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Exploring CBRE’s Midyear Market Report

Source: National Real Estate Investor ( CBRE provided NREI with an early look at its Global Real Estate Market Outlook 2020 Mid-Year Review report. )

The COVID-19 pandemic rages on, with the U.S. remaining one of the worst-hit parts of the globe. Other nations have contained the virus or are dealing with more isolated outbreaks. There’s no clear end in site for the crisis. The global economy remains gripped by uncertainty and hobbled by measures necessary to contain the spread of the virus. 

It’s in this context that CBRE is releasing its Global Real Estate Market Outlook 2020 Mid-Year Review report. As it did with its 2020 Real Estate Market Outlook, CBRE has provided NREI an advance look at the report. The slideshow walks through the firm’s observations with interactive versions of the charts published in the report.  

All told, CBRE’s conclusion is that the rebound for commercial real estate will lag that of the overall economy, with recovery in most commercial real estate sectors expected to start this year and continue through 2021. The firm foresees the industrial and logistics and multifamily sectors bouncing back more rapidly than other sectors. The acceleration of the shift to more e-commerce will boost industrial and logistics, while overall demographic trends will push more people to rent apartments, boosting multifamily fundamentals. 

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Amazon, Walmart, fuel industrial real estate occupancy across Atlanta

Article Source: Atlanta Business Chronicle, Biz Journals

While uncertainty continues about demand for office space in the Covid-19 world, developers of Atlanta’s industrial real estate projects seem bullish about their future.

Keep on building.

Majestic Realty Co. is the latest developer to announce a new project, a 1.15 million-square-foot speculative building in Union City near Hartsfield-Jackson Atlanta International Airport, the world’s busiest. Majestic adds to the more than 21 million square feet of industrial real estate projects under construction in Atlanta, the fifth consecutive quarter activity has remained at that level, according to Colliers International.

Amazon and Walmart are driving much of the new occupancy, Colliers said.

Amazon alone leased 3.7 million square feet in the past three months. Amazon’s new leases bring its total fulfillment center network to at least 13 million square feet across the Atlanta region, almost doubling its size from the end of last year.

Majestic was a beneficiary of that rapid expansion. Amazon leased at least 500,000 square feet at Majestic’s Airport Center IV project, according to market intelligence. The firm did not release the name of the company behind the new lease at “MAC IV.”

Amazon is building-out the infrastructure of its same-day delivery network, with fast-growing population centers such as Atlanta and cities in Texas and Florida seeing most of the new activity.

Walmart may also explore ground-up development in Atlanta, sources familiar with the market said. For now, it’s ramping up its own real estate expansion in north Georgia. It recently leased just over 1 million square feet at Valentine 85 Logistics, a project owned by Hillwood Development Co. near Pendergrass, Ga. The project is about 45 minutes northeast of downtown Atlanta.

Georgia’s construction boom for new warehouses is a microcosm of bigger trends across the country.

“In the Covid-19 era, e-commerce is fueling industrial demand more than ever,” according to real estate giant CBRE.

As e-commerce accounts for a larger share of overall retail sales and same-day delivery networks continue to expand, the activity should provide a short-term buffer to a more severe economic downturn. Across the Atlanta metro region, other companies such as Facebook, Boeing Co. and Mondelez Global are also moving into new warehouse and data center operations.

In Union City, Majestic says its new spec building will be called MAC V and should be finished by June 2021. It’s the fifth phase of Majestic’s 12 million-square-foot portfolio in the I-85 South corridor.

Stan Conway, executive vice president of Majestic Realty, said, ““By moving forward with this speculative project, we are reinforcing our commitment to the submarket despite current uncertainties in the economy.”

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Booming E-commerce Sales Drive Demand for Industrial Facilities

Source: National Real Estate Investor

Acceleration of online shopping during the COVID-19 lockdown has made companies more risk-averse in their inventory management strategies. Concerns about running low on ordered merchandise is causing a shift from “just in time” to “just in case” logistics strategies. Now, firms are increasing stock at facilities near customers to ensure timely shipping in case customers order more than anticipated. 

