Analysts Are Bullish On Industrial Real Estate: Here Are 2 Private Market Offerings To Gain Exposure

New industrial facilities are mushrooming all over, but there still aren’t enough of them to halt the rent hike. That’s only scratching the surface of why accredited investors need to keep an eye on industrial real estate in 2023, especially after the latest Deloitte outlook on commercial real estate.

It shined a new light on the current trends - the growth of e-commerce is driving the demand for warehouse space up and it’s being built on an unprecedented scale. But it’s still not enough. Rents for industrial real estate climbed 16% last year. And more of the same can be expected for this year.

The Real Estate Market Consequences Of One-Day Shipments

Deloitte’s analysts expect the share of e-commerce sales to go up by 13% and top 33% by the end of 2031. Such a shift would necessitate a pace of industrial real estate development that we will most likely not see for two major reasons. In Deloitte’s words, “anticipated continued high cost of land and construction, as well as expected zoning limitations for centrally located facilities should heighten the competition for existing space.”

Furthermore, the Head of Commercial Real Estate Economics at Moody’s Analytics, Victor Calanog, said, "e-commerce will likely serve as a tailwind for the logistics industry—and industrial warehouse and distribution properties—for at least 10 years.”

Investment directors over at Crowdstreet have taken note of that and found some promising opportunities in the industrial real estate space to provide investors with exposure to this booming asset class.

Crowdstreet puts thousands of commercial properties through a rigorous vetting process that entails both real estate and investment veterans. Only a fraction of the properties make the cut. The shares of the listings are then offered to accredited investors who often see returns that exceed 20%.

If the analysts are right, the following industrial real estate listings from Crowdstreet will likely do the same.

1. Mercantile Industrial Park, Sacramento MSA

This 18-suite industrial park’s optimal positioning and amenities have resulted in 100% economic occupancy. The sponsor has a proven track record of bringing outsized returns on similar projects. Additionally, the company used its familiarity with the Sacramento market to secure this property off-market and significantly lower the acquisition cost.

Currently, the rents of the property’s units are ~34% below the gross market level. The sponsor is looking to improve the cash flow through renovations that will precede a rent increase.

Furthermore, there has only been a 2.23% increase in total space in the submarket in the past decade, further justifying the high expected IRR displayed on Crowdstreet’s page.

Every Crowdstreet listing comes with an extensive analysis of the deal.

Click here to learn more about the Mercantile Industrial Park. 

2. Easton Industrial Center

The expected internal rate of return is even higher for this supremely connected Boston warehouse. It’s perched right on the I-495 South, connecting it to the New England region. The sponsor is a Boston-based developer with over half a billion dollars in real estate investments and a five-time repeat partner with Crowdstreet.

Market circumstances point to a high likelihood of a total prelease of the property. The sponsor is developing a Class A product that is particularly supply constrained, with properties with 28’ ceiling height and above scoring staggering vacancy rates of only 0.1% in the greater Boston area.

The project is shovel-ready as the sponsor has gathered all the necessary approvals to develop this storage facility and it’s ready to be realized as soon as the acquisition is finalized.

Every Crowdstreet listing comes with an extensive analysis of the deal.

Click here to learn more about the Easton Industrial Center.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.