The Business Times | Tuesday, April 17, 2018 E...
1
Washington FORGET your fancy office towers. The future lies in warehouses. But not just any old dusty depot. It’s got to be big enough, smart enough and close enough to con- sumers. Pick right and you could beat the returns of every other kind of property this year. Real estate investment trusts that specialise in industrial properties, such as Prologis Inc, Rexford Indus- trial Realty Inc and Terreno Realty Corp, are outperforming Reits that fo- cus on malls, residential rentals and office buildings. The three companies all returned more than 16 per cent in the past year, crushing other types of real estate – and handily beating their own peers in the Bloomberg Reit In- dustrial/Warehouse index, which reaped 8.3 per cent. It’s all about e-commerce. Online shopping still accounts for less than 10 per cent of retail sales in the US but is reconfiguring supply chains and shaping the fortunes of warehouse landlords. Demand is especially keen in and around big cities, where online shopping has caught on fastest. Those are the same places – New York, Boston, Chicago, San Francisco, Los Angeles – where land parcels big enough for the latest warehouses and loading docks are scarcest, and rents are highest. Online retailers require about three times the warehouse space of traditional brick-and-mortar stores, and more-sophisticated logist- ical services. “E-commerce has taken a business that was already pretty solid and tur- bocharged it,” Prologis chief execut- ive officer Hamid Moghadam said in an interview. Among other differ- ences, he said, “in a regular ware- house that supplies a retail store, you are dealing with pallets of goods that are moved around. In the case of e-commerce, there is a lot of packing and handling”. Consider the 12-month return of the biggest US mall owner, Simon Property Group Inc, at negative 9.7 per cent, and the BBG Office Property Reit Index, at negative 11.7 per cent. The two biggest apartment owners in the US by market capitalisation – Equity Residential and AvalonBay Communities Inc – respectively re- turned 0.35 per cent and negative 8.5 per cent in the past year. Which industrial Reits win and which fall victim to the next economic downturn will depend partly on prox- imity to major population centres. “There was an old name for the last mile – it was called retail,” Mr Moghadam said. “Instead of the facil- ity being the last mile to your house, you were a mile from the retail store.” The Terreno Reit, which is in six US markets, and Rexford, focused on Southern California, are best posi- tioned to increase rents, said John Guinee, an analyst at Stifel Nicolaus & Co, while Liberty Property Trust and First Industrial Realty Trust Inc are more “susceptible to a slowdown in the economy”. Prologis, which like DCT Industrial Trust Inc and Duke Re- alty Corp has a national presence, can use its financial might to pick its spots, he noted. At Prologis, the biggest industrial Reit, e-commerce accounts for about 10 per cent of revenue, 20 per cent of new leases and close to 30 per cent of new developments, according to the company. The dearth of land avail- able for development in New York City prompted Prologis to snap up a 200,000 sq ft warehouse in the Bronx last year. It’s also the reason the com- pany is building a multi-storey facil- ity of almost 600,000 sq ft in Seattle, a first in the US because it’s hard to man- oeuvre tractor-trailers above ground level. “Multi-storey is very expensive” to build, said Bloomberg Intelligence analyst Lindsay Dutch. “Prologis is in a position to take these risks and do these projects. They’ve done it in Asia, with ramps for the trucks to the second floor, but the third floor is el- evator access only, so you can’t charge as much for that.” The high cost of land and construc- tion in major urban centres like New York and Los Angeles has helped save industrial landlords from the mis- takes common to office, retail and res- idential developers – overbuilding when demand is high, which forces rents down when it declines. “Commercial real estate is all about supply and demand, and indus- trial supply has been very discip- lined,” said Ross Smotrich, an analyst at Barclays Capital Inc in New York. Whether the warehouse Reits sus- tain that discipline is another matter. “Industrial is anywhere from a 5,000 sq ft building in Manhattan to a million sq ft in suburban Indiana- polis,” Mr Guinee said. Outside the big urban centres, he said, “clearly some markets are in the process of being overbuilt, and those will suffer more when the inevitable recession comes”. WP E-commerce gives boost to warehouse Reits D04 APARTMENT FOR SALE Sandy Koh 9455 8605 Keener Sense of Real Estate REFLECTIONS @ KEPPEL BAY 2/3bdrm/ Penthouse. 