Institutions Are Buying Old Industrial Product

LOS ANGELES—Institutional investors want a piece of the booming Los Angeles market. Bret Hardy recently joined Newmark Grubb Knight Frank as executive managing director to build an institutional industrial investment sales platform, and says that demand from institutional investors is climbing in the Los Angeles market.

“Institutional mandates for infill, high-barrier to entry locations continue to grow across product quality, relative to overall fund allocations and new entrants into the market,” Hardy tells GlobeSt.com “Foreign and large private capital investment are adding additional competition for what few opportunities exist in the market today.”

While institutions want market share here, there aren't many opportunities for them to gain it. The Los Angeles market is notoriously tight, and much of the product is old and outdated—meaning that it is not institutional quality. “Older stock as well as newer generation investment opportunities are in low supply and high demand,” says Hardy. “Investors, and brokers, continue to seek older stock, value-add investments in order to achieve hard-earned yield premiums in this environment.”

Institutions will help put upward pressure on pricing, but the already steep competition will keep pricing high regardless. “Industrial product offerings across the quality spectrum will continue to achieve record setting pricing,” says Hardy. “Moreover, quality product offerings in secondary markets will continue to benefit from the unmet demand within infill markets.”

Hardy plans to build out a platform to service this demand, and build on the firm's already robust industrial platform. “As the industrial sector continues to evolve, we are committed to bringing in the best talent in strategic industrial markets so-as to meet the expanding needs of our sophisticated clientele,” he says.

LOS ANGELES—Institutional investors want a piece of the booming Los Angeles market. Bret Hardy recently joined Newmark Grubb Knight Frank as executive managing director to build an institutional industrial investment sales platform, and says that demand from institutional investors is climbing in the Los Angeles market.

“Institutional mandates for infill, high-barrier to entry locations continue to grow across product quality, relative to overall fund allocations and new entrants into the market,” Hardy tells GlobeSt.com “Foreign and large private capital investment are adding additional competition for what few opportunities exist in the market today.”

While institutions want market share here, there aren't many opportunities for them to gain it. The Los Angeles market is notoriously tight, and much of the product is old and outdated—meaning that it is not institutional quality. “Older stock as well as newer generation investment opportunities are in low supply and high demand,” says Hardy. “Investors, and brokers, continue to seek older stock, value-add investments in order to achieve hard-earned yield premiums in this environment.”

Institutions will help put upward pressure on pricing, but the already steep competition will keep pricing high regardless. “Industrial product offerings across the quality spectrum will continue to achieve record setting pricing,” says Hardy. “Moreover, quality product offerings in secondary markets will continue to benefit from the unmet demand within infill markets.”

Hardy plans to build out a platform to service this demand, and build on the firm's already robust industrial platform. “As the industrial sector continues to evolve, we are committed to bringing in the best talent in strategic industrial markets so-as to meet the expanding needs of our sophisticated clientele,” he says.