Latest CoStar Reports Shows Ideal Conditions for CRE Growth

CoStar has released its Commercial Repeat Sale Indices (CCRSI) for the month, looking at figures for commercial real estate pricing, which reflects continued price growth in Q3. Steady employment growth, low interest rates, and the global uncertainty that has pushed capital into 'safe-haven' investments helped drive continued investment and price growth, with real estate investors continuing to push activity. According to the CCRSI, composite pair sales volume of nearly $91 billion in the first three quarters of 2015 grew 32.8% compared with the first three quarters of 2014, and put 2015 on track to become the strongest year on record for transaction volume.

Some excerpted hilights follow:

STEADY GAINS SEEN IN OFFICE SECTOR.
The core gateway markets continued to do well during the third quarter of 2015. In addition, former housing-bust markets such as Atlanta and Miami, which have so far lagged in the recovery, also saw some of the most pronounced improvements in market fundamentals and price growth in the last year. The national U.S. Office Index increased 2.7% in the third quarter of 2015 and 10.3% in the 12-month period ended September 2015. The Prime Office Metros Index advanced by an even stronger 12% in the 12 months ended September 2015, propelling it to within 1.2% of its prior peak level.

INDUSTRIAL MARKET PRICE GROWTH HIGHER OUTSIDE PRIME METROS.
The industrial sector's solid fundamentals performance has supported price growth of 2.6% in the third quarter of 2015 and 10.9% in the 12 months ended September 2015. The Industrial Index is now within 6.3% of last cycle's peak. The Prime Industrial Metros Index has generally mirrored that of the broader market. Although its 7.7% increase in the 12 months ended September 2015 was lower than the national Industrial Index, and the Prime Industrial Metros Index remained 15% below last cycle's peak. This suggests more room for price appreciation as rents continue to rise, but space markets are expected to become increasingly competitive as construction levels increase.

To read the full report, click here. For more news and information visit Blumberg Partners.

Fed's Beige Book and Commercial Real Estate

The U.S. Federal Reserve's latest Beige Book, more formally called the Summary of Commentary on Current Economic Conditions, was released today with figures pointing to continued modest expansion in economic activity during the reporting period from mid-August through early October. Citing "generally weaker" manufacturing activity, "subdued" wage expansion and a "slowed" pace of growth in some regions, the Fed's report highlights a handful of concerns while offering a modestly optimistic economic assessment overall.

According to the report, commercial real estate markets have shown signs of strengthening in all twelve federal reserve districts. Most noted improvement across all major segments, though New York and St. Louis noted some increased slack in the market for retail space. Commercial construction was also stronger, with Boston and St. Louis noting brisk construction in the health sector, including senior care facilities, and Cleveland also indicating strong demand for senior living structures. New York, on the other hand, noted some pullback in new commercial construction, though activity remained fairly brisk.

To read the full report, click here. For more news and information visit Blumberg Partners.

Blumberg in the News

Blumberg Grain was featured in an article in The Tribune in India this week as Sanjeev Sharma interviewed David Blumberg CEO, Blumberg Grain. An excerpt from the article follows:

Q: What are your plans for Punjab?
A: Senior representatives of the company are visiting Punjab as well as several other states in the country, to explore propositions for establishing the manufacturing plant and export hub for Asia. The company intends to select a location for the manufacturing hub by the end of summer. We are also in discussion with potential distribution partners and customers in the state.

Q: What are the initiatives for making India an export hub?
A: We are looking forward to making India our hub for Asia to enhance food security infrastructure in both the grain and perishable value chains throughout the region. We are looking to establish a manufacturing plant and export hub in India. The Blumberg Grain Hub in India will manufacture components for scientific warehouses. Blumberg Grain will export its systems, made in India, throughout Asia.

Q: How does it synchronise with Make in India?
A: Blumberg Grain aims to make India a home country in the greater region — that is the vision of our chairman, Philip Blumberg. The Blumberg Grain manufacturing facility alone would generate over 1,000 local jobs and an estimated economic impact of $1 billion in the first year of operation in the state in which it is set up. In addition, we will source raw materials from India and help create a knowledge base and supply chain that will have a multiplier effect on local economies.

