Diverse Industrial Deals Gain Momentum

HIALEAH, FL—Industrial has been a hot story in South Florida—and in pockets of the Southeast—through early 2012. In early January, Flagler Real Estate Services inked what's considered to be Florida's largest industrial deal in two years, as well as the largest in South Florida in more than four years. Bullet Line took down 475,000 square feet of space at Centergate at Gratigny, adding to the more than one million square feet of lease transactions that have closed at the mixed-use Hialeah business park since Flagler took over as asset manager two years ago.

Renovations are part of the story at Centergate. Flagler project manager Brian Kronberg completed a large-scale property revitalization and transformation plan, as well as launching aggressive marketing strategies that raised occupancy by almost 80%. The 47-acre property also has 27 acres of land available, which can accommodate an additional 650,000 square feet of development.

Also in January, Butters Construction & Development disposed of some of its industrial properties in the $18.9-million sale of a four-building, 208,590-squarefoot portfolio to Industrial Income Trust. The sales price translates to $90 per square foot.

"Industrial fundamentals are strengthening and buyers are looking for core industrial product," says Douglas Mandel, vice president of investments in Marcus & Millichap Real Estate Investment Services Inc.'s Fort Lauderdale office. Mandel sees a strong year ahead for South Florida industrial assets: "If I had more, they would sell."

It's not just the class A, spruced up industrial parks that are turning heads, either. In a deal that illustrates there's still a demand for older, larger industrial buildings in Miami, Copy Systems in February inked a five-year lease at 5703 NW 35th Ave. The deal is worth about $1 million.

"Despite many tenants wanting new space, deals are still getting done at larger, older facilities, although it's harder," says Franklin Street Real Estate Services managing director Joel Kattan, who brokered the deal.

Finally, H&R REIT won the confidence of investors with an industrial portfolio spanning three states and two million square feet. The three-building package is fully leased to Nestle USA. CBRE senior vice president Michael Strober, along with partners Amanda Valenti and Donald Jennewein, secured financing with a 10-year term, 10-year amortization and a 4.5% interest rate through ING Investment Management.

"The life companies are all flush with cash," Strober says. Although multifamily is top priority in life companies' investment plans, "I must say that the industrial corridor throughout the US has taken a second position. Industrial has become the fair-haired child right now for life companies."