• I hired Ward Richmond because I needed a fast-paced individual who specializes in solutions for 3PLs and could deliver a comprehensive solution that maximized site value and enabled me to close the deal. His market intelligence and relentless effort on this project undoubtedly helped us secure the business with this new, Fortune 500 customer.

    BRETT M. MEARS President - Palmer Logistics
  • Ward Richmond understands the 3PL business. We rely on Ward to help solve our customers’ supply chain opportunities and provide them with logistics solutions that fit their needs.

    BRYAN KELLER Chief Executive Officer – Keller Logistics
  • Ward has consistently demonstrated a high level of customer service, a strong work ethic, and comprehensive understanding of transportation & logistics-related real estate.

    ED Brickley Fund Manager, Realterm Logistics
  • Ward and his team have consistently delivered a high level of customer service over the course of several years and hundreds of transactions by working closely with our team in an effort to assist us with developing and implementing creative real estate solutions.

    Frank Mazzone RM, Real Estate, TFI International
  • Positive attitude and customer-centered approach made for a great working relationship.

    Joe Fidalgo MD, N America, Marine Harvest
  • Ward and his team have consistently exceeded our expectations while working closely with our Properties Team to execute our real estate strategies and achieve our stated objectives.

    MAYNARD F. SKARKA COO, Yrc Freight
  • The Colliers team worked quickly and efficiently to leverage their local market relationships to find KW multiple short term, flexible space solutions in an expedient and professional manner.

    DEAN DOKGO Vice President, KW International
  • Ward has acted as our strategic real estate partner for several years having assisted our team during our rapid growth by utilizing strong relationships and unparalleled market knowledge to source off-market opportunities for property expansion needs.

    TAYLOR WHITE CEO, Performance POP

Ward Richmond

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Posts by Ward Richmond

Supply Chain Real Estate Podcast #3: Hot Topics in the Cold Chain

November 15, 2019 Podcast 0 Comments

Supply Chain Real Estate Podcast: Episode #3 - Hot Topics in the Cold Chain!

By Supply Chain Now Radio

For anyone not familiar with the unique nature of a “cold” supply chain, it covers the movement of any perishable good from its point of origin to the place where the customer ultimately purchases it – and all the companies and logistics elements that are involved in that journey. Products that commonly move through a cold supply chain include raw and processed food items as well as pharmaceutical ingredients – anything that is at risk of perishing should the temperature become too hot during shipping.

Both of the guests in this podcast know the cold (or “cool”) chain well, and can speak to the big picture business trends that are driving the change being seen, including shifting consumer preferences, old companies being disrupted by innovative startups and why B2C supply chain professionals need to be familiar with “SKU proliferation”.

In this interview, Chris and Ward tell Supply Chain Now Radio co-hosts Greg White and Scott Luton about:
– The challenges associated with staffing huge warehouses where employees have to work in extremely cold conditions.
– The increasing pressure to innovate while managing costs in the food and consumer packaged goods (CPG) industries.
– Why the stock market may be misreading the indicators coming from the supply chain industry, especially outside of manufacturing

“Ward Richmond & Chris Cummings with Colliers” SCNR Episode 206 is live! Check out the following links:
Dedicated Show Page

Apple Podcasts

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DFW Market Report – Q3 2019

October 24, 2019 Market Reports 0 Comments

As we cruise into Q4, I’m about ready to put 2019 in the rearview mirror of my 18 wheeler and truck on down the road into 2020...

The Summer Lull

By Ward Richmond

As we cruise into Q4, I’m about ready to put 2019 in the rearview mirror of my 18 wheeler and truck on down the road into 2020.

Between the ongoing trade disputes with China and quite possibly, the most highly anticipated presidential election in the history of the USA on the horizon, this has been a pretty odd year in the world in general, to say the least.

Not surprisingly, these macro market moving events have certainly had an impact on us in the world of Supply Chain Real Estate. During Q3, we saw industrial occupiers take a step back and hit the pause button on major capital expenditures.

That being said, the DFW Metroplex is still hanging in there this year at a strong and steady 15 Mil SF in YTD absorption despite having a fairly lackluster 3 Mil SF absorbed in Q3 2019.

Industrial developers on the other hand, are doubling down on the Home of the Dallas Cowboys and the Rise of eCommerce with 36 Mil SF of new industrial inventory currently under construction in DFW. Despite this staggering figure, developers have only delivered 16 Mil SF YTD. Therefore, as of today, DFW new construction and absorption metrics have remained fairly well aligned in 2019.

Landlords remain bullish and continue to push rates hitting a new record high average asking rate of $3.86 psf NNN for Big Box (200K SF+) product. The Non Big Box rates continue to get pushed up as well closing in on average asking price of $6 psf NNN. This makes sense given extremely limited Non Big Box inventory with a Sub 4% Vacancy in multiple infill submarkets.

Deal activity in Q3 2019 was fairly weak compared to the first half of 2019 and the largest lease signed in Q3 was a 1.2 Mil SF renewal with LG Electronics at their Alliance facility. We are seeing an uptick in renewal activity and a lot of our clients would really prefer to extend leases on a short term basis while they patiently wait for Amazon to figure out how to deliver them a crystal ball (same day shipping preferred!).