To read the full article, click here. For more news and information visit Blumberg Partners.

Dalfen Secures Sale/Leaseback of Lockwood International HQ

Dalfen America Corp., a private equity firm specializing in real estate and real estate-related investments, has acquired the corporate headquarters and distribution facilities of Lockwood International in Houston in a sale-leaseback deal. Joseph Smith of CBRE represented Lockwood International in the sale-leaseback transaction; terms of the deal or a sale price were not disclosed. The three-building portfolio includes two warehouses and one office building totaling over 201,000 square feet.

"In Texas, our current holdings and active development projects total approximately 3.5 million square feet," Dalfen America Corp. president and chief investment officer Sean Dalfen told GlobeSt.com. "We firmly believe in the continued prosperity of the state, from both an economic and population growth standpoint. And thus we intend to dramatically increase our portfolio over the next 36 months. Over the last two months, we have acquired nine buildings totaling close to 1 million square feet of industrial property in Texas. Both people and businesses continue to flock to Texas in droves. Even with the decline in the energy sector, we believe that the state’s economy is sufficiently diverse and will remain one of the nation’s top performing markets for the foreseeable future."

10203 Wallisville Road is a Class "A" corporate head-quarters facility totaling 201,128 square feet of warehouse and office space built in 1998, 2006 and 2007 on 8.11 acres of land. The office/warehouse/industrial complex offers 24'-26' clear ceiling height, 12 oversized loading docks, 8 dock wells, heavy power, 115 parking spaces and covered parking. With quick access to I-10 and I-610, it is located 15 minutes to downtown Houston, and 30 minutes to George Bush International Airport.

For more news and information visit Blumberg Partners.

Rexford Industrial on SoCal Market

Kelsi Maree Borland of GlobeSt.com conducted an exclusive interview with Howard Schwimmer and Michael Frankel, the co-CEOs of Rexford Industrial, to discuss their firm's recent transactions in Southern California and their current take on the industrial market. Just this month Rexford announced the acquisition of two industrial properties for $15.4 million, another two for $29 million, along with first quarter financials which reported the Q1 acquisition of four industrial properties, totaling approximately 432,000 square feet, for an aggregate cost of $52.4 million. An excerpt of the Q&A follows:

GlobeSt.com: Are there markets within Southern California to which you are particularly attracted?

Frankel and Schwimmer: Well, 70% of our portfolio is located in L.A. and Orange County, but we are looking for opportunities in all of the markets that I mentioned. We do have a higher concentration in the San Fernando Valley, where we have close to 3 million square feet of our portfolio. That market has been a good performing market for us.

GlobeSt.com: As you mentioned, this is a very competitive industrial market and you are focusing on high barrier to entry areas. How are you finding and winning deals?

Frankel and Schwimmer: Today, a lot of the deals that we do have a value-add component to them, and a lot of times we see things that a lot of other buyers don’t. We have three licensed contractors on our staff, so we are always looking at how to create value, and in doing so we are often able to secure the deal ahead of other buyers because we are able to create stronger cash flows.

GlobeSt.com: Where do you see the Southern California market over the rest of the year?

Frankel and Schwimmer: I think it is going to continue to be strong from a fundamental standpoint, with high occupancy and growing rental rates and property values. It is a huge market and it is very fragmented in terms of ownership, so there is always a lot of opportunity in terms of buying assets, whether they are core deals or value-add. We are excited about the market, and we think there is still a lot of opportunity on the rental side in terms of the product that we focus on, and our ability to grow rents in the product that we are buying.

For more news and information visit Blumberg Partners.

Blackstone Buys German Warehouses for Logicor Unit

Blackstone Real Estate Partners Europe IV announced this week that it had purchased three warehouse properties in Cologne and Düsseldorf for its European logistics company, Logicor. Terms of the deal were not disclosed, but the move is inline with the company's expansion strategy; in April 2013, LogiCor Chief Executive Officer Mo Barzegar told Bloomberg that the company had plans to double its portfolio through 2015 as it seeks to profit from rising rents and values.