1195-4187 sf. With/ without Tenancy, $2.2M up, From Developer, Furniture rebate for this month. D04 APARTMENT FOR SALE Goh Wee Hong 9622 3998 Keener Sense of Real Estate REFLECTIONS VILLA Reflections Villa, 2/3 bedroom New Release. From $16xx psf. Corals 2/3/4 bedroom, Brand New Unit. Direct from Developer. Hurry, Dont Miss! Call Now. D04 APARTMET FOR SALE STEVEN LEE 9796 2828 REFLECTIONS 1055 sqft 2 bedrooms. Deferred payment till 2019. Mins to MRT. Expats’ choice Below $1700 psf after rebate. Don’t miss! Grab before price increase. D09 APARTMENT FOR SALE STEVEN LEE 9796 2828 PEAK 2 @CAIRNHILL Freehold. Selling with tenancy. 2 bedrooms. Excellent Location! High floor. Deferred payment till 2019 Asking below $2900 psf. Hurry Must view! D09 APARTMENT FOR SALE Andy Chua 9068 0898 TWENTYONE ANGULLIA PARK F’hold TOP obtain. Just cross the road to Ion! View actual unit! 2 bdrm 1163sf from $4.8M 3bdrm 2260-2314sf from $7.8M 4bdrm 3122-3154sf from $11M. Fr$3xxx psf. Call now for appt!!! D10 APARTMENT FOR SALE NASSIM PARK RESIDENCES Prestigious Nassim Park Residences. 4,883 sqft, 4+1 + pool, all ensuite, greenery, mins to Tanglin / Botanic Gdn. Act Fast ! Serious Seller!! Sherry @ 97353597 OrangeTee & Tie D11 APARTMENT FOR SALE 26 NEWTON Freehold, 2+Study from $2555 psf only! Recent launches from $3300 psf and above! Near 2 MRTs, Novena Medical Hub, 1km to ACS/SJI. Limited stock, call now! David 8822 7555 D11 APARTMENT FOR SALE JOY WANG 8100 8812 NOVENA Very Cheap! Freehold. Near MRT, Malls, Good Schools, ACS and SJI, Future Health City. High Capital Gain/ Rental Yield Potential. Call 8100 8812 Joy Wang D03 SHOP FOR SALE 9817 0028 Maureen Neo The Agency of Choice SHOPHOUSE Rare! HDB shophouse at 107 Jalan Bukit Merah. Good crowd. 2 bedrooms upstairs, shop downstairs. Can rent out both. Good rental yield! D04 SHOP FOR SALE TELOK BLANGAH HOUSE Selling $500K below value. Freehold. Ground floor. Enbloc potential. 1216 sqft. F&B Approved. 9822-7464 Visit SRX.com.sg/code-1277 Call toll-free 1800-289-9988 to place your Classifieds Advertisements. Classifieds 9*; +08'56 +0 ,#2#0 2412'46; U /i 7À`½Ã ÌÀ` >À}iÃÌ * U 1ÀL> }À>Ì >` ÃÌÀ} Ìi>Ì `i>` iÞ >ÀiÌ ÃiVÌÀà U Õ}i }ÀÜÌ ÌÕÀÃ] Ìi ÓäÓä "Þ«Và >` ÌiÀ iÛiÌà U ÕÌÕÀi `iÛi«iÌ v Ìi}À>Ìi` ,iÃÀÌà >Ãî 3HWHU .RK 9. Ó THYRL[PUN'OQYLHSLZ[H[LJVTZN ¯ OQYLHSLZ[H[LJVTZN 72%1/+0) '8'06 U iÀV> «À«iÀÌÞ ÛiÃÌiÌ >«> U ÛiÀ} ÃÌiÃ] vvVi] ÀiÃ`iÌ> >` ÀiÌ> «À«iÀÌÞ U iÞ V>Ìà ÃÕV >à /Þ] ÞÌ] ÕÕ> >` ->««À U *ÀVi À>}ià LiÌÜii 1-f£°x >` 1-f£x U Ý«iVÌi` Ó{¯ " Þi` 2/ 5#674&#; 6* /#; )4#0& *;#66 5+0)#214' 5HJLVWHU 2QOLQH OQYLHSLZ[H[LJVTZNNHSSLY` 5HDO (VWDWH $JHQF\ /LFHQVH 3+ *, 4'#. '56#6' Freehold B1 Semi Detached Industrial Factory FACTORY FOR SALE • Legal Description: Lot 01732A on Mukim 20 • Land Area: 1,276.4sqm or 13,739sqft • Existing GFA: 1,123sqm or 12,088sqft • Plot Ratio: 2.0 • Tenure: Freehold • Short drive to SLE, CTE and within close proximity to Bishan. 464 Tagore Industrial Avenue Singapore 787833 Tender Closing Date 2ND May 2018, Wednesday, 2:30pm. Tan Khai Leng 9696 3120 | 6100 8809 Cea Reg. No.: R044933H ORANGETEE & TIE PTE LTD | CEA LICENCE NO.: L3009250K FOR SALE BY EXPRESSION OF INTEREST Freehold B1 Detached Industrial Factory • Address: 466 & 468 Tagore Industrial Avenue Singapore 787836 • Legal Description: Lot 1265M on Mukim 20 • Land Area: 2319.8sqm or 24,970sqft • Plot Ratio: 2.0 • Tenure: Freehold Jane T an 9696 3120 | 6100 8809 Cea Reg. No.: R044933H ORANGETEE & TIE PTE LTD | CEA LICENCE NO.: L3009250K CLOSING DA TE 11TH May 2018, Friday 2:30pm. Online shopping still accounts for less than 10% of retail sales in the US but is reconfiguring supply chains and shaping the fortunes of warehouse landlords. Demand is especially keen in and around big cities, where online shopping has caught on fastest. US industrial property Reits, such as Prologis, Rexford Industrial Realty and Terreno Realty, are outperforming those that focus on malls, residential rentals and office buildings 16 | REAL ESTATE The Business Times | Tuesday, April 17, 2018
Transcript of The Business Times | Tuesday, April 17, 2018 E...
