Swedish private equity firm EQT has agreed to acquire Exeter Property Group for approximately US$1.9 billion. The combination with Conshohocken, PA-based Exeter will create “a scaled, global real estate investment platform, adding one of the largest and well performing value-add real estate investment managers in the world to EQT’s successful platform,” EQT said Tuesday.
“EQT is a fantastic strategic and cultural fit for our business,” said Ward Fitzgerald, Exeter’s CEO and founder. “For our day-to-day activities, it will be business as usual. We will continue to be fully focused on driving returns by utilizing our unique local execution of small and mid-cap acquisitions, adhering to our real estate solutions ethic to our over 1,200 corporate client/tenants and directly performing our own leasing, property management and development.
Founded in 2006, Exeter focuses on acquiring, developing and managing logistics/industrial, life science/office and residential properties mainly across the U.S. and Europe.
International real estate firm Hines has broken ground on Busch Logistics Park, a 97-acre industrial project spanning two buildings and nearly 732,000 square feet in Bartow County. The project is Hines’ first Atlanta-area logistics property.
Hines will develop two speculative industrial facilities at Busch Logistics Park. Building A will span 523,541 square feet and feature cross-dock configuration as well as 36-foot clear heights. Building B will span 207,989 square feet and feature rear load configuration and 32-foot clear heights. Both buildings will deliver in Q3 2021. The project is located off I-75 and Cass White Road.
Bob Currie and Reed Davis have been tapped to handle marketing and leasing efforts for the site. More than 100 tenants are currently surveying the Atlanta industrial market, and 4.3 million square feet of new deals are expected to close before the year’s end, according to JLL’s Q3 Industrial Insight.
The U.S. economy’s exit from the COVID-19 pandemic will mirror the flight path of a butterfly, according to economist Dr. Peter Linneman. In other words, it will move forward but also up, down and sideways — quite erratic and not terribly fast.
Linneman’s comments came during a “Walker Webcast” hosted by Walker & Dunlop CEO Willy Walker on Wednesday, Jan. 6.
The butterfly stage will continue until enough people get vaccinated where Americans feel safe resuming pre-pandemic activities, argued Linneman. Once that occurs, we’ll enter the flight path of a more steady “migratory bird.” Linneman’s best guess for that timeline is June or July of this year.
In order to gauge the economy’s progress, it’s best to monitor GDP growth and employment, not corporate profits or the stock market, said Linneman.
In Linneman’s view, 15 percent of businesses and citizens are “really struggling” and will need continued relief and roughly six more months to get their footing. A stimulus focused on that 15 percent segment — including hotel, airline and restaurant workers — is needed, according to Linneman.
“It’s not about spending; it’s about targeting,” he said.
If the U.S. government can effectively target that 15 percent with stimulus relief, then the result will be “productive spending.”
A big Atlanta-area distribution building leased to The Home Depot has been acquired for $96.7 million.
Monmouth Real Estate Investment Corp. (NYSE: MNR) said it bought the new 657,518-square-foot industrial building located at 3150 Highway 42 in Locust Grove, Ga.
The property is leased for 20 years to Home Depot (NYSE: HD). The building is situated on approximately 130 acres, providing ample opportunity for future development, Monmouth said.
“A common misconception is that all industrial real estate provides a linkage to the digital economy, but in fact, a new type of industrial real estate has been designed specifically to serve the computer-driven supply chain. These smart, highly-automated facilities are uniquely equipped to handle omni-channel distribution,” said Michael P. Landy, Monmouth’s president and CEO, in a statement.
New Jersey-based Monmouth’s portfolio consists of 121 properties containing approximately 24.5 million rentable square feet across 31 states.
Its other Georgia properties include two in Augusta leased to Fedex, one in Braselton northeast of Atlanta, one in Griffin south of Atlanta, and two in Savannah leased to Fedex and Shaw Industries, according to the company.