We are keeping our heads down and working hard to continue helping our customers meet the ever-growing demands of Speed and Flexibility in their supply chains in an effort to maximize corporate real estate value and enhance process efficiency.

To get further inside my supply chain brain,
please check out my website and blog:
www.SupplyChainRealEstate.com

Q2 2019 TOP TEAM RICHMOND PROJECTS

    • Dal-Tile Corporation – Mesquite, TX 156,293 SF Lease
    • E.L.Farmer & Company – Houston, TX 103.69 Ac Sale
    • 4000 Dan Morton – Dallas, TX 130,000 SF Renewal
    • Palmer Logistics – Grand Prairie, TX 52,812 SF Renewal
    • Keller Logistics – Tacoma, WA 122,500 SF Sublease

Q2 2019 TOP DFW DEALS

    • LG Electronics – USA Inc. renewed 1.2 M SF at alliance in Roanoke, TX from Hillwood
    • Schluter Systems – leaded 550,555 SF at alliance northport in Roanoke, TX from Hillwood
    • American Airlines leased 394,143 SF at DFW airport
    • Ericsson leased 306,280 SF at Majestic airport center DFW in Lewisville from Majestic realty
    • Emergent Cold – leased 300,000 SF at Carter Industrial Park on fort worth from Hunt Southwest

Key Takeaways

Landlords set a new high mark for asking rental rates with an overall asking rates of $3.86 NNN.

The vacancy rate dropped below 10% for the first time in over a year coming in at 9.6%. With 25% of the under construction product leased up, expectations are for vacancy rates to rise in the coming quarters.

Construction of Big-Box product at the end of the 3rd quarter has set a new ALL-TIME high with a total of 56 buildings comparised of over 30 million square feet in the works. Sixteen of these buildings started construction in the 3rd quarter alone.

Year of data Absorption is strong at 11.2 million square feet. Over 75 million square feet has been absorped in DFW in the last 5 years.

MEET THE TEAM MEMBERS

Ward Richmond has over twelve years of experience specializing in industrial real estate, and has negotiated over 500 transactions while working in over 100 cities across the USA, Canada, and Mexico. Several publications have featured Ward for his expertise in this field including the Wall Street Journal, Dallas Morning News, and Dallas Business Journal. He also serves on Colliers International Industrial Advisory Board, and is a member of the Logistics & Transportation Solutions Group.

WARD RICHMOND, SIOR
Executive Vice President

COLE HOOPER
Senior Associate

ZACK RUTLAND
Associate

JAMES EWING
Associate

KRISTINA RODRIGUEZ
Client Services Specialist

The Gladiator Group is supported by Colliers International Research Team

ON THE ROAD AGAIN

Oct 26 2019: Arete Live, St. Louis, MO
Nov 8-11 2019: Summit LA19, Los Angeles, CA
Jan 22-24, 2020: BGSA Supply Chain Conference, Palm Beach, FL
Feb 21-23, 2020: Grant Cardone 10X Growth Conference, Las Vegas, NV
Mar 15-17, 2020: IWLA Convention & Expo, San Diego, CA

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Supply Chain Real Estate Podcast: Episode #2

September 17, 2019 Podcast 0 Comments

Our Supply Chain Real Estate Podcast Episode # 2 on Supply Chain Now Radio is now up and running! Co-host, Scott Luton

Our Supply Chain Real Estate Podcast Episode # 2

By Ward Richmond

Our Supply Chain Real Estate Podcast Episode # 2 on Supply Chain Now Radio is now up and running! Co-host, Scott Luton and I discuss traveling through Europe with an upright bass, How To Negotiate A Successful Lease Renewal and the undeniable value in recognizing and acknowledging when you might be Unconsciously Incompetent aka when You Don’t Know What You Don’t Know! I hope you enjoy!

“Supply Chain Real Estate Series: Successfully Renewing a Lease” SCNR Episode 161 is now live! Check out the following links:
Dedicated Show Page

Apple Podcasts

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Supply Chain Real Estate Podcast: Episode #1

August 21, 2019 Podcast 0 Comments

This August, we recorded my first official Supply Chain Real Estate Podcast on Supply Chain Now Radio with the great Scott Luton.

This August, we recorded my first official Supply Chain Real Estate Podcast

By Ward Richmond

This August, we recorded my first official Supply Chain Real Estate Podcast on Supply Chain Now Radio with the great Scott Luton.

This kicks off a new monthly series that we will be recording out in ATL where we will discuss all things Supply Chain Real Estate. We will specifically focus on simple tactics that we recommend you put to work in order to maximize value and optimize process efficiency with regard to your corporate real estate strategy.

I’m hopeful we will also occasionally veer off track and discuss “Hustle Culture” including lessons that I’ve learned from Tony Robbins, Tim Ferriss, Gary Vee, Grant Cardone, Andy Frisella, Joe Rogan, Aubrey Marcus and all of my other heroes of the interwebs and my philosophies on Lifestyle, Sales & Entrepreneurship.

I head back to ATL to record Episode 2 on September 5th!

