owners $6.5 to $10.5 billion per year in additional property taxes. For more information, click here.


Amendment 2 would raise the minimum wage from $8.56 in 2020 to $15.00 by 2026. For more information, click here.


The Idaho Minimum Wage Increase Initiative would raise the minimum wage incrementally to $12 per hour by 2023. For more information, click here.


The Illinois Allow for Graduated Income Tax Amendment would repeal a state constitutional requirement that the state personal income tax be flat and instead allow the state to enact a graduated personal income tax. It also would change the limits for corporate income taxes to a ratio based on the highest personal income tax rate. For more information, click here.


The Nevada Renewable Energy Standards Initiative would require electric utilities to obtain a minimum of 50% of their electricity from renewable sources by 2030. The increase would come in increments as follows: 26% by 2023; 34% by 2026; and 42% by 2029. This would amend the current standard which requires electric utilities to obtain a minimum of 25% of their electricity from renewable sources by 2025. For more information, click here.

CRE Services

Corporate real estate has developed distinct service categories to meet the real estate needs of business units and organize talent by skill sets. These services often work closely with each other. Portfolio administration continuously interacts with transaction management, facilities management and legal. Facilities management can frequently work with project management and space planning, or assume their functions within the facilities management department.

These services will often report directly to the corporate real estate management or account leaders in CRE service organizations, who can monitor their success with clearly defined key performance indicators or KPIs. While the names of the services may vary by organization, in practice they have similar functions in today’s CRE.

Portfolio Administration

Portfolio administration creates, manages, and communicates real estate information accurately and effectively to the entire corporate real estate organization. Referred to as lease administration in some companies, portfolio administrators can have many responsibilities other than managing contractual data. Today’s portfolio administrators can also share responsibility for strategic oversight, accounting, legal, and human resources functions in the modern corporation.

Transaction Management

Transaction management’s general function is to achieve company objectives through the oversight of real estate events. Rarely is transaction management only responsible for the successful completion of a real estate transaction. Most transaction managers today are tasked with assisting with strategic oversight of the company’s real estate portfolio and have a “cradle-to-grave” process for real estate events which involves responsibilities before and after transactions are complete.

Facilities Management

Facilities management has evolved from a property management function to becoming an increasingly important part of a company’s success. Today’s facilities management professionals are tasked with creating and maintaining environments in which company employees and equipment can thrive. They often track a variety of measurements of company space and how it is being utilized. Such data creates visibility in the organization about how space is being used. It allows the organization to communicate important messages to outside parties about its role as a caretaker of shareholders, employees, society, and the environment.

Project Management

Project management is the oversight of the design, build, furnish, redevelopment, re-furbish, and budgeting for company real estate projects. When corporate real estate needs real estate to be built or altered, a project management team usually is responsible. Project managers are also important resources for the other services. For example, project management can supply improvement costs, project timelines, and other construction related information to help transaction managers negotiate effectively, and facility managers plan for future upgrades.

Space Planning & Design

Space planning and design may be a function under project management or facilities management, but could also be a separate function in some organizations. Space planning can involve many different types of space. While many may think of space planners as designing office and site plans, space planners are also critical in manufacturing and warehouse environments as well.


Legal departments are typically responsible for the review of contractual agreements and hiring of outside counsels. Whether legal is a part of the real estate organization or a separate entity can have a significant influence on its function. Attorneys in legal departments which are separate from real estate often have responsibilities for documents outside of just real estate related contracts. With the possible exception of space planning, legal services usually interact with all of the other service lines and are a critical part of the overall success of the CRE organization.

Selecting and Hiring a Market Brokerage Partner

The selection and hiring of a market broker to represent a client as a fiduciary is one of the most significant responsibilities of a corporate real estate account manager. A market broker is typically an expert in a given geographic market or vertical, such as cold storage or truck terminals, while the corporate real estate account manager oversees the overall real estate services to the client.

Without the proper process in place, the odds of selecting the wrong market broker greatly increase along with the chances of frustration for the client, the market broker, and the account manager. There are a host of variables to consider in any market broker selection process. Without a defined process in place, many account managers simply do not have the time or resources to appropriately conduct a market broker search from scratch.