Despite 2020’s uncertain realities and significant change, Georgia turned those 2020 buzzwords – “pivot,” “adapt,” even “unprecedented” – into good news.
By partnering with our employers and communities in confronting challenges from COVID-19 head-on, we’ve regained our economic momentum while developing industries that will provide the jobs of the future. In fact, despite the downturn in our service industries, the number of people working in Georgia actually reached an all-time high during the COVID-19 pandemic!
Jobs and investment numbers from July through December are higher than the same period last year. During December, a month when the Georgia Department of Economic Development (GDEcD) has traditionally seen a drop in secured locations and expansions, we’ve seen an increase over last year. Key industries like automotive, food processing and advanced manufacturing grew substantially during 2020, and the Georgia Centers of Innovation continue to build critical ecosystems to fuel additional growth and remain competitive.
To expand markets, small businesses are utilizing the specialists in GDEcD’s International Trade division, which earned an unprecedented fourth President’s “E-Star” Award for Export Services last year.
Across government and business, Georgia’s vital life sciences communities have supported COVID-19 response and developed life-saving vaccines. Vaccines are now being distributed with help from Georgia’s extensive logistics networks and Georgia-based Fortune 500 companies such as UPS and Delta. Vaccine effectiveness and availability has improved job creators’ confidence levels, too.
Our metro areas are seeing continued growth in Health IT, cybersecurity, and financial technology, and in Atlanta along with esports, have reinforced the city’s ranking as the No. 1 tech hub in the U.S.
This sector of industrial was booming even before the pandemic, and future demand is expected to soar even higher.
In the age of one-hour package shipments, the infrastructure needed to serve a growing on-demand culture is scrambling to keep up. This has taken on even greater significance amid the COVID-19 pandemic, which forced millions to stay home for months.
According to Coresight Research’s U.S. Online Grocery Survey 2020, online grocery sales are expected to increase by about 40% this year due to the pandemic. That’s after a 22% increase in 2019. The strong growth in e-commerce is a main reason that the industrial real estate sector is a bright spot in the U.S. economy, as developers and tenants continue to construct millions of square feet of warehouses and logistics centers.
Within the industrial sector is a unique class of buildings that maintain the continuity of the “cold chain,” which is crucial for the integrity of U.S. food and pharmaceutical logistics. While market factors are driving rising demand for cold buildings, there are also practical reasons behind the need for this asset class. The existing cold building stock in the U.S. is becoming antiquated, with an average age of 34 years, according to CBRE research.
In the past, cold storage buildings were built to suit, but due to the surge in demand and the need to upgrade these facilities, the era of the speculative cold building could be upon us.
Serving Metro Atlanta businesses for 40 years, King Industrial Realty/CORFAC International has the largest concentration of industrial brokers in Atlanta with a collective experience of over 500 years. The core of the relationships that King has built since 1980 is trust. King brokers know the Metro Atlanta industrial market better than any other firm. Using a proprietary database, PinPointTM, King tracks 27 counties with over 735 million square feet of industrial and service buildings, that drives our expertise and information on the market. King’s quarterly publications, the Point of View and the King Industrial Market Overview, accurately report and analyze the Atlanta industrial market, which is distributed to bankers, builders, investors & SIOR.
King Industrial is a founding member of CORFAC International, connecting clients’ needs to over 3,300 seasoned commercial experts in 132 markets worldwide.
As Atlanta moves into a new year, the question on everyone’s mind is what long-term impact will the pandemic have on commercial real estate?
The answer is less than many originally predicted, according to leaders at the Atlanta Commercial Board of Realtors (ACBR). Office space isn’t going away, even though workers will be spending more time at home. E-commerce, which was already a growing trend, got a jump start during the shutdown and is likely to keep warehousing and logistics leasing humming along at a record pace.
The office market is experiencing two seemingly contradictory trends. Companies are re-upping their leases for about the same amount of space they took pre-Covid, while continuing to allow their employees to work from home.
