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Amazon to expand its e-commerce network with latest Doraville project

Source: Atlanta Business Chronicle

Amazon.com Inc. continues revving up its fulfillment center engine across Atlanta, with a new project in the works along the Perimeter.

Amazon is considering a 20-acre industrial property just north of I-285 on the Gwinnett-DeKalb county line, where it would occupy 121,017 square feet of space for a new delivery station, according to public documents and sources familiar with the project.

Atlanta-based real estate company Seefried Industrial Properties Inc. would develop the property, which stands along Interstate 85 amid a collection of 1980s industrial buildings at 6945 Button Gwinnett Drive and 4600 Northeast Expressway. In the past, Georgia Pacific and Levitz Furniture have operated facilities there. Seefried has entered a contract with the owner of the properties and would buy them, according to an intergovernmental agreement between Gwinnett County and the city of Doraville.

Seefried would redevelop the site for Amazon, sources with knowledge of the project said. An Amazon spokesperson said the company typically does not comment on an expansion of its logistics network until a lease has been signed.

Amazon has been rapidly expanding its delivery stations across Atlanta, with the potential Doraville site becoming the latest example. Earlier this year, Amazon said it was opening three new delivery stations in metro Atlanta in 2020, creating hundreds of full-time and part-time jobs, paying a minimum of $15 per hour. The new delivery stations will be located in Atlanta, Buford and Fairburn. 

Delivery stations provide the last mile of Amazon’s order fulfillment process. They receive packages from fulfillment and sortation centers, which are then loaded into vehicles for delivery to customers.  Amazon has more than 150 delivery stations in the United States.

Amazon’s Doraville project is a continuation of a bigger trend. More than 21 million square feet of industrial real estate projects are under construction in Atlanta, the fifth consecutive quarter activity has remained at that level, according to Colliers International.

Amazon’s demand for new warehouse space is driving much of that new development. The e-commerce giant alone leased 3.7 million square feet in the past three months.

Amazon’s total fulfillment center network has grown to at least 13 million square feet across the Atlanta region, almost doubling its size from the end of last year.

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Cushman & Wakefield Arranges $126.6M Sale of Industrial Park in Metro Atlanta

Source: REBUSINESSONLINE

NORCROSS, GA. — Cushman & Wakefield has arranged the $126.6 million sale of Gwinnett Commons, a 16-building light industrial park in Norcross. The property comprises 1.2 million square feet and is situated at 1790 Corporate Drive, 22 miles northeast of downtown Atlanta and one mile from Interstate 85. At the time of sale, the property was 97 percent leased. Gwinnett Commons also includes two development sites that can accommodate 195,000 square feet of warehouse space. Stewart Calhoun and Casey Masters of Cushman & Wakefield represented the seller, a partnership between affiliates of Westmount Realty Capital and Quilvest Capital Partners, in the transaction. Brian Linnihan and Mike Ryan of Cushman & Wakefield arranged acquisition financing on behalf of the buyer, Irvine, Calif.-based CIP Real Estate.

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PGIM Real Estate Acquires Industrial Portfolio in $425 Deal

Source: GlobeSt

On behalf of its US core real estate strategy, PGIM Real Estate has acquired a 4.7 million-square-foot, 15-building industrial portfolio valued at $425 million. The seller was Crow Holdings.

The properties, located in Atlanta, Dallas, Denver, Fort Worth, and Phoenix, are newly constructed or still under construction and are close to major thoroughfares and gateway airports. 

Four of the delivered buildings are now fully leased and two others partially leased. 

With 32- to 36-foot clear heights and functional layouts with dock doors, the properties can accommodate the drastic rise of e-commerce and last mile distribution in the US, PGIM Real Estate says, while offering space for advanced distribution operations and autonomous machinery.

These awards honor the industry’s most influential and knowledgeable real estate executives from the net lease sector.

“This transaction enabled us to capitalize on an extremely rare opportunity to acquire a large high-quality industrial portfolio that would have otherwise taken years to build or assemble,” said Frank Garcia, managing director and senior portfolio manager for PGIM Real Estate’s U.S. core strategy, in prepared remarks. 