That’s why it is important for the account manager and the client to have an agreed upon plan and process for selecting a local brokerage team. Such a plan would ideally be simple, adjustable guidelines for selecting and working with market brokers. Some of the plan elements usually would include:

  • Criteria for market broker selection
  • Brokerage standards of conduct
  • Responsibilities of the client, account manager, and market broker
  • Confidentiality
  • How requirements are presented to the market broker
  • Expected compensation structure including fee sharing

Most clients want the best broker for their requirement in a given market. For the account manager, fulfilling this requirement means considering market brokers affiliated with their firm and those who are not affiliated with their firm.

Practically speaking, most account managers affiliated with large national brokerage firms will limit their search for market brokers to those within their company. Exceptions to this include areas where their company has limited coverage, such as tertiary markets, and when the client directs the account manager to use a certain local market broker.

Whether the account manager considers market brokers outside if their firm is ultimately not as important as making sure the selected market broker meets the client’s agreed upon criteria. If such standards are not met, the account manager should be responsible.

Brokerage standards of conduct and market broker responsibilities should be clear and concise. They should be communicated in writing shortly after initial contact and certainly before engaging the market broker. A brief summary of expectations, such as reporting, confidentiality or dual agency concerns, along with a matrix showing the responsibilities of all relevant parties is usually sufficient.

Client requirements should also be communicated clearly and in writing to the market brokers prior to engagement. It does not make any sense to hire a market broker for an assignment until the account manager can accurately describe what the client needs. This communication is sometimes assisted by visual aids such as prototype site plans, maps, and photos of current properties similar to the required facility. Once a market broker understands the requirements, the account manager should allow them the opportunity of declining to be considered for the assignment.

Lastly, the account manager should communicate the anticipated brokerage fee sharing along with the standards of conduct and client requirements in writing. This includes the nature of any exclusivity, fee sharing with a client, and other matters related to their compensation. It is vital that the market broker and account manager have agreement on compensation concerns prior to the hiring of the market broker for the assignment.

The above does not include every consideration for selecting a market broker in every situation. Therefore, it is critical that the account manager and client have a general plan in place to review and modify prior to starting the search for a market brokerage partner. By doing so, they will greatly increase the likelihood of hiring a qualified, motivated, and invested market brokerage partner to work on their behalf.

Avoiding the Bad

Last week I was listening to the Art of Manliness podcast with guest John Tierney, who recently co-wrote a book called The Power of Bad: How the Negativity Effect Rules Us and How We can Rule It.

As the title would indicate, John and host Brett McCay discussed how humans are much more sensitive to bad events than good ones, and how this sensitivity shows itself in our daily lives. For example, John cited research that showed that it takes at least three good events to outweigh one bad one in our minds.

As companies consider future real estate decisions, it may be helpful to think about how to avoid bad outcomes before achieving outstanding ones. Most of us are in positions where we are in service to something or someone else, whether it be a business unit, client, or shareholders. While it may not fit our current narrative to the customer, the truth might be that the customer really wants to avoid negative outcomes much more than receiving great service.

Avoiding negative outcomes and great services are not mutually exclusive. But if we can design our systems, processes, and tasks in a way that protects against negative outcomes first, at least the research shows that we are tailoring our services to what people care about most.

Maintenance Responsibilities for Industrial Occupiers

One of the main areas I recommend industrial occupiers pay close attention to in lease negotiations are the responsibilities of who maintains, repairs, and replaces building systems and components under a lease.

Leases follow the 80/20 rule. 80% of lease content most likely won’t impact operations or P&L. 20% of lease content will. Maintenance, repair, and replacement provisions are always in the 20%. Therefore, it is smart for companies to conduct due diligence and structure maintenance, repair, and replacement provisions in a way most suitable for operations.

As a starting point, I suggest companies assess what the impact will be if operations dedicates the time and resources to maintaining, repairing, and replacing building systems during the lease. Would the company be better off if the landlord was responsible and passed through the costs? Are there reasons the company would prefer responsibility, such as site security or, for larger firms, potential cost savings. Whatever the answer, it will help to inform any initial discussions with prospective landlords.

Next, companies should conduct due diligence on what the age, condition, and useful life are of the components of the space being potentially leased. It should be standard practice to find out the age, condition, and useful life of the major building systems (structural, roof, HVAC, electrical, parking areas, etc.) before agreeing to maintain anything in the letter of intent or proposal. A property condition assessment report can be helpful in this area.