Here are the primary links: SCNR
Apple Podcasts

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DFW Market Report – Q2 2019

July 25, 2019 Market Reports 0 Comments

DFW explodes into mid 2019 with 30 Million SF under construction. As an FYI, this is comprised of 101 new buildings.

The Hot, Wet & 40 Foot High American Summer

By Ward Richmond

DFW explodes into mid 2019 with 30 Million SF under construction. As an FYI, this is comprised of 101 new buildings. 10 of these new buildings (about 5.7 Mil SF) are Build to Suit facilities and 91 of them (24.7 Mil SF) are being built on spec. This is an extraordinary amount of concrete.

DFW finished Q2 2019 with 6 Mil SF in Total Industrial Absorption bring YTD absorption number to a rock solid 13 Mil SF. Our 850 Mil SF market is hovering at 6% vacancy which is very healthy.

Rates are holding steady in the Big Box market (250K SF +) in the $3.80 psf NNN range while Non Big Box product continues to experience high levels of demand as rates have skyrocketed from $4.50 in Q2 2018 to $4.90 today.

DFW market activity remains strong with 3 different 1 Mil+ SF deals getting signed so far this year. Multiple other 250K SF+ monster deals keep slamming down with consistency trying to help our absorption numbers stay in line with the absolutely staggering amount of product that is being developed.

We are keeping our heads down and working hard to continue helping our customers meet the ever-growing demands of Speed and Flexibility in their supply chains in an effort to maximize corporate real estate value and efficiency.

To get further inside my supply chain brain,
please check out my website and blog:
www.SupplyChainRealEstate.com

Q2 2019 TOP TEAM RICHMOND PROJECTS

    • Ace Hardware – Wilmer, TX – 900,000 SF
    • FNA – Mesquite, TX – 400,000 SF
    • 4000 Dan Morton Dallas, TX – 208,948 SF Investment Sale
    • TForce FInal Mile – Elk Grove, IL – 87,600 SF
    • Schenker International – S.A. de C.V. – Juarez, MX – 86,627 SF

Q2 2019 TOP DFW DEALS

    • El Pedregal S.A. Food & Beverage distributor lease 1.54M SF at DFW Airport from Bandera
    • Callaway Golf leased 783,000 SF in Fort Worth from Hillwood
    • Systemax leased 489,804 SF at 2119 N I-35 N in South Dallas from Hillwood
    • Petmate leased 468,300 SF at Park 20 in Lancaster from SV Captial
    • Capstone Global LLC renewed 248,096 SF in Arlington from Emerik Properties

Key Takeaways

Construction has not stopped rental rates from increasing as rates bounced back from last quarter’s decline to come in at $3.80 this quarter.

Despite all of the construction activity, the vacancy rate remains strong at 10.5%. While leasing activity has been robust thus far, only 22% of the speculative development has been pre-leased, leaving close to 15 million SF of new space to come on the market.

“Go Big-Box or go home” continues to be the mantra in DFW with several new buildings kicking o during the quarter. These new builds are keeping the under construction pipeline of close to 24 million SF in record territory for the metroplex.

Absorption of almost 9 million SF through mid-year 2019 is on pace to eclipse the 2017 record of 18.8 million SF.

MEET THE TEAM MEMBERS

Ward Richmond has over twelve years of experience specializing in industrial real estate, and has negotiated over 500 transactions while working in over 100 cities across the USA, Canada, and Mexico. Several publications have featured Ward for his expertise in this field including the Wall Street Journal, Dallas Morning News, and Dallas Business Journal. He also serves on Colliers International Industrial Advisory Board, and is a member of the Logistics & Transportation Solutions Group.

WARD RICHMOND, SIOR
Executive Vice President

COLE HOOPER
Senior Associate

ZACK RUTLAND
Associate

JAMES EWING
Associate

KRISTINA RODRIGUEZ
Client Services Specialist

The Gladiator Group is supported by Colliers International Research Team

ON THE ROAD AGAIN

Sept 4 2019: Annual Interface DFW Industrial Conference, Dallas, TX
Sept 14-18 2019: IAMC Fall Forum, Milwaukee, WI
Sept 24-27, 2019: Colliers International Supply Chain Conference, San Diego, CA
Oct 8-9, 2019: Keller Logistics Customer Summitt, Deance, OH
Oct 15-17, 2019: Armstrong 3PL Conference, Chicago, IL
0ct 26 2019: Arete Live, St. Louis, MO
Nov 8-11, 2019: Summit LA19, Los Angeles, CA

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Food and Beverage Industry Continues to Grow but 3PLs Dominate Activity in First Half of 2019

July 23, 2019 Market Reports 0 Comments

Occupier activity across the Unites States continues to be robust, but it is not on par with the same time a year ago in bulk industrial space (100,000 square feet and larger).

Food and Beverage Industry Continues to Grow but 3PLs Dominate Activity in First Half of 2019

By James Breeze

Occupier activity across the Unites States continues to be robust, but it is not on par with the same time a year ago in bulk industrial space (100,000 square feet and larger). In the first half of 2019, 1,142 industrial (warehouse, manufacturing, flex) new leases, renewals and user sales were transacted, totaling 266.7 million square feet, a 12.6% decline from the first half of 2018. The average size of a bulk transaction was 234,000 square feet, much lower than the 261,000-square-foot average this time last year.