While this new logistics approach is still in its infancy, Greg Healy, senior vice president, supply chain solutions & workforce analytics, with real estate services firm Colliers International, says “It’s impact on industrial real estate is nothing but positive.”

The increase in online shopping was happening prior to the quarantine, but the pandemic accelerated it, Healy says., For example, in 2018, 29 percent of Nordstrom sales were online, he notes, which is equivalent to sales at 146 stores, and six percent of Target’s sales were online, which is equivalent to sales at 122 stores.

Omni-channel retailers are downsizing bricks-and-mortar space and increasing their focus on online sales, but because customers no longer come to them, their biggest challenge is reducing the high cost of transporting products. As a result, retailers’ highest demand will continue to be for space at infill distribution facilities, according to Healy. But the need for resilience is also increasing demand for regional warehouse space where large quantities of consumer goods are stored.

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Investing in Industrial in the Post-COVID World

Source: NAIOP Commercial Real Estate Development Association

When the COVID-19 pandemic struck the U.S. earlier this year, it was unclear what the effects would be on industrial real estate. But nearly six months into the crisis, it appears that the sector has been more resilient than others, according to participants in a panel discussion during I.CON Virtual 2020 on investing in industrial properties in the wake of COVID-19.

“I don’t think we’re immune to what’s happened, but we’ve held up well,” said David Fazekas, a senior managing director with the Black Creek Group.

The panelists agreed that an explosion in e-commerce activity at the height of the pandemic, when much of the country was under stay-at-home orders that curtailed consumers’ ability to shop, is a major factor behind that stability.

“Accelerated adoption of e-commerce was definitely a positive trend of the pandemic,” said Michael Coppola, a partner with Bluewater Property Group. “E-commerce has changed our industry. We’ll all be attuned to how much of that sticks.”

Stephanie Rodriguez, vice president of leasing and development with Duke Realty Corp., said online sales accelerated much faster than she expected during the pandemic.

“The e-commerce increases we’ve seen in the last few months have been astounding,” she said. “In this short amount of time, we’re outpacing where we thought we’d be in three years.”

Along those lines, panelists noted that demand for industrial space held up well during the crisis, and e-commerce giant Amazon is a major reason. The company added about 175,000 employees at a time when more than 30 million Americans were out of work.

“The space that is coming online is getting gobbled up by Amazon,” Coppola said. “That’s certainly going to help rent growth.”

Opportunities and Markets

Coppola said that his company, which is focused on the Northeast, will continue investing in that region.

“These Tier-1 infill markets are insulated from long-term trends that COVID-19 is not going to change,” he said. “COVID has only accelerated a lot of those trends. We don’t see anything in the way of distress, unless it’s a one-off like a retailer or someone with liquidity needs. We’re in a bit of a wait-and-see period now. Buyers are being appropriately cautious right now.”

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The Future of Industrial Real Estate and Logistics Systems

Source: NAIOP Commercial Real Estate Development Association

The design and constructability of industrial projects has changed immensely over the past decade, alongside growing e-commerce demand, population density and trends like grocery delivery. Kim Snyder, president, U.S. West region at Prologis; Jinger Tapia, principal, design at Ware Malcomb; Brook Melchin, senior architect/director at Riddell Kurczaba; and Robert Murray, senior vice principal at Alston Construction, discussed emerging trends in industrial development at this week’s I.CON Virtual 2020. Their conversation addressed a range of topics including design trends in new buildings, potential models for mixed-use buildings, and adapting to autonomous vehicles and increased automation within buildings.

Building Design

Murray provided insight into recent trends in industrial buildings that are likely to continue in the near future. In general, buildings are getting taller, with 40-foot clear buildings now commonplace and 48-foot clear buildings increasingly entering the market. Taller buildings are also becoming more common in last-mile facilities located close to dense urban areas. Robotics and autostore systems are increasingly common, increasing building throughput. However, automated systems and HVAC systems also sometimes require the installation of additional sprinkler systems and have contributed to buildings’ electrical requirements. Murray observed that new buildings with automated systems frequently require the installation of three or four transformers and large backup generators to ensure that systems can remain in operation during a power outage.