Lastly, companies should protect themselves against unfair replacement practices. Exposure to capital replacement costs should typically be limited to the amount of time remaining on the lease term and amortized according to GAAP or other reasonable useful-life schedules. Normal wear and tear should be expected in exchange for the rent.

Nothing is free. The landlord and/or the tenant will bear the costs of maintaining, repairing, and replacing within a property. Therefore, I would suggest the focus for industrial tenants should be:

  • What general maintenance, repair, and replacement arrangement is best for the operation
  • What property systems or components should not be the tenant’s responsibility
  • Preventing operational disruption by addressing the near-term replacement of building systems or components prior to signing a lease
  • Outside of requirements caused by tenant improvements, are there requirements such as ADA which are not being met in the space currently
  • Making sure there is limited exposure to unamortized capital replacements
  • If a property management fee is charged, it is commensurate with the market rate and justified by the responsibilities of the property manager


One of my goals this year is to write a blog post once a week. Look forward to sharing my perspective in 2020.

Significant News in Logistics & Industrial Real Estate

Week of October 13, 2019

Welcome to Significant News in Logistics & Industrial Real Estate, a weekly and monthly newsletter where I highlight and comment on the most important stories in industry, the economy, and industrial real estate.

Key Themes

  • Demand for industrial space picks up after a slow start to 2019
  • Industrial users are not only demanding variable footprints but also a variety of clear height, land, and power requirements
  • A future with autonomous vehicles should be considered when designing today’s commercial real estate

The U.S. industrial real estate market continues to thrive supported by e-commerce and warehouse/distribution demand. After a slow start to 2019, demand picked up in the Third Quarter of 2019 with 48.7M square feet absorbed according to Cushman & Wakefield’s latest report. Year-to-date absorption registered 148.8M square feet and is on pace to break 200M square feet for the sixth straight year. 

For the first time in nine years, construction supply is on track to exceed demand by around 70M square feet in 2019. However, much of the 337.6M square feet in the pipeline is either build-to-suits (72.5M square feet) or pre-leased (72.3M square feet) with the remaining 109.3M square feet going towards speculative construction. The amount of speculative new construction should provide additional avenues for tenant growth in tight markets and is not expected to adversely impact rent growth or market values.

With the slow down in demand, asking rents rose 3.2% year over year in 3Q 2019 down from 7.2% in 3Q 2018. Rents are projected to rise modestly has the economy likely grows slowly or contracts slightly. I would anticipate the strongest rent growth in the primary markets but also in some secondary markets like Salt Lake City, which is one of the hottest markets in the U.S. right now. #industrial real estate

Amazon continues to open massive fulfillment centers across the country such as a 1 million plus square foot facility in Channahon, Illinois, about 11 miles southwest of Joliet. Sure, e-commerce is driving smaller buildings in some infill markets but big box distribution centers are not going away. What is changing is the efficiency within the big box. Amazon is rumored to be their fourth or fifth version of a multi-level fulfillment prototype which combines racked storage with sortation in a vertical delivery system. If distribution does skew more into smaller footprints, it is likely to be due to continued developments in how product is stored and moved in the box and not just getting close to the customer. #Amazon #e-commerce #Chicago

To say that FedEx has been in the news lately is an understatement. Two real estate deals involving FedEx were notable this week. First, FedEx filed a $212M building permit with Memphis, Tennessee to improve and expand its presence at the Express World Hub at the Memphis International Airport. The total investment of the expansion is expected to be more than $1B is scheduled for completion in 2025. The State of Tennessee provided more than $20M in tax brakes for the new hub. 

Second, a 252 door terminal FedEx leases in West Jefferson, Ohio was sold by Griffin Capital Essential Asset REIT for $30.3M or $120K per door to Sealy & Company. No word on what FedEx is paying but if one assuming an 8% return that would equate to a monthly rent per door of $800. #FedEX #Memphis #Terminal

Autonomous vehicles are predicted to change real estate and logistics in many ways and developers are starting to design properties accordingly. In the industrial real estate world, autonomous vehicles would likely impact site selection, employee parking, truck court design, and overall ingress/egress pathways onto sites. I wrote about this topic back in 2017 when the technology was just starting to clear pathways to full autonomy in the form of driver assist technology, otherwise known as Level 1 autonomy. Now we are seeing Level 3 autonomy in vehicles, meaning the vehicles handle driving tasks but still may need intervention. Level 4 and Level 5 are what we think of as the driverless stages, where in certain environments the vehicle is driverless (Level 4) and in all environments the vehicle is driverless (Level 5). Most do not believe these latter levels are achievable in the near future, with most predictions falling in the middle part of the next decade.

