Gramercy Property Trust has launched a new joint venture to acquire, own and manage class A distribution centers leased to leading e-commerce tenants on long-term leases across the United States.
The company is in discussions with several institutional capital partners and has reached an agreement with a sovereign investor to anchor the joint venture.
The company expects to contribute between 25 percent and 50 percent of the equity to the venture, estimated to be between $64 million and $128 million at target leverage levels. Gramercy Property Trust expects to finance the initial acquisition with 55 percent to 60 percent property-level mortgage debt.
The venture’s first acquisition is a forward purchase contract for $642 million. The portfolio comprises seven newly constructed class A bulk distribution properties totaling 6 million square feet.
Each building will be 100 percent leased to a leading e-commerce company. Distribution facilities have been the beneficiaries of a surge in online retail.
The Census Bureau estimated U.S. e-commerce retail sales for second quarter 2017, adjusted for seasonal variation, but not for price changes, totaled $111.5 billion, an increase of approximately 4.8 percent from first quarter 2017. E-commerce sales in second quarter 2017 accounted for 8.9 percent of total sales. Total retail sales during the second quarter were estimated at $1.3 trillion, an increase of approximately 0.5 percent from the first quarter. Second-quarter 2017 e-commerce retail sales increased an estimated 16.2 percent from second quarter 2016, while total retail sales increased 4.1 percent in the same period.
On a non-adjusted basis, U.S. e-commerce retail sales for second quarter 2017 totaled $105.1 billion, an increase of approximately 6.9 percent from the first quarter. E-commerce retail sales in second quarter 2017 were an increase of an estimated 16.3 percent from second quarter 2016, while total retail sales increased 4.4 percent in the same period. E-commerce retail sales accounted for 8.2 percent of total sales in second quarter 2017.
Sales online reached $394.86 billion in 2016, a 15.6 percent increase compared with $341.7 billion in 2015, according to the Department of Commerce. It is the highest growth rate since 2013, when online sales grew 16.5 percent over 2012.
The volume of goods sold online has increased significantly during the current technology boom. This is transforming logistics networks across the country, creating immense demand for warehouse space to satisfy increased consumption. CBRE Research estimates the amount of logistics space needed to accommodate rising e-commerce sales is 1.25 million square feet per $1 billion of online sales.