I love getting updates like this from our Director of Technology @_gregadams_.
"We finished our first version of the “satellite feature classifier.” Basically, it takes satellite images and extracts features from the image using a neural network. This allows us to scan...
through large volumes of properties for features, we are seeking in our investment strategy (whereas county data and sources like CoStar have less reliability). I ran the classifier on about 190k parcels in Tarrant and Dallas and the results of parcels with high “industrial”....
are shown as the yellow dots below."
Soon I'll post about how this feeds into a database that uses AI and 70+ sources of data to create a predictability score on whether a building is likely to sell.
This is the future for how we'll identify acquisition targets.
Teaser, it's working!
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One reason we like Class B Industrial - we aren't competing against new supply, so we can forecast competition.
The lack of available land in city limits for industrial creates barriers to entry.
Often, even if there is land, it's not priced for industrial.
Lastly, if someone was able to find affordable dirt, the hard cost to construct is too high to make sense.
Most tenants in this asset class are using the space as a function of their business, with minimal attention to how "nice" it is.
Don't get me wrong, we always want to deliver a clean property, but tenants aren't looking to pay large increases in rent just to have something that is newer and nicer - so new development doesn't make sense.
Here are 6 takeaways from listening to the guests on 75 episodes we've recorded to date:
1. The perfect time to start anything you want to do is NOW.
There is no perfect time because it's always the perfect time.
2. When you work hard at something and are passionate about it, doors will open.
Several episodes are with people doing things for the first time. That doesn’t slow any of them down. In fact, it accelerates their desire to learn quickly.
3. The goal isn’t to be perfect; the goal is to learn quickly—because failures are guaranteed along the way.
In most conversations, some of the biggest ‘breakthrough’ moments were after a failure, not after a success.
I’m proud of our team @FortCapitalLP for completing the purchase of Merrick Business Park, our 4th acquisition in Irving, TX.
- 115,000 sq ft in one of the fastest-growing cities in the country W of Dallas.
- Sourced off-market through direct negotiation with the seller.
- Located directly next door to property Fort purchased in early 2019 which creates operational efficiencies and gave us great insight into u/w the asset.
- Seller financed, 75% LTV.
- We will mark to market rents as we get through the rent roll and also convert gross leases to NNN. (Current rents 26% below market.)
- Entire roof replaced 5 years ago.
- Cosmetic cap-ex on the exterior includes monument signage, paint, landscaping, and parking lot striping.
In 2011, we assembled 30 SF homes & lots and entitled them for a MF project and sold to an institutional MF developer in 2013.
This was in an emerging area of #FortWorthTX called W 7th.
Here's what went down...
Over an 18 month period, we achieved some major entitlements including:
1. Zoning 2. Re-platting 3. Removing a public road out of the grid 4. Allowing for a bridge to cross a major city waterline easement so parking garage could attach to units.
We worked through these entitlements with the developer and upon completion, they closed. The dirt was "shovel ready" meaning they could go pull a permit and get started.
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!