A Look at Industrial Investments During COVID-19
The full article was originally published as an SIOR Thought Leadership piece and was featured on Commercial Property Executive (May 20, 2020).
We are facing an unprecedented global crisis that will have a lasting impact for months and years to come. Not since 9/11 has life been altered in ways that will require drastic modifications to our daily routines. Time was needed to heal then, and it likely will take a while to return to some sense of normalcy after the current pandemic. But what can we do now to make the most of what is available while continuing to conduct business?
A common misconception right now is that all deals are on hold and there isn’t much left to do but wait. According to Minneapolis-based SIOR Mark Kolsrud, senior vice president of Colliers, waiting would be a mistake.
Transactional opportunities are still plentiful—if you know where to look. The industrial sector in particular is thriving in many areas, and in some instances, even struggling to keep up with overdemand. Many suppliers of essential products are over-capacity and seeking new storage options to meet demand. Those kinds of non-essential storage facilities are a prime place to modify assets and capitalize on the situation.
“We are getting calls daily from investors looking to buy,” says Kolsrud. “This is not a down market when it comes to investments. We are representing buyers looking for opportunities throughout the country.”
According to Kolsrud, investors are still looking to close transactions in the current economic climate. He would know, considering he just closed the largest deal in Minnesota history, an industrial portfolio sale comprised of 59 properties and 7 million square feet that sold for nearly $650 million. The record-breaking sale came about when a large investment firm sought to expand its Midwest and West portfolio to expand its holdings and capitalize on the Twin Cities’ booming investment market.
While it may seem like an anomaly, miracle, or fluke depending on where you stand, this transaction indicates a few trends in the market:
- Large investment firms are seeking to close transactions.
- Industrial property is more popular than ever, due to its high liquidity and sustainable momentum. It is a sector that continues to grow amidst a pandemic that has brought global economies to a standstill.
- Bigger is better: multi building portfolios are the most sought after product
With transactions still happening, the COVID-19 downturn is no time for commercial real estate professionals to tread water. So how can you capitalize on those potential industrial investments and deals? We've gathered four considerations Kolsrud suggests abiding by while working on closing a transaction in 2020.
To read the full SIOR Thought Leadership piece, click here.