Washington
FORGET your fancy office towers. The future lies in warehouses.
But not just any old dusty depot. It’s got to be big enough, smart enough and close enough to con-sumers. Pick right and you could beat the returns of every other kind of property this year.
Real estate investment trusts that specialise in industrial properties, such as Prologis Inc, Rexford Indus-trial Realty Inc and Terreno Realty Corp, are outperforming Reits that fo-cus on malls, residential rentals and office buildings. The three companies all returned more than 16 per cent in the past year, crushing other types of real estate – and handily beating their own peers in the Bloomberg Reit In-dustrial/Warehouse index, which reaped 8.3 per cent.
It’s all about e-commerce. Online shopping still accounts for less than 10 per cent of retail sales in the US but is reconfiguring supply chains and
shaping the fortunes of warehouse
landlords. Demand is especially keen in and around big cities, where online shopping has caught on fastest.
Those are the same places – New York, Boston, Chicago, San Francisco,
Los Angeles – where land parcels big enough for the latest warehouses and loading docks are scarcest, and rents are highest. Online retailers require about three times the warehouse
space of traditional brick-and-mortar stores, and more-sophisticated logist-ical services.
“E-commerce has taken a business that was already pretty solid and tur-
bocharged it,” Prologis chief execut-ive officer Hamid Moghadam said in an interview. Among other differ-ences, he said, “in a regular ware-house that supplies a retail store, you are dealing with pallets of goods that
are moved around. In the case of e-commerce, there is a lot of packing and handling”.
Consider the 12-month return of
the biggest US mall owner, Simon
Property Group Inc, at negative 9.7
per cent, and the BBG Office Property
Reit Index, at negative 11.7 per cent.
The two biggest apartment owners in
the US by market capitalisation –
Equity Residential and AvalonBay
Communities Inc – respectively re-
turned 0.35 per cent and negative 8.5
per cent in the past year.
Which industrial Reits win and
which fall victim to the next economic
downturn will depend partly on prox-
imity to major population centres.
“There was an old name for the last
mile – it was called retail,” Mr
Moghadam said. “Instead of the facil-
ity being the last mile to your house,
you were a mile from the retail store.”
The Terreno Reit, which is in six US
markets, and Rexford, focused on
Southern California, are best posi-
tioned to increase rents, said John
Guinee, an analyst at Stifel Nicolaus &
Co, while Liberty Property Trust and
First Industrial Realty Trust Inc are
more “susceptible to a slowdown in the economy”. Prologis, which like DCT Industrial Trust Inc and Duke Re-alty Corp has a national presence, can use its financial might to pick its spots, he noted.
At Prologis, the biggest industrial Reit, e-commerce accounts for about 10 per cent of revenue, 20 per cent of new leases and close to 30 per cent of new developments, according to the company. The dearth of land avail-able for development in New York City prompted Prologis to snap up a 200,000 sq ft warehouse in the Bronx last year. It’s also the reason the com-pany is building a multi-storey facil-ity of almost 600,000 sq ft in Seattle, a first in the US because it’s hard to man-oeuvre tractor-trailers above ground level.
“Multi-storey is very expensive” to build, said Bloomberg Intelligence analyst Lindsay Dutch. “Prologis is in a position to take these risks and do these projects. They’ve done it in Asia, with ramps for the trucks to the
second floor, but the third floor is el-evator access only, so you can’t charge as much for that.”
The high cost of land and construc-tion in major urban centres like New York and Los Angeles has helped save industrial landlords from the mis-takes common to office, retail and res-idential developers – overbuilding when demand is high, which forces rents down when it declines.
“Commercial real estate is all about supply and demand, and indus-trial supply has been very discip-lined,” said Ross Smotrich, an analyst at Barclays Capital Inc in New York.
Whether the warehouse Reits sus-tain that discipline is another matter.