Since the average useful life of an industrial property is 40 years, even if we are 10 years away from Level 4 or 5 autonomous vehicles they will likely impact industrial buildings being designed and built today. Randy Thompson with Cushman & Wakefield’s Build-to-Suit group, recently wrote an article for Area Development where he discussed “Future-Proofing” buildings to account for autonomous vehicles. We will likely see future industrial property design include smaller to no employee parking lots, expanded and separate drop-off areas, and smaller truck court areas as autonomous trucks become more common. In addition, since an autonomous vehicle does not need to rest, secondary and tertiary markets may become more attractive for distribution into even infill areas. #AV #technology

Key Themes

  • The logistics industry is investing heavily into technology to improve supply chains and support customers
  • Various economic and industry indicators point to a balancing trucking industry in 2020 and steady growth in the warehousing sector
  • Companies continue to enter and exit the last mile delivery space as Amazon and FedEx expand their last mile services

Logistics companies continue to invest heavily in technology to enhance a variety of functions and needs in their organizations. One area getting a lot of investment is technology to help increase visibility in the supply chain. Offering customers the ability to understand where their freight is located in real-time should increase as the Internet of Things (IoT) populate throughout the supply chain. Companies such as Flexport, who recently purchased container tracking company Crux, have made significant investments in “bolt-on” technologies to enhance their current and future tracking capabilities. 

In addition to serving external customers, companies such as Merck KGaA have partnered and acquired technology to allow them to better predict inventory requirements throughout their own supply chains. The large pharma company has partnered with TraceLink, Inc. to use analytics and machine learning to predict and prevent drug shortages. Merck not only wants to save lives by eliminating drug shortages in their supply chain, but also a lot of money. According to the research and analysis firm Gartner, pharmaceutical companies carry an average of 156 days of inventory compared to 78 for consumer product retailers and 57 days for IT equipment sellers. By better predicting inventory requirements, Merck could reduce its inventory requirements and expedited shipping charges allowing them to save potentially hundreds of millions of dollars. 

Another area where companies are investing heavily is automation within their supply chain. While vehicles get a lot of the press, automation of other functions may be equally or more important to the improvement of a company’s supply chain or those of their customers. For example, Amazon recently purchased digital customs broker INLT to help their third-party sellers import goods through U.S. Customs without an outside customs broker. Other companies, such as Shopify, have acquired technology firms to help automate and improve functions such as material handling, storage, and other warehouse functions. 
In addition to acquisitions, logistics companies are also partnering with technology firms to offer better service to their customers. The LTL carrier Estes Express has recently partnered with nearby Warehowz to give customers access to their available warehouse space on-demand. Flexe, a competitor of Warehowz, has developed a customer base of direct-to-consumer companies who can take advantage of the flexibility and cost savings of unused warehouse space. 

Information security is another area where logistics companies have invested and collaborated for the good of the industry. The Blockchain in Transport Alliance (BiTA) is a consortium of technology and transportation firms formed to create blockchain standards for the freight industry. The consortium has 500 members with over $1T in revenue annually. Their newest member, Prologis, is perhaps an acknowledgement of the important role large real estate owners can play in the security of information and the overall security of the supply chain.

Lastly, there are concerns that the investment and development of supply chain technologies is creating an abundance of ‘unhelpful’ solutions. The pace of technological growth is seen by some to exceed the logistics sector’s ability to consume. Furthermore, many technologies have been designed with only part of the supply chain in mind and therefore can create barriers to future integration efforts. #technology #Flexport #Crux #Amazon #INLT #IoT #Estes #Warehowz #BiTA #Prologis #blockchain

Various economic and industry indicators point to a somewhat improving picture for logistics in the U.S. The trucking industry is expected to rebound in 2020 with truckload rates potentially seeing growth in early 2020. The trucking market appears to be headed towards a equilibrium between freight and capacity next year, but certain challenges remain. J.B. Hunt, for example, missed on profit expectations last quarter due in part to increases in its costs for recruiting and retaining drivers.