While e-commerce-only occupiers, like Amazon, remain on the top of minds of industrial landlords, they only made up 10% of the transactions signed in the past 12 months — in line with the percentage of total retail sales e-commerce accounted for. The top occupier remains third-party logistics and packaging companies (3PLs), signing 67 million square feet of transactions, 25% of the total transactions signed. 3PLs, who offer logistics and warehousing services for retailers and wholesalers who choose to outsource, remain the top occupier of industrial space because of the sheer volume of companies who service every industry in the business. While 3PLs were the top overall occupier, the food, beverage and pet supplier industry grew the most compared with the previous year, at a rate of 6.5% and they were the only occupier type to post a growth in year-over-year transactions.

E-commerce-only occupiers continue to require buildings much larger than other occupier types, as the average e-commerce transaction the past year totaled 422,903 square feet, nearly double the overall average transaction size for a bulk industrial building but much lower than the 510,840-square-foot average in the first half of 2018 because of a decline in transactions larger than one million square feet. For the 19th consecutive quarter, Amazon was the top e-commerce and overall occupier of industrial space, with a year-to-date total of 9.3 million square feet.

The Midwest beat out the Southeast as the top region of choice for bulk industrial occupiers, with 32% of the bulk transactions signed in the region. Both industrial and manufacturing occupiers continue to move into the market in droves because of the region’s pro-business climate and significant logistics advantages. The Southeast region is still doing well as occupiers move into the region to support the growing population. At the time of this report, more than 70 million people lived in the Southeast region, and this is expected to grow by a nation-leading 7% over the next five years. The West region finished in third thanks to continued strong demand in the Inland Empire, which remains one of the top markets in the country for bulk leasing activity.

Transaction volume for bulk industrial space will remain robust over the next 12 months because of occupiers’ increasing need for both regional and final-mile bulk distribution centers. While 3PL and retail-related distribution volume will remain robust, look for the strong growth that was showcased in the food and beverage industry to continue, as many of these occupiers are looking to expand and modernize their distribution and manufacturing networks. Population growth will keep occupiers in all industries looking at space in the Southern and Western portions of the U.S., while improvements and expansions of inland and coastal logistics hubs as well as strong domestic manufacturing in the Northeast and Midwest will keep demand strong in these regions for the foreseeable future.

Company Type Description:

    • Construction, Improvement and Home Repair – Warehousing and distribution of materials used in residential and commercial construction, improvements and repair, could contain some e-commerce components.
    • Data Centers, Tech and R&D – The use of industrial space for data centers and non-pharmaceutical R&D purposes.
    • E-Commerce Only – Warehousing and distribution of product that is ordered online and shipped directly to the end consumer only.
    • Food, Beverage and Pet Supply – Manufacturing, warehousing and/or distribution of food and beverage related products. Could contain some e-commerce or manufacturing components.
    • Furniture and Appliances – Warehousing and distribution of retail and/or wholesale furniture and appliance products. Could contain some e-commerce and or manufacturing components.
    • General Retail and Wholesale – The warehousing and distribution or retail and/or wholesale products not listed in any of the other categories. Could contain some e-commerce or manufacturing components.
    • Manufacturing – Industrial space used for manufacturing and/or storage of raw materials and equipment used in the manufacturing of non-automobile related products.
    • Motor Vehicles, Tires and Parts – The warehousing, manufacturing and/or distribution of motor vehicles, tires and related parts and materials.
    • Third Party Logistics and Packaging – Third party logistics (3PL) and packaging of a wide variety of products, could contain some e-commerce components.

James Breeze is the national director of Industrial Research for Colliers International, where he focuses on analyzing industrial property trends, compiling Colliers’ thought leadership and delivering timely market projections to provide clients with a leading edge in our industry.

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Listen to “Live from the eft Media Zone: Ward Richmond & Stacie Vroman” – SCNR Episode 113 in Podcasts

June 25, 2019 Podcast 0 Comments

A couple of weeks ago at EFT 3PL/ Supply Chain conference in ATL, I had the pleasure of making a guest appearance on the Supply Chain Radio Now Podcast...

Live from the eft Media Zone: Ward Richmond & Stacie Vroman

By Ward Richmond

A couple of weeks ago at EFT 3PL/ Supply Chain conference in ATL, I had the pleasure of making a guest appearance on the Supply Chain Radio Now Podcast. Please take some time and go check it out to hear us discuss all things Supply Chain Real Estate in the midst of the eComm explosion. I’ve been seriously considering and seriously procrastinating starting my own podcast for over a year so this was a super cool experience and despite the fact that I am a podcast rookie, I’m proud to say that I sound smarter than I actually am!😉 So- After you listen, let me know: Should I start my own podcast?!

Listen to “Live from the eft Media Zone: Ward Richmond & Stacie Vroman” – SCNR Episode 113 from June 19, 2019 in Podcasts.

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DFW Market Update – Q1 2019

May 13, 2019 Market Reports 0 Comments

Once again, DFW Industrial blasted into the year with a powerful army of tenants taking down millions square feet of modern bulk distribution space!