Space usage at a site is also beginning to shift as many facilities, especially those in the last-mile category, increasingly accommodate additional parking for delivery vans and workers. Conventional buildings are still being built with 50-foot bays to service truck deliveries, but buildings increasingly use truck queueing systems to allow more on-site space to be devoted to parking. Murray said he has also seen a trend of moving offices to the center of a building. Buildings are increasingly being designed to accommodate different future uses of space.

Tapia also noted ways that buildings are being designed to be more flexible and identified design elements that can allow for more efficient use of space. For example, to accommodate a future change of use, designers can ensure that a wall that is initially designed for truck docking is not load-bearing so that it can be reconfigured or moved.

Tapia also outlined potential approaches to making a large buildings “more efficient on smaller acreage of land, closer in to the buyers who are looking for delivery.” These include the potential of placing loading zones in a central corridor along the middle of a building instead of at a building’s sides, and surrounding each side of a loading zone with mezzanines and vertical lifts.

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Million Dollar Brokers: Brian Bratton hones his reputation as Rookie of the Year

Brian Bratton, a sales associate with King Industrial Realty, excels at one thing many people avoid: picking up the phone and calling a potential client you’ve never talked to before.

“I’ve never seen anybody do a better job of cold calling,” said Sim Doughtie, president of King Industrial Realty Inc. and CORFAC International. “He’s very disciplined and stays after it. He has no fear. So it’s been very successful for him. He’s always putting things in the pipeline.”

Thanks to his skills at bringing in business, Bratton has been named Rookie of the Year by the Atlanta Commercial Board of Realtors for 2019. The award is given to brokers who have been in commercial real estate for up to three years and have amassed the highest volume of sales transactions.

Bratton said he was drawn to the industrial side of commercial real estate “because of the scale and excitement of the deals as opposed to office or retail leasing,” he said. “Plus, I get to see and learn about so many different and interesting types of businesses that otherwise you would never get to experience in any other field.”

After joining King in 2017, Bratton heeded the advice of the seasoned professionals there.

“Everything is about the phone. You’ve got to dial away,” he said he’s learned. “So many people have call reluctance and they won’t pick up the phone. It was just amazing to me that there’s so many deals out there to be had. I called some people who would say, ‘You’re the first guy that’s ever called me.’”

Cold calling, as its known, requires determination to keep going, knowing that few of those calls will result in deals. Bratton, however, said he sees those phone rejections not as “no”, but as “not now.”

“I’ve called people and four months later they tell me they’re ready to sell,” he said.

At King, Bratton has been involved in projects worth more than $80 million, said Doughtie, adding that “that’s pretty unusual for somebody that young and that new in the business.”

A big part of Bratton’s plan for success is proving he is a true professional. To that end, he’s pursuing the Society of Industrial and Office Realtors (SIOR) designation.

“Being an SIOR means you are the best of the best,” said Bratton. “When clients and other brokers see those four letters after your name, they know that they are dealing with a professional of the highest caliber and that in any situation, you will do the right thing.”

He’s been a SIOR member associate for the past year and during that time, he added, he has made valuable connections and relationships. Earning a SIOR designation requires experience, education and commitment to ethics, Bratton said, and honorees must be consistent top producers in their areas.

Bratton called King Industrial Realty Inc., a professional home, as well as a place he receives mentoring and support. “I felt like there was a lot of talent here, a lot of people that I could learn from,” said Bratton. “King was going to give me the tools to be successful and invest in me and my future, and it just felt right.”

While he has been involved in bringing in a large amount of business, he said he does not consider any one deal his biggest success.

