Editors’ Weekly News Roundup, Feb 27th – March 3rd

In their quest to find developable land in prime locations, industrial real estate developers have looked to properties that are nearing the end of their useful lives and won’t be missed once they’re torn down and replaced with state-of-the-art warehouses. Six months ago, Dermody Properties was in the headlines for a deal to acquire the Allstate office campus in the Chicago suburbs, and this week’s most-read story centered on another acquisition in another hotbed of industrial development: the Inland Empire.

Hillwood Buys Auto Club Speedway from NASCAR for $559M, a breaking news story that appeared this past Wednesday, details Corion Properties’ arrangement of a deal between NASCAR and the buyers, Hillwood Investment Properties and CBRE Investment Management. As the story makes clear, the deal didn’t happen overnight.

Although the Auto Club Speedway in Fontana, CA will be replaced with an industrial park, its name will live on—sort of—in the name of the project, the ACS Logistics Center. And although $559 million may seem like a steep price, we are talking about 364 acres in the Inland Empire, one of the nation’s most sought-after industrial markets. That amount of acreage can support a lot of warehouse space. 

The week’s second most-read story detailed a type of sale we’re likely to start hearing more about over the next couple of years: a large-scale auction of distressed properties. Part of the onetime holdings of Nate Paul’s World Class Holdings, the 13 single-story office buildings and one retail strip center in Austin, TX’s Domain neighborhood were evidently the object of some spirited bidding.

Distressed Domain-Area Property Portfolio Sells for $102M at Auction tells us that the portfolio sold for nearly 36% over the stalking-horse bid. It’s not clear whether the final sale price reflects the quality of the real estate or the desirability of the neighborhood. You’ll be reading more about Austin real estate later in this roundup. 

Not to beat up on the office sector, but it also figured in this past week’s third most-read story, and not in a good way. We reported on a new study from Cushman & Wakefield with a story headlined Office Sector Heads for Surplus of 330 Million Square Feet, the amount of office space the firm believes will be redundant by the end of this decade. 

It’s not a case of an ebbing tide sinking all boats, though. The study makes it clear that the risk of obsolescence is greater for “mediocre, lower-quality, older non-sustainable/ESG-oriented, commodity office product,” which comprises the majority of current office stock. To avoid having to consign their properties to the dustbin, Cushman & Wakefield recommends that owners and investors take a proactive, creative and strategic approach in maintaining competitiveness. 

Adding up-to-the-minute amenities is certainly a proactive approach to maintaining or improving the appeal of commercial properties, and one way of doing this is to install electric vehicle charging stations in parking lots. This isn’t a project that can be undertaken on the spur of the moment, and our Q&A with EBI Consulting, Installing EV Charging Stations at Commercial Properties Isn’t Just Plug-and-Play, explains why.

The week’s fourth most-read story, this Q&A spells out the need for extensive due diligence along with an understanding of the value proposition EV charging facilities can represent for property owners. 

Returning to Texas’ capital city—and to the concept of redeveloping a site—for our fifth most-read story, our readers learned of plans to put up a mixed-use project on a site currently occupied by a self-storage facility and mobile home park. The Sprawling Mixed-Use Project Planned Near Austin-Bergstrom Airport would be a seven-building complex encompassing about two million square feet of office, retail and residential space. A ground-floor retail corridor would connect all seven buildings. 

Just how many apartments that Austin project will contain depends partly on whether the developer is in tune with a trend reported in the latest edition of Weekender. A study from RentCafe finds that the average size of U.S. apartments decreased by 54 square feet over a 10-year period. 

This is due partly to changing demographics in high-cost cities. Among the nation’s more expensive cities to live in is Seattle, which the RentCafe study found to have the smallest new-unit size of any major city.