"Europe presents a really attractive opportunity because it is a highly fragmented market in terms of ownership of real estate," he said. "There is an opportunity to create a pan- European provider of modern logistics facilities that has access to capital, can provide quality space to customers and, frankly, provides an alternative in the marketplace."

The warehouse properties are located in core logistics markets adjacent to the city centers and are 100% leased to the logistics arm of an unnamed leading German department store. This transaction is the fifth portfolio acquired in Germany over the past year and increases Logicor's overall Germany portfolio by more than 40%, taking it to 550,000 square meters.

"This acquisition substantially increases our exposure in a core European logistics market with solid long-term real estate operating and economic fundamentals," said Mr. Barzegar in a press release this week. "Our investment strategy remains focused on acquiring high-quality, well-located product that represents value-added opportunities in the short to mid-term. This is a great start for us in 2015 and we look forward to building our pan-European portfolio further over the coming months."

For more news and information visit Blumberg Capital Partners.

Red Tail Buys DFW Industrial Portfolio

Red Tail Acquisitions (RTA), a Newport Beach, CA-based real estate investor that targets properties that normally have leasing or construction issues, has purchased a six-property, 16-building industrial portfolio in the Dallas-Fort Worth area from AEW Capital Management. HFF marketed the property on behalf of the seller; the purchase price or terms of the sale were not disclosed by any parties.

"This acquisition not only represents an exciting opportunity for Red Tail Acquisitions to expand its DFW holdings, but is also a prime example of the types of investments we hope to make throughout Texas," said Sean Miller, Executive Vice President at Red Tail, in a press release. "RTA would like to thank AEW and HFF, who were great transaction partners."

The portfolio includes 1360-1420 Presidential Drive and 850-890 North Dorothy Drive in Richardson, Texas, plus 1420 Halsey Way, 1406 Halsey Way, 2122 Country Club Drive and 2855 Trinity Square Drive in Carrolton, Texas. The portfolio was 87% leased at the time of sale to 41 tenants, including NOW Specialties, Optex Systems, Laboratory Corporations of America, CircuitCo Electronics, Advanced Environmental Concepts, Milestone Construction, TraStar, Inc. and Gym Ratz Basketball Club.

For more news and information visit Blumberg Capital Partners.

CushWake Q2 Report Reflects Strong Industrial Growth

Cushman & Wakefield released its Marketbeat Snapshot reports for Q2 of 2014, which shows the economy not only growing at an annual rate of 4% but industrial production, which correlates highly with industrial demand, advanced at an annual rate of 5.5% in the second quarter of 2014. An excerpt from the report follows:

With vacancy rates and speculative construction back to per-recession levels, the U.S. industrial sector continues to lead the country's commercial real estate recovery. Strong occupancy gains and dwindling supply of big-box drove the overall vacancy down to 7.6%, 80 basis points lower than a year ago and the lowest level since first quarter 2008. This also represents a significant drop from the recent high of 11.2% posted during first quarter 2010. Net demand remained strong during the second quarter and is on track to surpass last year's total, with 95.7 million square feet of occupancy gains at mid-year. Atlanta is leading the nation, with 8.9 million square feet of space absorbed to date followed by Inland Empire with 7.5 million square feet. Healthy demand led to increased occupancies in almost every major market with only 12 of the 78 markets tracked posting net loss in occupancy at mid-year.

For more news and information visit Blumberg Capital Partners.

IndCor Buys Texas Industrial Portfolio

IndCor, a Chicago-based real estate company focused on the ownership and management of industrial properties, announced this week that it had purchased a 1.1 million square foot industrial property portfolio, known as the 10/375 Industrial Portfolio. The portfolio sold by an institutional seller, who was represented by CBRE, according to a GlobeSt.com article. No price was released for the recent purchase, but the seven buildings have a tax-appraised value of $25.95 million, according to data from the El Paso Central Appraisal district.

