Reno’s largest portfolio of industrial properties is changing hands once again.
Blackstone Real Estate Partners VI & VII of New York City in mid 2013 purchased a 64-property portfolio of Reno-Sparks industrial and distribution buildings totaling 9.5 million square feet from Prologis. Blackstone already held 1 million square-feet of real estate in the Truckee Meadows, and the transaction made the group the region’s largest industrial property owner.
However, in December Blackstone announced it was selling its wholly-owned U.S. industrial platform managed by subsidiary IndCor Properties to GIC, the sovereign wealth fund of Singapore, for $8.1 billion. Since the economic downturn IndCor had compiled a portfolio of 117 million square feet through 18 transactions and had been moving toward an initial public offering, which has been cancelled with sale of the portfolio.
The IndCor properties were developed by DP Industrial, a joint venture of Dermody Properties and the California State Teachers Retirement System. DP Industrial sold the portfolio to Prologis in 2007 for $1.85 billion. Prologis in 2013 it sold its regional portfolio and additional space in Las Vegas and Pennsylvania to Blackstone for $960 million.
Though the change of ownership won’t likely be felt in the Truckee Meadows, it’s yet another sign that industrial real estate is one of the hottest sectors of commercial real estate locally and across the U.S.
Greg Shutt, vice president of the industrial properties group at Colliers International, says IndCor benefitted from excellent timing in its purchase of the Reno-Sparks portfolio. Industrial vacancy in the Truckee Meadows has plunged from its recession-era double digits with millions of vacant square feet on the market to less than 7 percent vacancy for Class A properties.
The purchase by GIC could spur additional investment interest in Reno-Sparks industrial properties, Shutt adds. Development already is nearing the frothy stage.
Panattoni Development Company is building 200,000-square-feet of speculative industrial as it builds out a new 770,000-square-foot distribution center for Petco at Stead. Dermody Properties is construction two buildings of 402,320 and 224,640 at Logisticenter 395 in north Reno after building a new 624,000-square-foot facility for Amazon at the site. KTR Capital Partners has a 566,000-square-foot speculative project underway at Tahoe Reno Industrial Center, and Conco of the San Francisco Bay Area is building 300,000-square foot facility off USA Parkway at TRIC.
Shutt says absorption of that space, as well as additional institutional investment in the region, should remain strong.
“Every institutional investor has different parameters for what they see as value and for how they view their portfolios,” Shutt says. “I don’t think we will have any problem with absorption. As long as activity levels stay the way they are we will be OK.”