Columbus region with a 3-million-SF
COLUMBUS, OH-The market’s continuous positive absorption, combined with good basis and value-add potential were triggers encouraging new partners Westmount Realty Capital LLC and New York City-based Garrison Investment Group to enter the region with its 2.9-million-square-foot industrial property acquisition. The partners bought the 10-property collection earlier in the fall from First Industrial Realty for $38.7 million.
Area reports note that the transaction, brokered by Jones Lang LaSalle, represented First Industrial’s exit from the Columbus market, which hadn’t treated the Chicago REIT very kindly. First Industrial had paid a total of $65.5 million for the properties it acquired between 1996 and 2007. The portfolio currently has an overall occupancy of less than 60%.
But Clifford A. Booth, president and CEO of the Dallas-based Westmount Realty, tells GlobeSt.com that the Columbus region, though still somewhat struggling, is starting to experience a moderate turnaround. “In recent months, there has been positive absorption and new job growth,” he comments. “We’re seeing a turnaround – none would call it robust. But there’s positive indications the market is heading in the right direction. The combination of positive absorption and job growth and underlying fundamentals is what attracted us to the transaction.”
Booth has backup for his words – Colliers International‘s Q3 Industrial Trends Report for the Greater Columbus Region points out that the market saw its sixth consecutive quarter of positive absorption, with 1.3 million square feet of new construction projects scheduled to break ground. The report also pointed out that, according to the Federal Reserve’s Beige Book, which records economic activity, the Columbus MSA’s economic activity was growing modestly, even though the outlook from manufacturers about the region is mixed. The Bureau of Labor Statistics has also chimed in with mixed messages, pointing out that manufacturing is down by 5% from 2011 though mining, logging and construction have increased and is hiring.
As such, Booth is optimistic that the investment will yield good returns. He says the plan is to invest capital into improving the 1970s-1980s-built portfolio. “We have the capital to do it,” he notes. “We’re an entrepreneurial company and are market-responsive, and at the basis at which we bought this portfolio, we’ll be able to compete favorably in the marketplace.” Furthermore, he points out, the lease rates will be more attractive than those offered by First Industrial.
Booth wasn’t specific about future investments in the Columbus market, only to suggest that opportunities would be pursued if they made sense. He did acknowledge, however, that Westmount and Garrison will look at other buys in the future. “We’re pleased with the first deal,” he adds. “We’re looking forward about the possibility of doing more with them.”