Blackstone Group investment is latest show of faith in logistics real estate, which continues to be powered by e-commerce

Blackstone purchase warehousing

The world’s largest real-estate private equity firm, Blackstone, has agreed to purchase a portfolio of US logistics properties from LBA Realty for $1.5bn. Blackstone will take control of a portfolio of 12m sq ft of facilities located primarily on the US West Coast.

The deal is Blackstone’s largest buy of US logistics property since it exited the sector in 2015 by disposing of IndCor properties for $8.1bn.

An article in the Wall Street Journal asserts, “Investor demand for such real estate has shown unusual resilience during what many analysts and investors consider to be a late stage of a bull market for commercial property. Prices keep rising even as those in other commercial-real-estate sectors, such as office buildings and malls, have shown signs of cooling.”

Indeed, Blackstone is not the only logistics property developer investing in the US. Earlier in September it was announced that Singaporean property company, Global Logistic Properties Limited (GLP) was making its second major investment into the US warehousing market with the purchase of US$1.1bn worth of facilities from the Hillwood Development Company, an investment vehicle controlled by Ross Perot. President and Chief Operating Officer of GLP US, Chuck Sullivan, commented that the “portfolio has a strong concentration in desirable locations expected to benefit strongly from the growth of e-commerce in the US”.

As outlined in Ti’s latest report, Global Warehousing and Logistics Networks 2016, e-commerce is a major reason behind the surge in demand in recent years for logistics real estate. Not only is e-fulfilment a more space-intensive operation – Prologis estimates that online retail typically requires three times as much space as store-based distribution – it is also creating new demand for warehousing. Retailers are not just switching from store-based networks; they are having to supplement them with new facilities.

If this brief has been of interest, you might also like to download Ti’s new report Global Warehousing & Logistics Networks 2016. This report examines the shifting landscape of supply chain real estate and the changing patterns of distribution on a global basis.

Source: Transport Intelligence, September 27, 2016

Author: David Buckby