“Flexibility is the new amenity for employees,” said Heather Lamb, vice president of ACBR and senior vice president/co-market leader of Colliers Atlanta’s Landlord Services Group. “Corporate America is saying our employees want a flexible work environment, they want the ability to work from home, but then they also need a landing space at the office for the days they congregate together as a team to strategize or brainstorm.”
Keeping work-from-home polices in place also allows tenants to stagger shifts and maintain social distancing. For many, that means keeping the existing square footage while reducing user density.
“The physical office will remain critical to a company’s success,” said Audrey Frey, managing director and Atlanta occupier leader at CBRE and an ACBR director. “You can run a business virtually, but it’s very hard to grow it remotely. Culture, mentoring, collaboration, and innovation all need to be done face-to-face.”
While the pandemic certainly accelerated the slow-moving tend toward telework, it also demonstrated to companies that its applications are limited.
“There’s some evidence that we can work effectively from home, as long as the volume and velocity of businesses is 40%,” said Bryant Cornett, president, DTSpade. But as business activities increase and as companies need to innovate, the question becomes whether a company can thrive while keeping employees working remotely, he said.
When it comes to office rates, owners are holding firm although there are more concessions than before. The average rate for Class A office space dropped slightly during the year from a historic high of $32.21 per square foot per month in the first quarter to $30.78 in Q3, according to JLL Atlanta research. These figures compared to $30.39/sf per month at the beginning of 2019.The cost of space has risen steadily from an average $24.35/sf/month in 2015.
The question of just how much space is enough is an evolving trend.
“Everyone’s trying to figure out right now how they’re going to be using office space going forward,” said Kyle Kenyon, senior vice president for CBRE’s Atlanta Brokerage Group and a director of ACBR.
One big question is the availability and success of a Covid-19 vaccine. If it proves effective and workers get comfortable being back working together in the office, then the shift away from telework is likely to become more pronounced.
As workers return to the office there will be less crowding together. The days of the open office plan with low cubicle walls putting people close together may be at end – at least for the near future.
“It straightened out some of the trends where people are really being stacked into work environments that were too dense,” said Kirk Rich, principal with the Agency Leasing Group at Avison Young Atlanta and an ACBR director. “It is probably going to make the work environment a much more pleasurable experience and a more flexible experience, which is good for everybody.”
The amount of leasing activity has also held relatively steady.
“The number of companies that have been touring our building has been down about 20%” during 2020, according to Jeff Shaw, partner at Bridge Investment Group and CEO of Bridge Commercial Real Estate and a director of ACBR.
With 229 leases done so far this year, Shaw’s firm has leased about 1.62 million square feet of space with more in negotiations. This volume of business compared to 213 leases signed in 2019 for 1.9 million square feet.
“The demand [for square footage] is going be less but not nearly to the extent they think,” said Gregg Metcalf, vice president of ACBR and executive vice president at JLL Atlanta. “The focus within the space will change. It’s really going to be about the human experience, with more attention to creativity and collaboration.”
One segment of the market that has not only flourished, but accelerated, is industrial space. E-commerce was already well underway when the pandemic shutdown forced more people to start ordering home delivery via Amazon and other companies.
“We’ve been booming,” said Sim Doughtie, president of King Industrial Realty Inc.
Over the last four quarters, the Atlanta market did over 65 million square feet of space in deals, according to Doughtie. “And that’s a record, we’ve never done that much,” he said. A total of 24.7 million square feet was absorbed over the same period. This compared to 48.5 million square foot of leasing activity the previous year (Q4 2018 to Q3 2019). During that same time period, there was more than 7.6 million square feet of positive net absorption as well as over 17.4 million square feet in new construction.
“And then from a new construction standpoint, we did the second most new construction with a little over 24 and a half million square feet,” Doughtie said. The record for new construction was set in first quarter 2018 with more than 24.9 million square feet.
E-commerce has moved beyond just Amazon with more and more retailers and suppliers doing business online for sales and deliveries.