 “This quarter, we’ve added 49 best-in-class industrial properties totaling 12.3 million square feet to our core fund, located across highly sought-after US distribution markets,” he added.

Steven Oliveira, executive director, and Kevin Interlicchio and Laura Nugent, associate vice presidents, of PGIM Real Estate’s Transactions team led the portfolio acquisition on the firm’s behalf.

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U.S. may need another 1 billion square feet of warehouse space by 2025 as e-commerce booms

Source: CNBC

With online sales proliferating during the coronavirus pandemic, the U.S. is going to need more warehouses to store hoards of boxes and handle those orders. 

Holed up at home, and with many bricks-and-mortar stores temporarily shut, shoppers have turned to their computers and smartphones to buy everything from fresh groceries to new home furnishings to pet toys. And even after the pandemic subsides, the trend of people buying more and more online is expected to stick around. 

And so with more people clicking “buy” instead of venturing to the mall, demand for industrial real estate could reach an additional 1 billion square feet by 2025, according to a new report from JLL. 

The commercial real estate services firm said that prior to the Covid-19 crisis, about 35% of its industrial leasing activity was related to e-commerce. But now, it said, as much as 50% of that leasing activity has already been tied to the online retail industry in 2020. 

“The first quarter was our largest leasing quarter in three years,” said Craig Meyer, president of JLL’s Americas industrial division. “We’re seeing more pressure on [e-commerce companies] than the typical holiday season … to meet consumer demand.” 

He explained a recent situation where a retail-related company requested a lease on a 1.2 million-square-foot warehouse space in Delaware about 30 days ago, and moved in almost immediately to begin fulfilling orders for fresh items. Part of the warehouse included a cold-storage component, for foods that need to be kept refrigerated, Meyer explained. 

“That is unheard of,” he said. “The lease was signed and they moved in in less than 30 days.” Typically, deals will span the course of nine months, from signing a lease to moving in, according to Meyer. 

JLL is projecting the U.S. needs another 100 million square feet of cold-storage facilities just to keep up with consumer demand and sales trends. 

To put into perspective how much extra warehouse space is needed, Prologis, a real estate investment trust that is also Amazon’s largest landlord, has estimated that e-commerce companies require 1.2 million square feet of distribution space for each $1 billion in sales.  

The firm eMarketer, meantime, is predicting U.S. e-commerce sales will make up about 14.5% of total retail sales, or $709.78 billion, this year. By the end of 2024 that percentage will grow to 18.1% of all retail sales, with online sales surpassing $1 trillion for the first time, it said. 

Industrial real estate is the “darling” of the commercial real estate industry today, Meyer said.

The sector certainly has a brighter outlook than some of its peers — including office, retail and hotel space, where vacancies are increasingly growing and fewer new deals are being done. 

In retail specifically, store closures are piling up and are on track to break a record this year, pressuring landlords to find new uses for emptied spaces. Rents are also under pressure, as companies looking to keep their stores open are working to renegotiate deals, hoping to leverage the market’s disarray in their favor. Former department store executive Jan Kniffen has predicted a third of America’s malls will vanish by 2021. This could also deal a blow to the towns that depend on their malls for tax purposes. 

Warehouses could be one solution, since supply is harder to come by. 

In some instances, dead malls have already been converted into sprawling logistics hubs. In Memphis, Tennessee, for instance, a shuttered Sam’s Club store is now home to a Sam’s Club e-commerce fulfillment center

Still, there are hurdles in taking a former retail space and turning it into something else, Meyer cautioned.

“There are things like zoning laws, these are residential areas,” he said. “There’s going to be a lot more involved with imagining these things.” 

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3 things leaders must do to seize opportunity in a post-pandemic economy

Source: Vistage

“The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic,” wrote Peter Drucker, revered as the father of modern management.  

Using logic based on the new economic realities, I would like to review the changes we’ve seen in the economy recently and propose three actions that you, as a business owner, should take to prepare for success in a post-pandemic economy.

What the economy will look like post-pandemic

To begin, let’s review two premises about the economy.  

There will be an Economic Reordering

The current economic crisis will give way to a period of adjustment and recovery. In this period, which I term the “Economic Reordering,” the U.S. and foreign economies will change dramatically. 