Meanwhile, warehousing continues to steadily grow as e-commerce companies continue to gobble up space. According to the CSCMP Logistics Manager Index, the pace of growth is expected to be less than years prior and warehouse capacity is expected to increase for the first time since June. With the growth in warehousing, material handling orders have increased as well. The Conveyor Equipment Manufacturers Association (CEMA) reported its August 2019 booked orders increased 58.1% compared to August 2018 and were up 27.2% over July 2019. #trucking #J.B. Hunt #CSCMP #material handling

Last mile delivery is a dynamic part of the supply chain as companies are continually announcing reductions or expansions in the service area. Last week, Inpax Final Mile Delivery announced it was laying off at least 718 workers and Letter Ride over 900 workers after losing contracts with Amazon, reportedly due to Amazon’s review of their safety practices.  Following Schneider’s announcement that they were shuttering their final mile delivery business last month, FedEx announced this week that it is expanding its FedEx Freight Direct service, which delivers bulky items into residences and businesses, to cover 80% of the population. #last mile #Inpax #Letter Ride #Amazon #FedEx

Key Themes

  • A handshake agreement has halted some of the trade war between the U.S. and China
  • Economic indicators were mixed with the Federal Beige Book indicating slow growth in the U.S. while retail sales saw a slight dip in August

There was a bit of good news this week regarding the trade negotiations between the U.S. and China. The so-called Phase I handshake agreement postponed certain tariffs on goods from China in exchange for promises to purchase large amounts of agricultural goods from the U.S. However, trade experts warn that the agreement is just a temporary pause to allow for further negotiations to take place and many of the promises made seem unrealistic or uncertain. For example, China promised to purchase $50B of U.S. agricultural goods-which is double the most they have purchased from the U.S. previously. Also, many more important issues remain unsolved such as intellectual property rights, national security concerns, and tariffs not discussed under the Phase I agreement. #trade 

Economic indicators were mixed this week with some positive indicators from consumers and negative markers for retail sales. The Federal Beige Book, which summarizes the areas which the Federal Reserve considers when making decisions, reported slower growth in regions throughout the U.S.  In particular, the Midwest and Great Plains are growing slower than the South and West regions. Some manufacturers are starting to layoff workers due to weak orders while others are cutting hours in order to retain their workforce and avoid potential re-hiring and retraining costs in the future. The big question is will the weakness in business confidence seep into the consumer sector, which is still seen as an engine of growth. Average hourly earnings are up 3.2% YOY, household savings rates are triple what they were in 2005, and consumers have less debt overall. However, retail sales fell 0.3% in August, the first monthly decline since February, which is potentially an indication that the consumer confidence is softening. #growth #consumer confidence #retail sales

Site Selection for Land-Intensive Occupiers in Infill Areas

Key Concepts

  • Industrial properties with 30% or less improvement square feet compared to land square feet (“low coverage”) are increasingly scarce in metropolitan areas of the United States
  • Land-intensive industrial uses, which typically use low coverage industrial properties, can be challenging to entitle and therefore understanding zoning is critical to a project’s success
  • Successful site selection for land-intensive industrial occupiers typically involves a proactive approach to finding and securing suitable properties
  • The ability to compare the relevant internal and external data with a robust property search and indentification process exponentially increases the effectiveness of the site search

Availability of Low Coverage Properties

Finding available infill properties for land-intensive industrial occupiers is typically much more challenging than office, warehouse or manufacturing uses. Throughout most primary, secondary, and even tiertiary US industrial markets, low coverage properties are increasingly an endangered product type. With no more than 30% of their land area covered by improvements, low coverage properties have been developed into “higher and better” uses, subject to strict zoning regulations, and even turned into other property types.

Due to these challenges, site selection for land-intensive industrial occupiers must be designed differently to increase the odds of success. A successful site selection strategy for such occupiers incorporates the relevant internal and external sources of information with a proactive approach to investigate, target, and secure properties which align with company objectives.

The Proactive Site Selection Process

The site selection process involves multiple steps which ultimately lead to a desired site at the best cost/benefit ratio possible. Generally these steps are assembling project stakeholders, defining requirements, researching the market, analyzing potential options, negotiating, and acquisition. All these steps are important but I won’t be discussing all of them here. If you are interested, there are plenty of site selection articles in industry publications which discuss the site selection process in detail.

