If you don't have time to listen, here's a summary:
1. For every $1B increase in online sales, 1.25M SF of industrial real estate is needed. We believe online sales is a tailwind.
2. Infill by nature (b/c of decade built) which optimizes for "last mile".
3. @travisk, founder of Uber, with a gold mine of data, purchased @CloudKitchens after leaving Uber. They are acquiring Class B Industrial to be used as ghost kitchens.
We believe many more industries and businesses will continue to understand there is a meaningful part of their business that can be outsourced to this more affordable and functional real estate. Long food delivery!
4. Depleting supply and huge tenant demand.
We believe there is a 1-2% supply decrease each year as these properties are redeveloped into other product types.
5. They are the ultimate covered land play if you're in the path of growth. By nature, they are on large plots of contiguous land.
6. It is cost prohibitive to replace these properties. Lack of affordable land, construction costs, and city government preferences make for no new supply in the core.
7. Zero signalings in this asset class.
If you get a raise, you might move from a Class B apartment to a Class A apartment. If your business does better, you might move from a Class B office to a Class A office. If your business that occupies Class B industrial is prosperous, it grows within the same asset class.
There is no need to move to a Class A building unless there is a functionality need.
8. As Cannabis is legalized across the US, almost all major grow facilities operate from Class B industrial facilities. We are long legalization of cannibas.
9. Individual deal sizes (unless large portfolios) fall under the institutional threshold. Less competition.
Opportunity to aggregate and sell larger portfolios to institutional buyers (value add through cap rate compression.)
10. Cap ex is very predictable.
Roof is the largest risk (easily able to understand risk). TIs of $2-3 psf for minimal office finish outs. Exterior cap-ex includes striping parking lots, painting buildings, landscape, monument signage. Very predictable.
11. Leases get done much quicker with less friction due to tenant size and demand.
12. Tenants are humble in nature and easier to manage. Overall much easier property management.
13. Value add through converting gross leases to NNN.
14. Very diverse tenant bases and growing demand.
We've acquired nearly 3.5M sq ft to date, across 23 deals, and are looking for more in major Texas markets.
Please DM if you know of a property we should be buying!
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Fort has been all-in on acquiring Class B Industrial (CBI) since 2016.
Here's why in no particular order:
1. By nature of the era (70's - 90's) it was built, it is infill and surrounded by mature infrastructure. Transportation systems, major arteries, homes, commercial, hospitals, universities, etc.
One can’t over estimate the value of mature infrastructure surrounding a property.
2. Companies continue to optimize for being close to their customer so they can serve or deliver product faster.
Billions are invested annually to optimize the entire supply chain. As landlords, we benefit from these ever increasing efficiencies.
🚨New Episode: @pyrtbilly - Founder of Fyre Festival
- detailed stories of the day before and the day of the festival
- lessons learned over the last 6 years
- stories from his time in prison
- how he thinks about marketing and why things go viral
- his new business, PYRT