The rosy-fingered dawn of the emerging business landscape will possess both the familiar and unfamiliar. Globalization, for example, will not end but it will be modified, with huge implications for trade and supply chains.Free guide to help lead your company through challenging times.

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There will also be a new bias for domestic production. Countries will recover from the crisis at different times and in varying degrees of economic strength. Consumer buying patterns will not simply revert to what they were before the pandemic; they will develop in new ways and be affected by new demands and offerings. Many undercapitalized businesses will be swept away by stronger competitors. And there will be dynamic changes in taxation and regulatory frameworks. 

The Economic Reordering provides new opportunities for entrepreneurs (and we all must be entrepreneurs now)

The complex interlocking market system will be fundamentally reorganized in the Economic Reordering. There is, and will be, disorder and dislocation. The alert and capable leaders will create order out of chaos by discerning and responding to market shifts.

My premise is based on the renowned economist Professor Israel M. Kirzner’s insight that, contrary to the popular image of the entrepreneur merely as a disruptive force, the entrepreneur’s true role is discovery and correction of market misalignments. I suggest the current economic turmoil will inevitably create and magnify these misalignments. Consequently, I believe, there will be both significant hazards and huge opportunities for entrepreneurs. 

How to take advantage of the post-pandemic economy

Leaders should respond to the market disorder by being alert to, and seizing, the opportunities that will inevitably be created. To do this, you must do three things: Assess economic changes, examine yourself and reimagine your business.

1. Assess economic changes

As noted in the premises above, business in the Economic Reordering will be influenced by structural economic changes and timing differentials. In considering your positioning, you should assess at least the following:

  • Extent and length of the economic disruption 
  • Nature of the recovery (u-shaped or v-shaped)
  • Rate of recovery in your sector
  • Permanent changes in your sector (for example, to buying patterns and supply chains)
  • Availability of cash, lending and investment in your sector
  • Workforce availability and suitability
  • Effect of geography
  • Effect of size of companies in your sector (for example, larger companies may receive more government assistance or have more access to lending and investment)

Above all, consider your customer composition and assess how their behaviors will change. Certain businesses, for example, will experience results according to the age groups they serve (a gym with an older clientele may suffer more than one with younger customers), while others will see uniform growth as age group behaviors converge in adapting to the new environment (e-commerce will benefit from older people becoming accustomed to buying online).

Never forget that the consumer is sovereign — ultimately, the consumer drives the economy. 

2. Examine yourself

In the Economic Reordering, America will see itself anew. In turn, ask yourself these questions:

  • What are your goals?
  • Are you prepared to rebuild your business? Do you have the passion and drive to recreate your business model?
  • Do you have the family support and stability for the arduous work?
  • Can you access the necessary resources (talent, money, etc.)?

In essence, you must decide whether your goals, talents and resources make you more or less likely to succeed in the Economic Reordering. If you do not want to restart your business, consider alternatives to sell in whole or in part. Don’t try to muddle along. Commit or get out!

3. Reimagine your business

If you decide to rebuild, do not merely tinker with your business model. Do not try to fit your business into the future predicted by forecasters. Do not focus on just bringing back employees and restarting prior operations. Instead, be alert to fresh opportunities that others have not yet seized. 

Be the entrepreneur you were when you began your business. Reimagine your business!

Once you have done this, realign the business to your new vision:

  • Focus on new markets and strategic alliances
  • Retain and recruit employees who will advance the new business model
  • Reevaluate customer and supplier relationships 
  • Optimize your debt and equity structure to accord with the new strategies 
  • Evaluate new technologies 
  • Shed assets that are no longer mission appropriate 
  • Direct spending and investment to the reimagined core operations 
  • Identify and mitigate/seize upon new vulnerabilities from supply chains, regulation and customer mobility 
  • Communicate the new vision to all constituencies (employees, customers, suppliers, lenders, investors) 

Remember, the essential laws of business do not change. Basic human needs and nature are immutable. Ludwig von Mises, the economist who changed our understanding of entrepreneurship, wrote that core economic principles must be obeyed as laws of nature. I suggest that the genius of the entrepreneur lies in coupling these immutable economic principles with an innovative and robust spirit. 