The Rise of the Planet of The Big Bombers

By Ward Richmond

Once again, DFW Industrial blasted into the year with a powerful army of tenants taking down millions square feet of modern bulk distribution space! The staggering numbers displayed by the DFW market solidifies our spot at Number 1 in the USA in 2019 in Absorption, Product Delivered and Product Under Construction.

I don’t mean to sound like a non-humble bragger, but I just report facts and the fact of the matter is that our market is explosive and we have established ourselves here in DFW as a premier global distribution hub.

DFW finished Q1 2019 with 6.5 Mil SF in Total Industrial Absorption. This level of absorption accounts for about 1/3 of total absorption we saw in 2018. We kicked the final year of the decade off by delivering almost 8 Mil SF of new product with another 25 Million SF currently under construction as we our vacancy rate hovers at a healthy Mid 6.

Our Colliers Dallas office alone represented three different companies for 1 Million SF space requirements in Q1 2019 and 2 of the 3 deals have successfully closed. Multiple other massive unannounced projects are secretly circling the market and inking deals as I write this sentence.

USA Wide, absorption numbers are actually down with 39.2 Mil SF absorbed in Q1 2019 which is the lowest quarter on record since 2012. That has not stopped USA industrial rental rates from pushing to record highs with an average of $5.89 psf. US vacancy rate is riding low at 5% while the song “Lowrider” plays on construction sites everywhere as workers build 294 Mil SF of space which is an all-time record.

We look forward to seeing what happens this summer as eComm continues to replace traditional retail, WalMart continues to chase down Amazon, the trade negotiations with China drag on and the labor market continues to tighten.

To get further inside my supply chain brain,
please check out my website and blog:
www.SupplyChainRealEstate.com

Q1 2019 TOP TEAM RICHMOND PROJECTS

    • DB Schenker – DFW Airport, TX – 130,270 SF
    • Keller Logistics – Dallas, TX – 204,000 SF
    • Keller Logistics – Napolean, OH – 410,000 SF
    • Keller Logistics – Salt Lake City, UT – 120,000 SF
    • Daltile – Dallas, TX – 76,892 SF

Q1 2019 TOP DFW DEALS

    • Georgia Pacific leased 1 Mil SF at Intechange 20/45 in South Dallas from USAA Rael Estate.
    • CTDI leased 705K SF at Elizabeth Creek Gateway in Front Worth fron Transwestern Investment Group.
    • Samsung Electronics renewed 552K SF at 400 Dividened DR in Coppell from Duke Realty.
    • Hollingsworth Logistics leased 494K SF at 14900 Frye RD in Fort Worth from Prologis.

Key Takeaways

New construction and deliveries did not affect the overall vacancy rate as it held steady to last quarters rate of 11.3%. Expect that number to rise over the year as much of the speculativeunder construction inventory is set to deliver later this year.

Since 2010 the DFW has been the Big-Box inventory increase by over 200 buildings totaling 100M SF. For Context, in 2010 there was Big-Box building that was under construction during the entire year while in Q1 2019 alone, there were 40 building with a DLF quarterly record combined square footage of close to 25M SF.

Rental rates, although still strong at $3.75 NNN, did slide down $0.08 from last year’s record high of $3.83.

Absorption had a strong start to the year with over 3.4 million absorbed on Q1 2019.

MEET THE TEAM MEMBERS

Ward Richmond has over twelve years of experience specializing in industrial real estate, and has negotiated over 500 transactions while working in over 100 cities across the USA, Canada, and Mexico. Several publications have featured Ward for his expertise in this field including the Wall Street Journal, Dallas Morning News, and Dallas Business Journal. He also serves on Colliers International Industrial Advisory Board, and is a member of the Logistics & Transportation Solutions Group.

WARD RICHMOND, SIOR
Executive Vice President

COLE HOOPER
Senior Associate

ZACK RUTLAND
Associate

KRISTINA RODRIGUEZ
Client Services Specialist

ON THE ROAD AGAIN

May 8-10, 2019: CLDA – Phoenix, AZ
May 20-22, 2019: ICSC, Las Vegas, NV
June 10-12, 2019: EFT, Altanta, GA
Sept 14-18, 2019: IAMC, Milwaukee, WI
Sept 25-27, 2019: Colliers International Conference, San Diego, CA
Oct 15-17, 2019: Armstrong 3PL Conference, Chicago, IL
Nov 8-11, 2019: Summit LA19, Los Angeles, CA

The Gladiator Group is supported by Colliers International Research Team

2018 3PL ROBUST ACTIVITY

“Occupier activity across the Unites States continues to be robust, particularly in bulk industrial space 100,000 square feet and larger…”

“The average size of a bulk transaction was 266,000 square feet—much higher than the 242,000 square feet average the previous year. The increase in size range was a direct result of third-party logistics and packaging companies (3PLs) and automotive-related companies taking larger chunks of space compared with the same time last year.”

– Occupier Activity Remains Robust in 2018 Thanks for 3PL Activity, James Breeze, 17 Jan 2019

CONTACT WARD RICHMOND AT:

Office 214.217.1201
Mobile 214.336.5757
Email [email protected]

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U.S. Industrial Overview – Year End 2018

April 9, 2019 Market Reports 0 Comments

The U.S. industrial market finished 2018 with 276 MSF of overall net absorption, the second highest rate on record.

