Alpaca Real Estate has launched a $250 million venture with LRC Properties to target infill industrial properties in both the Southeast and Southwest. Already, as part of the move, the investment firms have bought two assets in Nashville that take up roughly a combined 500,000 square feet.
Both properties are leased to tenants at below-market rates. The off-market acquisitions are located near Nissan’s biggest North America assembly plant, which spans 6.5 million square feet. Also, they provide access to Jefferson Pike, I-24 and Route 41.
Peter Weiss, managing partner of Alpaca, noted that the deal continues on its infill industrial strategy that targets what it deems "high-growth markets" that surround cheap labor and the potential to redevelop properties, although it's unclear what's in store exactly for the Nashville deals.
“Infill logistics assets make up the largest component of the U.S. industrial market, supported by strong demand drivers including e-commerce; onshoring and nearshoring; and long-term supply constraints fueled by limited land availability and high construction costs," he said in a statement.
Weiss added that high costs are expected to continue due to the White House's trade policy, which includes the impact of imposed tariffs.
The good thing about the Southeast is that vacancy is quite low, sitting at below three percent, according to Alpaca. For context, the national rate stood at 8.8 percent in April, according to a report from CommercialEdge. But on the bright side, nationally, construction has been slowing down, which is expected to stabilize the overall rate in the coming months. Despite the influx of supply causing challenges, Nashville showed resilience, with the city benefiting as one of the top gainers in rent growth in April, according to CommercialEdge.
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