Final thoughts

You succeeded as a business owner prior to the current economic crisis. You can thrive in the Economic Reordering by entrepreneurial decision-making and action. Assess the economic changes and decide whether you want to rebuild your business for the new era of change and challenge. If you do not want to restart your business, consider alternatives to sell (in whole or in part) or merge. If you want to rebuild, be alert to the opportunities that will inevitably arise and reimagine your business in order to take advantage of them.

Above all, avoid the trap of “yesterday’s logic.” It’s a new world.

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A capital markets update

Source: Vistage

As the U.S. slowly reopens and the rate of new coronavirus infections increases, many CEOs of small and midsize businesses are wondering how to navigate the next six months and how to position their businesses for life after the crisis. Dr. Adrian Cronje, CEO and Chief Investment Officer at Balentine, joins Vistage Chief Research Officer Joe Galvin to discuss aspects of the economic road to recovery, including:

  • What the capital markets are indicating about the likely shape of a recovery over the next 18 months
  • Longer-term trends likely to affect businesses
  • Ways to ensure your business is poised to benefit

Walk away with tools to monitor the messages that capital markets send about the future economic environment and how you can use those indicators to manage your overall balance sheet.

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Sim Doughtie, President of King Industrial Realty, quoted in ‘Industrial Sector is in Good Health’

Image Source: Southeast Real Estate Business

Source: Industrial Sector is in Good Health

With millions of Americans working from home amid the pandemic and generally staying away from large group settings, industrial demand for e-commerce has only picked up. Online sales in June 2020 comprised 29.6 percent of all retail sales, according to the U.S. Commerce Department, nearly double that of June 2019 (15.9 percent).

Minneapolis-based Target reported that during its first quarter, which runs from February 1 to April 30, its digital sales grew 141 percent compared to first-quarter 2019. Union, New Jersey-based Bed Bath & Beyond, while announcing a 49 percent decline in overall sales, said its digital sales grew 82 percent in its first quarter, which ended May 31. Additionally, the National Retail Federation (NRF) and Prosper Insights & Analytics released their annual household survey of back-to-school shoppers. Of the 7,400 respondents, 55 percent said they plan to do all of their back-to-school shopping online, which is up from 2019 (43 percent).

Americans shopping online for clothing, household items and especially food has driven the industrial sectors throughout the region the past few months.

“Retail and office got hit pretty hard by the pandemic, but industrial continued pretty strong because of e-commerce,” says Sim Doughtie, president of King Industrial Realty Inc. in Atlanta. E-commerce retailers such as Seattle-based Amazon and Walmart have been at the forefront of the industry since the beginning of the COVID-19 outbreak in the United States, with each company hiring thousands of employees to keep up with online shopping demand.

In mid-March, Bentonville, Arkansas-based Walmart pledged to hire 150,000 workers in a six-week span at its stores and distribution centers. The company met that goal two weeks early and then pledged to hire another 50,000 employees. Amazon has been announcing fulfillment centers and delivery stations across the Southeast, with new facilities slated to go up in Mt. Juliet, Tennessee; Little Rock, Arkansas; Charlotte, North Carolina; and Suffolk, Virginia.

In the Tampa area, e-commerce players are entering and expanding in the market as well, says John Dunphy, managing director in JLL’s Tampa office. According to research from CBRE, the East Tampa submarket absorbed nearly 1 million square feet year-to-date. Additionally, there is 2.3 million square feet under construction in the Tampa Bay area, with a vast majority of it being for thirdparty logistics (3PL) companies and e-commerce use.

Amazon recently acquired 82 acres in Temple Terrace to develop a new warehouse. According to media reports, the property, which is located 10 miles northeast of downtown Tampa, sold for $26.4 million, and Atlanta-based Seefried Properties will develop the facility. Furthermore, Ace Hardware is expanding its ecommerce capabilities by developing a 315,000-square-foot facility in Plant City, 25 miles east of Tampa. “E-commerce growth has been across the board in Tampa, which is a dynamic of a very healthy market,” explains Dunphy.

