Goldman Sachs Invests in $500M Last Mile Industrial Portfolio

Goldman Sachs Merchant Banking Division is buying a stake in a 46-asset last mile industrial portfolio owned by Dalfen Industrial. The portfolio of over 6.3 million square feet caters to e-commerce-oriented tenants and is located in such metro areas as Atlanta, Dallas, Chicago, Orlando, Phoenix, Raleigh, Houston, Tampa, Baltimore, Minneapolis, Cincinnati, Columbus, Reno and Jacksonville. With 94% occupancy and an average property size of 126,000 square feet, the properties are leased to tenants such as Amazon, Frito Lay, Brinks, Central Garden & Pet, Pods, and Sherwin Williams.

The properties are valued at $500 million, according to a source cited by Bloomberg. 

E-commerce has been driving industrial property fundamentals for years but the pandemic has accelerated that trend. In May alone, e-commerce sales jumped 92.7%. The expenditures for just April and May exceeded $53 billion in the US. Dalfen points to industry research that indicates estimates that 400 million square feet or more of total additional US logistics real estate demand will be created in the next two to three years as a result of this shift. 

Another stat provided by JLL projects that demand for industrial real estate will grow to 1 billion square feet within five years, because of accelerated growth in e-commerce due to the Covid-19 pandemic and the ensuing shelter-in-place policies. E-commerce sales could hit $1.5 trillion by 2025, according to JLL, increasing demand for warehouse fulfillment space and other industrial real estate to an additional 1 billion square feet.

“With the exponential growth of e-commerce, especially in the wake of COVID-19, these last mile properties are more important than ever,” said Sean Dalfen, president and CIO.