James Breeze, National Director of Industrial Research

By James Breeze

U.S. Industrial Posts Second Best Year on Record

    Core Markets Dominate Leading to Robust Fundamentals

    • The U.S. industrial market finished 2018 with 276 MSF of overall net absorption, the second highest rate on record.
    • Overall vacancy rates remained low at 5.0%despite another year of robust new development, which finished 2018 at 263 MSF completed.
    • The Inland Empire dominated 2018 with 25.4 MSF of net absorption. The region also led the nation in new construction at 26.5 MSF.
    • Direct asking rents continue to increase finishing at an alltime high of $5.75 psf/yr for W/D space.

U.S. Industrial Markets Existing Inventory

U.S. Industrial Overall Vacancy Rate Breakdown Q4 2018

U.S. Top 10 Rankings 2018

Occupier Demand Driven by 3PL and E-Commerce

    • While e-commerce continues to get all the press, the top occupier of industrial space remains third-party logistics and packaging companies (3PLs) who signed nearly 115 million square feet of industrial deals the past 12 months, 31% of the total transactions signed.
    • While E-Commerce only occupiers signed 11.4% of the new deals in 2018, they required the largest buildings as the average e-commerce transaction the past year totaled 496,000 square feet, nearly double the overall average transaction size for a bulk industrial building.
    • Manufacturing occupiers continue to expand within the U.S. and have the potential to be one of the top growing industrial occupier types if trade issues are settled in the coming quarters.

Top 10 Occupiers of Space in the U.S. in 2018

E-Commerce Forcing Occupiers to Expand and
Modernize Supply Chain

    • U.S. e-commerce sales rose an impressive 14.5% in Q3 2018 compared with the same time last year and now represent 11.1% of non-auto total retail sales.
    • The continued surge in online sales and the need to get products to consumers quickly while minimizing supply chain costs are forcing retailers and wholesalers into more facilities throughout the country and rapidly changing supply chain strategy.
    • These changes will be a major contributor to industrial real estate demand for the foreseeable future.

Overall Net Absorption Positive for 35th Consecutive Quarter

Asking Rents Reach All-Time Highs But Remain A Small Portion of Overall Costs

Warehouse/Distribution Development Booming Because of Occupier Requirements

Since 2010, a whopping 1.2 billion square feet of warehouse product has been completed across the U.S. The top reason for this massive amount of development is the changes in supply chain because of e-commerce. Occupiers require different functionalities than many buildings completed before 2010 possess.

U.S. Industrial Sales Activity Overview

    • The industrial sector was firing on all cylinders in 2018. $92.4 billion worth of transactions were completed, over 70
      MSF of which was in Warehouse/Distribution facilities, an all-time record high. Sales prices also continue to rise with
      average price psf up 7.9% from a year ago.
    • Despite the turmoil in the financial markets, cap rates were largely unchanged-to-flat from a year earlier in Q4’18. Cap
      rates for flex assets averaged 6.7% in Q4’18 and a year earlier. Warehouse cap rates fell 20 bps over the last year
      though, to hit 6.3% in Q4’18.
    • There are warehouse assets in the market today trading at cap rate levels like those seen for office towers in
      Manhattan. Large distribution facilities with Amazon as a tenant have traded in the 4%-5% cap rate range. Larger
      buildings are also producing lower cap rates with buildings over 500,000 square feet selling at an average cap of 5.8%
      in 2018
    • Looking ahead, investors will continue to focus on secondary and tertiary markets because of easier opportunities of
      entry compared with core markets. Markets with large quantities of urban warehousing with high rents and low
      vacancies, including Seattle, Washington D.C., the NY Boroughs, Los Angeles and South Florida, will also enjoy
      increased owner interest, especially in “opportunity zone” designated areas.

U.S. Industrial Sales Activity Overview – Total Warehouse/Distribution Volume

U.S. Warehouse/Distribution Sales Activity Overview – Cap Rates and Avg $/sf

E-Commerce and a Solid U.S. Economy will Drive Demand

    • Industrial real estate will continue to prosper in 2019 with robust development, as well as strong
      positive absorption, and continued record low vacancy rates and record high asking rental rates.
    • Demand from 3PL’s and E‐Commerce occupiers will remain high, however we will see the biggest
      increases in new transactions from Manufacturers and the Food and Beverage industry.
    • Occupiers and investors will focus expansion on markets with high population concentrations,
      availability of labor, close proximity to major rail hubs, air cargo ports, seaports, and markets with
      economical rents and pro‐business environments.
    • Look for markets including St. Louis, Minneapolis, Savannah, Greenville, Las Vegas, Shenandoah Valley,
      Sacramento, the I‐4 Corridor, Seattle and the Lehigh Valley to experience the largest growth in activity
      and investor demand in the coming quarters.
    • Headwinds to look out for: Weakening Global Economy, Declining Home Sales in U.S., Labor Shortages,
      Disruptions to Global Trade.