“Very rarely is there an ‘easy’ deal. A lot of times, the small deals can take more time and be more difficult than the big deals,” Bratton said. “Every deal has its own quirks and obstacles. You have to work through making each deal different from the last. So, when I get the latest deal across the finish line, that to me is my new ‘biggest success’ until the next one.”

Press: https://www.bizjournals.com/atlanta/news/2020/03/15/million-dollar-brokers-brian-bratton-hones-his.html

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King Industrial Realty Represents Highest Number of Industrial SIOR Brokers in Atlanta

In February, 2020, Randall Bryan, Vice President, King Industrial Realty in Atlanta, Georgia became the ninth (9th) King Industrial broker to earn membership status in to the Society of Industrial and Office Realtors (SIOR). According to the Georgia Chapter of SIOR, with Bryan’s addition to the ranks of SIOR brokers, King Industrial Realty now boasts the highest number of Industrial Brokers in the Atlanta Industrial Market with the much sought after SIOR designation.

 SIOR is the leading commercial real estate association, representing the world’s top producing brokers. Known worldwide, SIOR has over 3,300 representatives from 36 different countries and offers a professional designation to commercial brokers and other industry professionals, (SIOR).

  “Randall joined King Industrial Realty on July 21. 2004, and he has been working in the firm’s southwest office for the past fifteen (15) years”, said Sim Doughtie, SIOR, CCIM, MCR, SLCR, President and Managing Broker, King Industrial Realty/CORFAC International. “Congratulations to Randall for all of his hard work, dedication and persistence in achieving the prestigious SIOR designation. Now, he will be able to wear the coveted SIOR Pin!”

 King Industrial Realty, Inc. has negotiated over three billion dollars in leases and sales of warehouse, manufacturing, distribution, high-tech, and service center space throughout the metro Atlanta area since 1995. King Industrial Realty is built on two cornerstones: superior knowledge of the Atlanta industrial market and broker professionalism. King Industrial Realty is a part of CORFAC International, a network of independently owned commercial real estate brokerage firms.

 CORFAC International is comprised of privately held entrepreneurial firms with expertise in office, industrial and retail brokerage, tenant and landlord representation, investment sales, multifamily, self-storage, acquisitions and dispositions, property management and corporate services. Founded in 1989, CORFAC has 77 offices internationally. CORFAC offices completed more than 10,000 lease and sales transactions totaling 620 million square feet of space valued in excess of $8.2 billion in 2018.

Pictured: From left to right: Wilson Covington, Steve Ratchford, Jason McCart, Charlie King, Randall Bryan, Brian Bratton (Associate Member), Sally Tennant, Bradley Bays, Sim Doughtie, Bill Johnston.

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King Industrial Offers “Top Dogs” Training to New Agents

King Industrial Realty prides itself on giving their agents the most valuable resources to help them excel in the field. All current agents are encouraged to take advantage of the professional development program, Top Dogs, a step-by-step training for commercial real estate professionals. Through the core curriculum, agents learn:

  • The major commercial property types
  • The anatomy of transactions
  • Client representation roles
  • The most commonly used financial calculations
  • The tools you’ll need for success
  • The people you need to get to know to be successful

For more information on the Top Dogs program, visit: https://www.tdogs.com/

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The Cornerstones of King

Serving Metro Atlanta businesses for over 38 years, King Industrial Realty is built on two cornerstones: Superior Knowledge of the Atlanta industrial market and Broker Professionalism. At King, our focus has always been on building long-term client relationships. We work proactively to serve each client with integrity and commitment.

We are a full service industrial and commercial real estate firm with the area’s largest concentration of active industrial real estate agents that have a collective experience of more than 500 years. King Industrial Realty negotiates leases and sales for more than 5.2 million square feet of warehouse, manufacturing, distribution, high tech and service center space throughout metro Atlanta. Simply put, we know the Atlanta industrial real estate market better than any other firm. We’ve compiled that knowledge into PinPoint™, our own proprietary database and Atlanta’s most comprehensive source of industrial real estate market data.

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