“Industrial is anywhere from a 5,000 sq ft building in Manhattan to a million sq ft in suburban Indiana-polis,” Mr Guinee said. Outside the big urban centres, he said, “clearly some markets are in the process of being overbuilt, and those will suffer more when the inevitable recession comes”.WP
E-commerce gives boost to warehouse Reits
D04 APARTMENT FOR SALE
Sandy Koh9455 8605
Keener Sense of Real EstateREFLECTIONS @ KEPPEL BAY
2/3bdrm/ Penthouse. 1195-4187 sf. With/ without Tenancy,$2.2M up, From Developer, Furniture rebate for this month.
D04 APARTMENT FOR SALE
Goh Wee Hong9622 3998
Keener Sense of Real EstateREFLECTIONS VILLA
Reflections Villa, 2/3 bedroom New Release. From $16xx psf.Corals 2/3/4 bedroom, Brand New Unit. Direct from Developer.Hurry, Dont Miss! Call Now.
D04 APARTMET FOR SALE
STEVEN LEE9796 2828
REFLECTIONS 1055 sqft 2 bedrooms. Deferred payment till 2019.Mins to MRT. Expats’ choice Below $1700 psf after rebate.Don’t miss! Grab before price increase.
D09 APARTMENT FOR SALE
STEVEN LEE9796 2828
PEAK 2 @CAIRNHILL Freehold. Selling with tenancy. 2 bedrooms. Excellent Location!High floor. Deferred payment till 2019Asking below $2900 psf. Hurry Must view!
D09 APARTMENT FOR SALE
Andy Chua 9068 0898TWENTYONE ANGULLIA PARK
F’hold TOP obtain. Just cross the road to Ion! View actual unit!2 bdrm 1163sf from $4.8M 3bdrm 2260-2314sf from $7.8M4bdrm 3122-3154sf from $11M. Fr$3xxx psf. Call now for appt!!!
D10 APARTMENT FOR SALE
NASSIM PARK RESIDENCESPrestigious Nassim Park Residences. 4,883 sqft, 4+1 + pool, allensuite, greenery, mins to Tanglin / Botanic Gdn. Act Fast !Serious Seller!! Sherry @ 97353597 OrangeTee & Tie
D11 APARTMENT FOR SALE
26 NEWTON Freehold, 2+Study from $2555 psf only! Recent launches from$3300 psf and above! Near 2 MRTs, Novena Medical Hub, 1km toACS/SJI. Limited stock, call now! David 8822 7555
D11 APARTMENT FOR SALE
JOY WANG8100 8812
NOVENAVery Cheap! Freehold. Near MRT, Malls, Good Schools, ACSand SJI, Future Health City. High Capital Gain/ Rental YieldPotential. Call 8100 8812 Joy Wang
D03 SHOP FOR SALE
9817 0028Maureen Neo
The Agency of ChoiceSHOPHOUSE
Rare! HDB shophouse at 107 Jalan Bukit Merah. Good crowd.2 bedrooms upstairs, shop downstairs. Can rent out both.Good rental yield!
D04 SHOP FOR SALE
TELOK BLANGAH HOUSESelling $500K below value. Freehold. Ground floor. Enblocpotential. 1216 sqft. F&B Approved. 9822-7464 Visit SRX.com.sg/code-1277
Call toll-free 1800-289-9988 to place your Classifieds Advertisements. Classifieds
Freehold B1 Semi Detached Industrial Factory
FACTORY FOR SALE
• Legal Description: Lot 01732A on Mukim 20• Land Area: 1,276.4sqm or 13,739sqft• Existing GFA: 1,123sqm or 12,088sqft• Plot Ratio: 2.0 • Tenure: Freehold• Short drive to SLE, CTE and within close proximity to Bishan.
464 Tagore Industrial Avenue Singapore 787833
Tender Closing Date2ND May 2018, Wednesday, 2:30pm.
Tan Khai Leng 9696 3120 | 6100 8809Cea Reg. No.: R044933H
ORANGETEE & TIE PTE LTD | CEA LICENCE NO.: L3009250K
FOR SALE BY EXPRESSION OF INTERESTFreehold B1Detached Industrial Factory• Address: 466 & 468 Tagore Industrial Avenue Singapore 787836
• Legal Description: Lot 1265M on Mukim 20
• Land Area: 2319.8sqm or 24,970sqft
• Plot Ratio: 2.0
• Tenure: Freehold
Jane Tan 9696 3120 | 6100 8809Cea Reg. No.: R044933H
ORANGETEE & TIE PTE LTD | CEA LICENCE NO.: L3009250K
CLOSING DATE11TH May 2018, Friday 2:30pm.
Online shopping still accounts for less than 10% of retail sales in the US but is reconfiguring supply chains and shaping the fortunes of warehouse landlords. Demand is especially keen in and around big cities, where online shopping has caught on fastest.
US industrial property Reits, such as Prologis, Rexford Industrial Realty and Terreno Realty, are outperforming those that focus on malls, residential rentals and office buildings
16 | REAL ESTATEThe Business Times | Tuesday, April 17, 2018
