Scarcity of Class A Drives Industrial Prices to New Highs

There’s still time to join us for Connect Industrial in Chicago on Wednesday. Leading up to the conference, Connect Media spoke with Hillwood’s Tom Fishman for insights into the investment sales market, where Hillwood is putting its money and whether it’s time to buy or sell in our latest 3 CRE Q&A. He’ll be among the experts taking the stage for the opening panel, “2018: The Year of the Entity-Level Deal.”

Q: In terms of available product and attractive pricing, what does the acquisitions market look like in 2018 compared to recent years?

A: There is abundant capital from domestic and foreign (some new) investment sources for U.S. industrial/logistics properties. The lack of Class A product and strong leasing velocity is keeping prices at all-time highs. Even in this rising interest rate environment, cap rates are stable and even decreasing in some markets. There are opportunities in Class B (very loose term) assets, particularly the multi-tenant, low finish product in markets where rental rates continue to escalate.

Q: What are Hillwood’s investment sweet spots (markets, type and size of product, etc.) and are these evolving in response to demand?

A: Hillwood is unique, as we can acquire, develop, and joint venture. Our sweet spot has been value-added acquisitions and development of speculative product, either direct or as a capital provider in a joint venture. Product has ranged from 50,000 square feet to north of one million square feet. We are active in Atlanta, Austin, Central and Eastern Pennsylvania, Chicago, Cincinnati, Columbus, Dallas, Detroit, Houston, Indianapolis, Inland Empire, Jacksonville, Memphis and Nashville MSAs. We are exploring some new markets and have the ability to follow our customers (tenants).

Q: Is 2018 looking like a year to be a net buyer or net seller, and why?

A: By the end of the year, we will likely be neutral. Our intention is to grow the portfolio through acquisition, development, and joint ventures. However, we have a fiduciary duty to our investors that requires us to review and execute potential disposition opportunities.

Get Chicago News in 150 Words

For comments, questions or concerns, please contact Paul Bubny