In any site selection search that has limited property availability in a desired area, such as the infill low coverage sites considered here, companies cannot follow the same playbook as a search for suburban office building or a dry warehouse and expect great results. Instead, I think there are two key areas where land-intensive companies should focus their resources.

First, firms should use internal and external data with GIS mapping platforms, such as Esri, to identify the areas in which they would consider a new location. GIS mapping technology can easily show customer locations, competitor locations, available properties, average real estate costs, zoning, labor, drive times, and more. A much better conversation can take place when stakeholders can see all the relevant information required to make location decisions.

Furthermore, it is especially effective to use GIS mapping when searching for properties that are difficult to find. Rather than just focusing on the location of currently available properties, via GIS mapping the stakeholders can determine:

A) the areas they would consider a location (“Areas of Consideration”)

B) zoning overlays within the Areas of Consideration which will allow their use (“Entitled Areas of Consideration”)

C) all properties within the Entitled Areas of Consideration which meet their minimum physical requirements (“Set of All Amenable Properties within the Entitled Areas of Consideration”)

D) all available properties, if any, within the Set of All Amenable Properties within the Entitled Areas of Consideration

E) then layer in additional data as needed.

The second key area I would recommend firms focus is actively marketing their requirement to owners of property within the Set of All Amenable Properties within the Entitled Areas of Consideration (Item C above), investor/developers, and brokers. This practice increases the odds of finding one or more suitable sites and can also create negotiating leverage with the owners of any sites currently on the market. The marketing can be done without divulging the company name, if helpful only indicating the basic requirements and creditworthiness to further entice landlords or sellers.

Marketing the requirement to owners is the inverse of what is typically done by an owner marketing its property. Similar to an effective property marketing program, a marketing program for an occupier can be structured in the same manner with marketing materials and scheduled follow ups being made to prospective landlords or sellers.

Another benefit of actively pursuing the key areas above is the trust it can build within the organization. Many site selection leaders experience the doubt expressed by others when available properties are difficult to find. By virtually exploring all the possible properties via GIS mapping and proactively marketing to those property owners, these leaders are able to show other stakeholders that no opportunities are being left “uncovered” and the organization is doing all it can to find a suitable site. This can engender trust in the site selection process internally and help prevent the dreaded “I see available properties everywhere. Why can you find one?” response many of us have heard.

First Principles

Today I was thinking about first principles and what first principles exist in my business as an industrial real estate resource and representative. A first principle is basically a concept which cannot be divided further. In other words, it is a foundational concept and leads to other concepts which are based upon something that cannot be further deduced.

I think one first principle for my business is the notion of service to individuals not organizations. When I represent XYZ Company, I am really representing and furthering the interests of the individual stakeholders at XYZ Company. This way of thinking helps me focus on building a personal relationship with the client where I understand their particular ideas, needs, and wants-not just the company’s objectives.

While it is great to have a reference board of the companies I represent, I really should have one that has just names of the people I work with at those companies. To me, they are a first principle for my business.

INterchange 2019

I attended the Cushman & Wakefield industrial conference known as INterchange 2019 last week. As a recap, here are some of the interesting points I heard there:


  • Availability of qualified labor is a primary concern in site selection.
  • Tenants and landlords are investing heavily in developing or adding amenities which can help companies attract labor
  • Industrial firms may value certifications such as WELL which indiciate a higher standard of amenities and health for employees
  • Staffing companies which are compensated based on their ability to retain employees as opposed to finding them are gaining in popularity

Capital Markets

  • Opportunities for rent growth in smaller spaces, 50,000 square feet or less
  • Larger buildings (500K+) are less attractive investments since many investors do not want to allocate high levels of capital to a single investment
  • Yield pain in primary markets continues to lead to investor interest in secondary and tiertiary markets
  • Secondary and tiertiary markets often have lower yields than many new investors expect
  • Value add opportunities are seeing the greatest buyer pool
  • Core opportunities typically will see 5-6 offers
  • 3-7 year lease term is most desirable for investors
  • 10+ lease terms are discounted +/-25 basis points since investors
  • Investors want to be able to forcast their exit or increase in future value
  • With land prices approaching market building values, covered land plays are increasingly desirable


  • Procurement is increasingly driving the bid process for 3PL customers
  • More 3PLs may look at strategic campuses of multiple buildings
  • Expect more merger and acquisition activity in the 3PL space
  • Shipping companies are aggressively expanding into the 3PL space