Over the past six years more than 122 million square feet of industrial space has been built, even as the vacancy rate has dropped from about 13.4% to 10.8%.
“We’ve been absorbing what we’ve been building, and that new construction was so prevalent because when e-commerce came on the scene, they needed 36 to 40 foot ceiling heights,” said Doughtie.
There is still considerable uncertainty around retail space. With many large retailers declaring bankruptcy, the prospect is for more empty space.
One surprising development is that companies will be opening up their office spaces and bringing employees back sooner than many had predicted. Workers are already back in many buildings on a staggered basis and the pace of their return is already accelerating.
A Colliers report found that large majorities of workers not only wanted to work from home at least one day a week a week (83%), but 76% self-reported the same or better productivity, while 74% said they felt connected to their teammates.
Later surveys conducted as the pandemic stretched on revealed that workers have grown tired of being at home full-time. This change in attitude reflected the stresses of working at home and the “need to be in a routine,” said Jodi Selvey, president-elect, Atlanta Commercial Board of Realtors and senior vice president, principal at Colliers International Atlanta. These workers were increasingly saying “it is impossible for me to work with my kids at home, my wife at home, I need to be around my coworkers,” she added.
While hospitals and medical practices were hit hard by the cancelation of many non-emergency procedures, that isn’t likely to affect the medical office sector.
While capital budgets have been constrained in health care due to the pandemic, there is “no uncertainty in clinical healthcare space as to whether they need space or size,” said Cornett. “There’s been an uptick in telemedicine, but it’s still just on the margins.”
The amount of medical office space being built and absorbed is likely to continue rising in the coming years, he added.
Atlanta’s recovery from the economic impact of the COVID-19 pandemic will outpace the nation’s in 2021, driven by the metro area’s educated workforce, consistent business development and innovation, above-average population growth and strong housing market, according to the Selig Center for Economic Growth’s Georgia Economic Outlook 2021, released earlier this month.
The Center, at University of Georgia’s Terry College of Business, conducts economic, demographic and other research across the state of Georgia, including the 38th edition of its yearly outlook report.
Among the 2021 report’s findings are that they pace of job growth in metro Atlanta will be 1.7%, almost double the 0.9% gain expected for the nation. This is in part due to the area’s high-wage industries including within technology and healthcare, and mid-wage industries such as general medical and surgical hospitals, and building equipment contractors.
Atlanta has many high-tech jobs: 5.9% of total employment in the Atlanta MSA versus 4.4% for Georgia and 5% for the nation, the report states. The 29-county Atlanta metro will add 46,500 jobs in 2021.
“In 2021, the area’s high concentration of college-educated workers, business partners, cybersecurity, high-tech companies, innovation centers and research universities will continue to attract high technology companies in life sciences, software development, R&D, healthcare IT, and advanced manufacturing,” according to the report.
A Chicago real estate developer has started construction on a distribution center near Atlanta’s airport, its first project in the metro area and another example of confidence in the region’s booming logistics sector.
This week Dayton Street Partners broke ground on the 180,300-square-foot building rising on 13 acres it assembled south of Hartsfield-Jackson Atlanta International Airport on Rock Hill Drive. Rock Hill Distribution Center, as the project is called, is slated to be finished by the third quarter of 2021.
Dayton Street declined to say how much it paid for the land, and the transaction was not immediately available in the public deeds.
Atlanta commercial real estate services firm Lee & Associates was tapped to market the distribution center for lease.
Dayton Street and other developers expanding in Atlanta see demand driven by consumers who are turning more than ever to online shopping, especially during the pandemic. An industry rule-of-thumb is that for every $1 billion in e-commerce sales another 1.2 million square feet of new e-commerce space is needed. Consider longtime Atlanta developer Portman Holdings just launched an industrial division. Another area of growth among industrial properties is within the cold-storage industry, where the largest giants are gobbling up other companies in a bid to build global logistics networks.