Industrial Warehouse Space Continues to Attract Investment

One of the Largest Industrial Warehouse Deals in History

CBRE Group (CBRE) will purchase an over 28-million-square-foot portfolio for $4.9 billion, representing one of the largest-ever industrial warehouse deals. The portfolio consists of warehouses, distribution centers, and other logistics facilities located throughout the US and Europe.

Industrial warehouses were real estate’s best-performing property category throughout 2021. Industry analysts say this points to the growth of ecommerce and the changing supply chain.

The Growth of Ecommerce Spurs Warehouse Investment

For years, the preferred supply-chain model involved making as few stops as possible between manufacturers and consumers as a way to reduce costs. The pandemic and the continued growth of online shopping has changed that. Space close to the consumer is now valued, as it’s increasingly important to quickly fulfill deliveries.

CBRE executives say that factored into their thinking when making this acquisition. The industrial warehouse properties are all located in high-population centers, with a robust workforce and advanced transportation systems. CBRE specifically lists Walmart (WMT), Home Depot (HD), and Amazon (AMZN) as companies that look for these traits when leasing space.

Europe Still Relatively New to Ecommerce Boom

The ecommerce boom that was sped up by the pandemic is lagging slightly behind in Europe. CBRE executives say that’s one of the main reasons this portfolio was so attractive. In addition to the US, the properties are located in the UK, Germany, and Poland.

Close to two-thirds of the portfolio is already leased, while the remaining third remains vacant or under development. CBRE says they won over other bidders because their strong balance sheet allowed them to move quickly. Reports indicate the deal will likely close towards the end of this year and carry over into 2023.

The undeniable impact of ecommerce continues to reach nearly every sector of the economy, perhaps especially real estate. Warehouse space that’s close to the consumer is increasingly important to those selling goods in bulk online.

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