Changes Coming

    Greater focus on creative industrial

    • Increasing Consumer Expectation for Speed
    • Lack of Qualified Labor
    • Transparency
    • Automation
    • Gig Economy
    • Threat of Amazon
    • Transportation Changes
    • Automated Vehicles/ Trucks
    • How to Control the Cost of the Last Mile

    Bigger Hubs & smaller/closer last mile

Occupiers and Owners are Trying to Solve the Final-Mile

    • As consumers increasingly expect that their e‐commerce orders are fulfilled and delivered in two days or less,
      demand for closer “in‐town” smaller final‐mile fulfillment centers is exploding.
    • It is this segment of the supply chain – getting the order to the end consumer – that overwhelmingly is the most
      expensive portion of the total transportation costs.
    • Final‐mile distribution centers tend to be near highly‐populated areas to access as many customers as possible.
      This is the primary value of the site.
    • In many populous areas however, industrial markets are mature and provide relatively few options for
      distribution needs. This is forcing occupiers to get more creative, and use more in‐depth location analysis than
      ever before.
    • In many markets, functionally obsolete industrial or converted retail space is being absorbed because of the
      ability to quickly reach end users is more important than building amenities when it comes to the final‐mile.

Occupiers and Owners are Trying to Solve the Final-Mile (cont.)

    • Use mapping, supply chain, national research, and marketing resources to analyze the final-mile.
    • The final-mile can be different in every market, there is no set answer.
    • We are starting a series of final-mile reports that will eventually encompass most major markets.
    • Los Angeles Basin and New Jersey Corridor Final-Mile Reports were released in 2018 and plans are in the works for other major metro reports in 2019.

The Availability of Labor will be Integral to Site Selection

    • With the U.S. economy near full employment and the industrial market needing more workers due to ecommerce, intensifying warehouse demand, and many occupiers are having difficulty finding adequate labor.
    • This trend could have a negative effect on markets with a shortage of industrial labor and could be a boon to markets with an adequate trained labor force in the coming quarters.
    • While the availability of labor will gain in importance in industrial site selection, look for the use of automation and other technologies to increase as a way of combating labor shortages throughout the country.

Tariffs Could Impact Markets Differently Based on Geography

The U.S. industrial market is heavily reliant on international trade. Because of this, tariffs on imports and counter tariffs on exports could lower demand for industrial real estate.

Tariffs could affect markets differently based on its proximity to ports and types on products stored. NAFTA, China, and Europe could all have more affects than others.

Many tariffs are currently affecting raw materials or finished materials that are not major occupiers or industrial products, but this could change, especially if tariffs are increased to 25%.

COLLIERS U.S. INDUSTRIAL RESEARCH REPORTS COMING SOON

    • 10 Emerging Markets to Watch in 2019 (February)
    • U.S. 2018 Year-End Report and Outlook (March)
    • North America Big-Box Report and Outlook (March)
    • Planning the Final-Mile – Chicago (April)
    • U.S. Seaport Outlook (May)
    • Blogs on Opportunity Zones, Labor, External Indicators and Market of the Month Profiles

JAMES BREEZE
NATIONAL DIRECTOR OF INDUSTRIAL RESEARCH
(602) 222-5184
[email protected]

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Power Broker of the Year

March 12, 2019 Success Stories 0 Comments

Commercial real estate brokers are changing the way they do business. These are the ones at the top of the game

The brokerage business is changing, and it’s producing a new breed of brokers capable of fielding the increasingly complicated needs of clients in today’s market. The professionals melding data and new technologies with the high-level of service customers are demanding are the ones at the top of the industry. For the first time in the eight-year history of D CEO’s Power Brokers program, we’ve selected outstanding commercial real estate professionals to honor in eight specialties.

Ward Richmond - Colliers International

Industrial Tenant Rep

Ward Richmond is a recognized leader in the industrial sector and oversees multiple national accounts. He has developed a strong understanding of supply-chain real estate through negotiating more than 500 transactions in 50 cities around the globe. He was Colliers International’s top Dallas producer in 2018.

“A key strategy of mine has been to work closely with business and life coaches. I also regularly attend seminars to elevate my game. … The industrial market has been riding the monster tidal wave of activity generated by rapid eCommerce growth for a long time. And so far, 2019 already has the pedal to the metal. … My advice to young brokers is to be disciplined about your approach to your goals and adjust as needed—but do not quit.”

Terrence Maiden - Corinth Properties

Community Impact

Since graduating from Texas Christian University (where he and his twin brother were standout football players for the Horned Frogs), Terrence Maiden has focused his distinguished real estate career to benefit the southern sector of Dallas, where he’s now leading development of the former Red Bird Mall. He’s also co-founder of the nonprofit Two-Wins Foundation.

“My philosophy is people-first. Being in an industry like real estate, which is often driven by profit and wealth, I always remind myself who we are doing this work for—the community. I am motivated by knowing that my efforts each day can impact people for generations to come. It’s a huge responsibility. … My advice for young brokers is to trust the process. Half the battle is staying committed to the industry through the highs and lows.”

Steven A. Lieberman - The Retail Connection

Retail
Steve Lieberman knows how to juggle. He leads his company as CEO while also consistently ranking as one of the nation’s top retail brokers. He pioneered the use of data mining in retail real estate and has long worked to solve inefficiencies in the sector. Last year, Lieberman closed more than 650,000 square feet in transactions valued at $350 million.

