Online Retail Demand Helped Prop Up Q2 Industrial Real Estate Sales
The sale of distribution warehouses accounted for a third of the second quarter deal volume among industrial properties, according to Real Capital Analytics.
Industrial real estate sales were down nationally in the second quarter of 2020, but that decline was smaller than those experienced by other real estate sectors, according to a recent analysis by Real Capital Analytics.
Demand for distribution warehouses helped to bolster industrial real estate deals, which totaled $11.1 billion in the quarter that ended in June, the report notes. A third of that deal volume centered on distribution warehouses, which highlight their key role in the logistics of online retail—a sector that has flourished amid the COVID-19 pandemic. Investors have continued to show interest in these properties because they are essential to getting online purchases and deliveries into the hands of customers.
The report offers a sampling of distribution warehouse sales in which either Amazon or FedEx are the sole tenants. The largest such transaction was the June $176 million sale of Wisconsin’s Kenosha Enterprise Park—a 1.5 million-square-foot distribution center rented by Amazon. The buyer, KKR Real Estate, paid $115 per square foot for the property.
“KKR was also the buyer behind another of these Amazon deals in June, buying a 1 million square-foot distribution center in North Carolina from Morgan Stanley for $84 million,” the report reads.
Other distribution warehouses leased by Amazon were also sold in the second quarter, including ones in Shakopee, Minn. that sold for nearly $119 million, North Las Vegas for $110 million, and Ocala, Fla, for $58 million.
“The FedEx properties that sold in the second quarter were smaller than the Amazon ones and, as is more typical with properties of this size, commanded higher pricing,” reads the report. “All three warehouses with FedEx as a tenant sold for more than $170 per square foot, as compared to the second quarter average of $97 per square foot for single tenant warehouses in the U.S.”
A 270,000 square-foot warehouse in Whitsett, N.C., so for nearly $48 million—a price per square foot of more than $176. An Ogden, Utah FedEx distribution center has the highest per-square-foot price, at $185.