Stockbridge Capital Group has acquired from Westcore Properties a portfolio of 26 institutional-quality logistics and e-commerce properties spanning nine U.S. markets, with a heavy focus on the high-growth West Coast.
The sales price was not disclosed; however it is estimated to be $570 million, reported to media outlets.
The acquisition is part of a trend toward institutional ownership of properties that are pivotal for retailers to meet the increasing consumer demand for faster shipping times.
“It is no secret that e-commerce continues to enhance the attractiveness of high-quality and well-located warehouse and distribution properties,’’ said Nicole Stagnaro, head of opportunistic and platform transactions at Stockbridge. “We’re excited about this portfolio because the properties are located in markets with above-average population growth, a propensity toward e-commerce buying and selling, lower overall vacancy rates and higher overall rent growth.’’
Approximately 60 percent of the portfolio’s net operating income is generated from assets in California markets: Inland Empire, East Bay, San Diego and Central Valley.
The portfolio properties are in markets that share common characteristics:
- Close to large population centers with robust local economies.
- Access to gateway ports and/or international airports.
- Strategically positioned in the U.S. distribution chain, with excellent freeway access.
- Land-constrained, infill markets that offer limited future development.
The portfolio includes a complement of bulk distribution facilities and light industrial (last-mile) properties. The bulk distribution facilities are relatively new and are as large as 1.1 million square feet, appealing to national and investment-grade tenants.
The light industrial properties are smaller and generally geared toward local-distribution tenants. From a demand standpoint, the appeal of light industrial properties has been mounting based on their increasing significance in the “last-mile” local distribution networks responsible for fulfilling ever-decreasing e-commerce shipping times.
Further, “these properties tend to support a stickier tenant base,’’ Stagnaro said, “catering to tenants whose core businesses bind them to the limited supply in the local areas where they operate.’’
“Because of their infill locations as well as the trend of mounting construction costs, the portfolio markets have experienced virtually no new light industrial construction in recent years,” explained Kristin Paul, portfolio manager at Stockbridge. “To us, the combination of these structural and local demand drivers, as well as significant supply constraints, make these properties and markets especially appealing.”