“Looking back on my career, I’m most proud of representing Bed Bath & Beyond, our development of Arlington Highlands, the redevelopment of Village on the Parkway, and the opportunity ahead with the Knox District. … A key strategy has been knowing that the best team wins. Partner, align with, inspire, leverage, and reward the best team possible, as all collaborations are connected and cumulative.”

Mark Allen - SVN | Investment Sales Group

Rookie of the Year

After attending the U.S. Military Academy at West Point, playing Division 1A football, and serving as an officer in the U.S. Army, Mark Allen pursued a career in commercial real estate, joining SVN to specialize in multifamily investment sales. In under two years, he has closed more than $250 million in commercial property transactions.

“A week into my career, I secured a listing from a referral in Appleton, Wisconsin. It was a small multifamily community in a market I’m not familiar with, and it was my very first transaction. I knew I could sell anything after that. … I’ll never forget the advice I was once given by Roger Staubach: ‘Prospect, prospect, prospect, and meet with at least two potential clients per week.’ Although this advice is simple, it has paid off.”

Tony Creme - Hillwood

Industrial Project Leasing

A 21-year Hillwood vet, Tony Creme has been a key player in the growth of AllianceTexas. During his tenure, it has grown from 50 industrial tenants to more than 500. Last year, Creme brokered 3 million square feet in lease deals, launched 4 million square feet of spec space, and led the acquisition of 500 acres of new industrial land.

“The value of working hard was instilled in me at an early age. I learned there is no substitute for putting in the time and effort necessary to succeed. … I have been with Hillwood my entire career. I’m fortunate to regularly interact with the leadership team, and I continue to learn from them every day. … The fundamentals of the overall industrial market are still very good, and 2019 will be a great year, especially in North Texas.”

Lynn Dowdle - Dowdle Real Estate

Commercial Property Sales

After a long career in the retail division of the former Staubach Co., Lynn Dowdle went off on her own in 2011 to forge a new area of specialization: hotel site selection. Last year, she closed 21 sales valued at more than $44 million—all hotels, with the exception of Music City Frisco. An active industry volunteer, she also recently served as president of NTCAR.

“This business is not for sissies.It often takes a ton of perseverance and fortitude to get the tough ones done. … If I go into each transaction knowing I can accomplish my goal of creating value, there’s usually no stopping me. I believe reputation is everything, so I’m very intentional about the way I transact. … My advice for young brokers is to work hard, work smart, and don’t expect to be an overnight success. That can take about 20 years!”

Chris Taylor - Cushman & Wakefield

Office Project Leasing

Office property owners across the region trust Chris Taylor to lease up their space. With good reason. He was the top-producing broker across all business lines for the Dallas office of Cushman & Wakefield in 2018. Taylor closed more than 1 million square feet in lease transactions and helped bring two projects to 100 percent occupancy.

“I’ve always strived to develop sincere business relationships and friendships, to be persistent, work hard, be consistent and honest in my business dealings, and always put the interests of my clients first. … I have had several great mentors throughout my career, but Johnny Johnson and Bret Bunnett have had the greatest influence on me. … My advice for young brokers is to always remember that this business is a marathon, not a sprint.”

Jeff Ellerman - CBRE

Office Tenant Rep

Throughout his 35-year career, Jeff Ellerman has had a hand in many of the region’s largest and most notable office leases, negotiating more than 30 million square feet of deals valued at more than $14 billion. Last year was another blockbuster for CBRE’s top producer, with headquarters leases for AT&T, Fossil, Merit Energy, MetroPCS, and Kosmos Energy.

“The commercial real estate game is long, and you have to show up every day hungry, committed, and disciplined. I’m motivated by the chase of the next deal and executing the best possible outcomes for clients. … Other than the safety of my family, my greatest fear is losing my competitive edge. … My advice for brokers just getting started in the business is to stay focused and disciplined—and keep making those calls.”

Dave Anderson - CBRE

Lifetime Achievement Award

Dave Anderson is a real estate rock star. He’s a vice chairman at CBRE, one of just three industrial brokers worldwide to earn the title. During his 35-year career, he has put together more than 1,000 deals, totaling 100 million square feet of space and 10,000 acres of land. Last year, he closed 8.5 million square feet in transactions for a combined value of more than $350 million. This would be notable for any broker, but even more so for Anderson, who did it while in a third year of a fierce battle with pancreatic cancer. D CEO is proud to honor him with its first-ever Power Brokers Lifetime Achievement Award.

What deal are you most proud of?

“It’s difficult to select just one. However, a transaction our team closed last month for a 1.2 million-square-foot build-to-suit for Goodyear has to rank high on the list. It involved site selection over a broad area, labor and transportation analysis, tax analysis, and negotiations of incentives, including infrastructure upgrades. Perhaps as rewarding as the end results we achieved (and subsequent pay day) was an email from the client during the process saying within the first five minutes of meeting me, he knew I was the right guy to handle the job.”

Why do you love what you do?

“I love tackling the challenges each transaction brings, but what I value most is the people in our industry. My associates with CBRE, quality competitive brokers with high morals, the best developers in the nation, and a strong array of investors. Trust me, that is not true in most cities.”

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