Commercial Investment Real Estate Spring 2020

port activity, shipment volumes, and other performance statistics all appear to have shrugged off worries of trade wars or reces- sions in the near term. One measure of the health of the in- dustrial market is an examination of how some of the largest players are positioning their portfolios. Blackstone, for example, is actively managing its portfolio, which includes 180 industrial properties across some three-dozen markets; it was involved in one of the largest purchases of industri- al buildings in 2019, valued at $18.7 billion, from Singapore-based GLP in September. Blackstone then promptly turned around and sold about $3 billion in properties to Nuveen Real Estate the following month. In December, Blackstone bought Colony Indus- trial’s portfolio of close to 500 last-mile infill industrial assets for $5.7 billion. Prologis has been similarly active, closing deals to acquire $4 billion of in- dustrial properties from Industrial Prop- erty Trust in January, and Liberty Property Trust’s portfolio of over 110 million sf of logistics space for $12.6 billion in February. While valuations suggest that it is a good time for many players to sell, the biggest market participants appear to be the ones buying, doubling down on industrial’s rela- tively strong future. EXUBERANCE AND CAUTION FROM CAPITAL SOURCES One theme that emerged from the January meetings of the CRE Finance Council in Mi- ami was that a lot of capital is waiting and eager to be deployed toward investment in income-producing assets. Preliminary esti- mates from the Mortgage Bankers Association suggest that issuances across all lender types came in at $628 billion in 2019, up more than 9 percent from 2018’s $574 billion, which was already a record year. Industrial is likely at or near the top of the list for most capital sources given property fundamentals and the near- term outlook. Still, several lenders at the Mortgage Bankers Association’s recent panel discus- sion titled “Bank Lending Trends in the Long Cycle” suggested some caution. “Most play- ers are looking to industrial for some deals since the playing field feels like it’s getting crowded,” one banker noted. “Non-tradi- tional lenders that aren’t constrained by reg- ulators in the same way as banks are more willing to take risks on construction loans, and that’s the kind of game you might not want to win, let alone join, from a pure risk management perspective.” Industrial fundamentals appear solid despite several years of strong supply growth. But just because the tide continues to lift most markets, analysts and underwriters can’t forgo deep market-specific analysis when making investment, lending, or de- velopment decisions about specific deals. In late January, the International Monetary Fund revised its 2020 global GDP growth projections to 3.3 percent, up from 2.9 percent in 2019 (the weakest performance in about a decade). Even if the U.S.’s GDP growth projections were lowered to 2 per- cent for 2020, more optimistic projections for major trading partners like Mexico of- fer continuing support for a sanguine view toward industrial. Uncertainties exist like the 2020 presidential election, but unless a significant unexpected event knocks global GDP growth off kilter, industrial is likely to do well this year. Victor Calanog, PhD, CRE Chief economist and senior vice president at Moody’s Analytics REIS Natalia Morton Economist at Moody’s Analytics REIS Author’s Note: Given the COVID-19 pandemic, an update to this article will be provided in the next issue. Data suggest that industrial properties will fare better relative to other property types. Maximize Your Opportunities with the BankFinancial Advantage! Commercial Real Estate Financing Real Estate investors can take advantage of best options available with our expansive Capital Markets Network. Our capabilities include: permanent and conventional financing, bridge loans, cash-refinances, investment equity lines and loans, as well as acquisition and rehab loans. • • • • Multifamily Office / Retail Industrial / Warehouse Single Tenant • • • • Self-Storage Mobile Home Parks (MHP) Hospitality Assisted Living Our experienced national commercial real estate lending team will present you with all the options from portfolio programs, Fannie Mae, Freddie Mac, Life Companies, CMBS and specialty finance lenders, and always guarantee to save you money on any option you choose-that’s the BankFinancial Advantage. Call 1.800.894.6900 option 7 or visit BankFinancial.com to learn more! *All loans subject to credit approval. © 2020 BankFinancial, NA. CIREMAGAZINE.COM COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE 13

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