Still Money to Make in Logistics, But Tougher Than Ever | GlobeSt

After a about two years of pandemic roil and the extraordinary performance of logistics properties as a resultant role, the legitimate question might be how long can the well times last ? According to Arie Salomon, star at NAI Puget Sound Properties in Bellevue, WA, and Adam Roth, EVP at NAI Hiffman in Chicago, there ’ sulfur however meaning prospect for natural process and profits, although the party is facing some pushback from its own success .
“ Seattle and Tacoma are the beneficiaries of the congestion in the Long Beach and Los Angeles ports, ” Salomon says. “ We are seeing 4 % as a typical ceiling rate. however, over the stopping point class or thus, we ’ re seeing some cap rates below 3.5 %. We even saw one at a 3 % crown rate. ” Cap rates on short-run leases can go tied lower “ because investors believe they can get much higher rate ” than in longer contracts as rents keep increasing .
According to Roth, Chicago has traditionally seen less aggressive ceiling rates than out in Seattle but not by that a lot now. “ We are getting hood rates dipping below 4 % and that is unusual for our market, ” he says. “ Capital is good pouring into our space at a very rapid pace. ”
compressed markets are likely to continue for some prison term. “ The projection is that the ports may catch up in the chinese modern class in 2023, which is January 22, ” Roth says. In early words, about an extra year of atmospheric pressure on supply chains at a prison term when businesses badly need them to start working more efficiently again, as many are moving from just-in-time inventory strategies to just-in-case, depending on deeper armory and closer distribution that can satisfy customers.

“ Companies with historically building complex issue chains are going to simplify, ” says Roth. “ Supply chains are going to shorten. The result is going to be corporations are going to need to combat duration of haul to avoid their exposure to a transportation add chain. ” In part, that will mean more logistics facilities to store materials and reduce transportation system costs which were up an estimated 27 % between 2020 and 2021.

The increased necessitate alone exacerbates challenges, particularly in trying to find deals, let alone close them. “ The trouble we ’ ra facing is we have so many clients asking us to submit unasked offers to owners, ” says Salomon .
redeployment of capital has become a meaning challenge. “ If those owners sell, where do they invest the money ? We have received offers that would shock, but which sellers didn ’ thyroxine accept. They said, ‘ We ’ ll accept if you can find something else that we could buy. ’ He adds that around Seattle, logistics real estate at the top end is going for between $ 220 and $ 900 a square foot. Existing owners might consider a sale, giving the sums being offered, and then putting it into junior-grade and third markets where prices are more reasonable .
As for buyers, occupation becomes a topic of faith. “ There is absolutely still money to be made in industrial real estate, ” Roth adds. “ There ’ sulfur going to be another high-water market 12 months from nowadays. There are silent opportunities in the sector, decidedly. ”

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