Industrial Investors Think Small Lately

ATLANTA-Smaller transactions appear to be the norm in the local industrial market these days. Brokers say investors are better able to raise equity and arrange financing at seven-digit levels than for more massive deals.

One recent example is the $6-million sale of Gateway Distribution Center, at 6047 and 6049 Fulton Industrial Blvd. A private investment group managed by Atlanta-based Ackerman & Co. acquired the two-building, 410,000-square-foot property for $6 million from a fund managed by New York-based ING Clarion.

Brian Budnick, an associate at CB Richard Ellis in Atlanta who represented the seller, says Ackerman was able to raise equity, procure debt financing and complete due diligence within a six-week time frame. CBRE executive vice presidents Frank Fallon and Chris Riley also were involved in the deal.

“We’re starting to see an uptick in interest in smaller deals,” Budnick tells GlobeSt.com, noting that there is still some apprehension among investors to try for larger transactions. He adds that it is “amazing” that such a deal could close so quickly given the current turbulent capital markets.

Gateway Distribution Center was built in 1987 and is 50% leased to Carolina Logistics Services. It is the first industrial acquisition by Ackerman, which primarily invests in office properties and owns four million square feet in the Atlanta metropolitan area.

“The industrial market, in our view, demonstrates real upside potential, particularly at current valuations,” Kris Miller, president of Ackerman, stated in a release. He added that the company expects to make additional industrial purchases this year.

Ackerman views Gateway, which is served by a CSX rail line, as a value-add play. The company has taken over leasing and management of the center, with Kate Sharp, vice president, and Mike Martin, senior vice president, serving as its agents there.

Atlanta’s industrial vacancy rate ended 2008 at 12.3%, its highest level in the past four years, with a large part of the increase occurring in the fourth quarter, according to CBRE research. Asking rents remain flat at $3.85 per square foot.