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E-commerce Fuels International Industrial Revival

(Credit: Interlake Mecalux)

BentallGreenOak has added 1.74 million SF of logistics assets in Germany to its European Core+ Fund for $247.3 million. The deals consisted of two 871,700-SF properties in Rheinland-Pfalz and Worms, IPE first reported.

Dig Deeper: Since 2019, the investment manager has picked up multiple industrial warehouses in Germany totaling over 6.4 million SF. The deals across its core-plus and value-add strategies have totaled more than $775 million. BentallGreenOaks’ Toby Phelps told IPE that he expects these assets to achieve a stabilized yield above 5%.

Related deal highlighting the hot sector: Dream Industrial REIT has picked up a roughly $1 billion logistics portfolio across six European markets from Clarion Partners Europe. The fully leased portfolio spans 8.9 million SF, and consists of 31 properties primarily located in Germany, the Netherlands, France and Spain.

Be Smart: In the U.S., e-commerce is expected to grow to become 26% of all American retail sales by 2025, with sales jumping $330 billion between 2020 and 2025. To handle the increase, CBRE estimates that the U.S. will need an additional 330 million SF of distribution space, which represents only 27% of the projected overall demand through 2025. Average industrial asking rents increased by a record 8.3% year-over-year in Q4 2020 and by 7.1% in Q1 2021.

Worth Cautioning: This torrid pace is likely unsustainable as reflected by Amazon’s relatively lackluster Prime Day results. The internet giant is facing headwinds from a slowdown in online sales. After surging 61% in March from a year earlier, e-commerce sales rose just 1% last month. [IPE+Bloomberg]

This story first appeared in the Real Estate Weekly Beat. Our institutional publication covers new listings, international transactions, development filings, fundraising activity, and recent hires. In this week’s issue, Scott Rechler shares his expectations for the office market after Labor Day and Rob Speyer reflects on the past 15 months of deal-making.

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