Similarly, Doughtie says Atlanta’s fundamentals have impressed him given the state of the global economy during the second quarter. Atlanta saw nearly 6.3 million square feet of absorption in the second quarter, almost 1.8 million square feet more than the first quarter of this year, according to data from King Industrial Realty.

New construction dipped by about 2 million square feet quarterover-quarter, but of the 4.5 million square feet in new product, 80 percent was speculative, suggesting developers are bullish on the health of the local industrial market from a demand standpoint. 

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Zinus USA pledges $108 million investment, 804 jobs in McDonough

Source: Atlanta Business Chronicle

A subsidiary of South Korean mattress and furniture maker Zinus Inc. picked Henry County as the site of its first North American advanced manufacturing facility, pledging to invest $108 million and create 804 jobs.

Zinus USA Inc. President Ha Bong Sung said Tuesday alongside Gov. Brian Kemp the company will develop the facility in McDonough and expects to open in the first half of 2021. A Zinus spokesperson said she “cannot disclose further details” about the facility’s location.

Kemp’s office called Zinus’ investment one of the state’s largest since the start of the new fiscal year.

Zinus is hiring for positions focused primarily on mattress production, in addition to roles in facility management and administration.

The home furnishings company has a presence in 20 countries and plans to continue growing its international footprint in the coming years, according to the release. Zinus has several distribution centers across the U.S., but its manufacturing facilities are located in Indonesia and China.

Zinus, known for infusing natural ingredients including green tea, olive oil, and charcoal into its mattresses and home furniture, sells its products to major retailers including Walmart, Amazon, Wayfair and Costco.

“As we continue to grow into new markets and expand our own vertical integration capabilities, establishing our first-ever production center in the U.S. is a critical step in our evolution as a global business,” said Keith Reynolds, president at Zinus U.S., in the release.

Final terms of incentives for Zinus have not been agreed on, according to the Associated Press. The AP also reports Henry County is likely to abate property taxes and that the company will qualify for a state income tax credit.

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Moody’s Analytics Q2 Report Gives Mixed Picture on CRE

Article from Globe St.

The current pandemic has affected most aspects of the commercial real estate industry, but a Moody’s Analytics report says some sectors have been hit much harder than others.

Moody’s looked at the impact on several categories in the second quarter of 2020 including industrial, warehouse and distribution and flex/research and development.

The data, Moody’s Analytics said, “show that the industrial sector was mixed in the quarter as warehouse/distribution held up better than other property types as e-commerce sales continued to grow throughout the pandemic.”

The report says that flex/research and development space “saw the biggest jump in vacancy in the quarter, more than any other property type.”

With regard to the industrial sector, the report says the impact of COVID-19 will “come at a lag.” The report says that’s so, primarily, because there is a consumer shift to online purchases that have been “supporting the sector in the interim.”

On the warehouse and distribution front, the data says, there was little if no change on those statistics.

Construction, the report details, fell to a low of 16.1 million square feet in the quarter. That, the report says, is from 30.2 million square feet of new warehouse space added in the first quarter and an average of 31.6 million square feet of new inventory added per quarter in 2019.

A real poor performing area that was hard-hit by the now five-month old pandemic was occupancy growth related to rents. The report said: “Alongside weak construction and occupancy growth this quarter, the average asking and effective rents grew 0.1% and 0.0% respectively, in the second quarter. This was also the weakest since 2011, but, it was nevertheless positive which was surprising given the extremity of the shutdown.”

Flex/research and development, Moody’s Analytics reported, didn’t fare well and “suffered the steepest decline in occupancy of any property type…. This scant growth corresponded to an inventory growth rate of 0.03% while the occupancy decline was 0.38%.”

Depending on where you lived, rent growth in flex/research and development space varied.

Raleigh-Durham, North Carolina saw an increase of 280,000 square of new completions in space in the second quarter, while suburban Virginia saw an increase of 92,000 square feet.

Twenty-six metro areas in the country saw an effective rent decline in the second quarter of the year led by Houston, Jacksonville, Los Angeles, Seattle and Fort Worth, Texas,

On the other hand, metro areas with the highest effective rent increases in the quarter included Columbus, Ohio; Miami and Fort Lauderdale in south Florida; suburban Virginia; and Phoenix.

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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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