"The El Paso market is thriving, and we are very excited to be a part of it," said Stephen Bryan, IndCor's Co-Chief Investment Officer. "These bulk, high-clear height, Class A industrial buildings in the El Paso market boost IndCor's portfolio substantially in Texas."

The portfolio includes warehouse and distribution facilities leased by Handgards Inc., El Paso manufacturer of gloves, food bags and other products, at 12375 Pine Springs; Electrical Components International, a St. Louis-based maker of electrical components for a variety of products, at 12415 Rojas; and ProTrans International, an Indianapolis-based logistics company, at 12425 Rojas. Two of the buildings are at 12420 and 12430 Mercantile. CBRE officials reported that 83% of the seven buildings in the portfolio are currently occupied. Only one building, at 12435 Rojas, is vacant.

For more news and information visit Blumberg Capital Partners.

Watson Realty Acquires Sanford Industrial Property

Watson Realty Associates has purchased a 341,250 square foot industrial building in Sanford, North Carolina for an undisclosed price. Binswanger, an international full-service real estate organization, handled the transaction; terms of the deal were not disclosed.

Located at 541 Harvey Faulk Road in Sanford, the industrial property sits on 23.13 acres located just west of Highway 87 at the southern terminus of the Highway 421 bypass. The building was constructed in 1989 and features roughly 10,000 square feet of office space, a reinforced concrete floor, an insulated metal roof, and paved and marked parking for several hundred vehicles.

For more news and information visit Blumberg Capital Partners.

US Warehouse Market Primed for Solid 2014

According to analysis presented at the State of the U.S. Industrial Market 2013 Review and Forecast by CoStar Director of Industrial Research Rene Circ and Senior Real Estate Economist Shaw Lupton, demand for U.S. warehouse space not only exceeded expectations in the final quarter of 2013 but is poised for even stronger performance over the next 12 months with early demand and vacancy rates falling to levels not seen since the early 2000s. CoStar recorded net absorption of 58 million square feet of warehouse/distribution space within the 210 largest U.S. markets. Meanwhile, the 45 million square feet absorbed in the top 54 markets ranks as the sixth-highest quarterly reading on record -- and by far the strongest reading since the beginning of the recovery.

"Right now, we're seeing vacancies on a national level lower than the entire period of the last cycle," said Rene Circ, director of industrial research. "You have to go back to before the bursting of the Internet bubble in the early 2000s to see vacancies for U.S. industrial space below that 7.6% number."

"Modern space with proximity to population centers and a robust logistics infrastructure will dominate the industrial real estate sector in 2014," said Craig Meyer, president of industrial brokerage at JLL, who attributed 40% of current big-box industrial requirements as directly related to e-commerce -- a sector that’s growing globally by 20% annually as retailers develop new real estate models to support their omni-channel logistics models.

For more news and information visit Blumberg Capital Partners.

PWC Survey Results: CRE Market Picking Up

PricewaterhouseCoopers' first-quarter report, which surveyed U.S. real estate investor confidence, shows that the commercial real estate sector is expected to remain in recovery mode in 2012, but added that the market for distribution and industrial real estate will likely become one of the hottest CRE sectors between 2013 and 2015. According to a Wall Street Journal report, real estate executives who responded to the survey said they expect investor interest in those properties to grow with an expansion of the economy and consumer spending.

The retail outlook, however, is a little more bleak. "There's been a total paradigm shift in retail,"Mitch Roschelle, who heads PwC's real estate advisory practice. "Big box stores are being replaced from the consumer's perspective by online shopping…and too many retailers are competing with each other's sticks and bricks stores."

Nationally, more buyers are considering the rebounding industrial sector, as it demonstrates positive signs of recovery, reported the South Florida Business Journal. Warehouse demand is increasing rapidly, especially in coastal markets with international port access, according to the report.

For more news and information visit Blumberg Capital Partners.