Cities hate industrial

Supply of Class B industrial is shrinking every year

Meanwhile, growth of Class A is slowing dramatically

And now it’s getting much harder to build new industrial buildings in urban cores across the US

What comes next for industrial?

A few thoughts: Everyone needs their Amazon packages delivered within a few hours, but nobody wants a Class A industrial warehouse in their neighborhood.

Everyone needs an emergency HVAC repair tech to come immediately, but no one wants a Class B Industrial building down the road from them.

Where is all the class B industrial going?

These two pictures sum up our bull thesis for Dallas and several other markets

Let me explain:

Every single major city in the United States is supply constrained when it comes to Class B Industrial

The supply is shrinking each year as tenant demand continues to grow

Dallas is a prime example

There's a problem in the real estate market:

Rising property insurance rates.

Here’s what I’m seeing & how our team is thinking about the problem: Earlier this year, State Farm announced it would stop writing new homeowner insurance policies in California

This came as a shock to many, but this has actually been years in the making

Here's why I'm incredibly bullish on Class B Industrial real estate: Every single major city in the United States is supply constrained when it comes to Class B Industrial

And the supply is shrinking each year as tenant demand continues to grow

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.

🚨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 Apple: podcasts.apple.com/us/podcast/bil…

Given the current market conditions - I've been thinking a lot lately about tenant dilemmas when relocating their businesses within Class B Industrial.

Bare with me, doing my best to articulate in this thread. A couple primers:

1. Tenant demand is at an all-time high.
2. Vacancy is at all-time lows.
3. Construction costs and timelines are more unpredictable than ever.

Recently hit 50k followers. Thank you to everyone for putting up with me. 🇺🇸

Here are 50 thoughts on business in no particular order: 1. If it’s too good to be true it probably is.

2. For the majority of companies, an inch wide a mile deep goes further than an inch deep and a mile wide. FOCUS

3. You can’t make a good deal with a bad person.

A few predictions for this year:

1. Interest rates up min. 50bp.
2. Industrial rents nationwide increase 8%.
3. Record yr. for outdoor storage properties.
4. Bitcoin over $100,000
5. BReit raises more capital than anyone in RE.
6. TX & Florida lead population growth, again. 7. Shorting stocks is popular again. No more meme stocks.
8. RV Parks and mobile housing continue to skyrocket.
9. Tokenization of properties takes center stage with more Tier 1 firms working on it.
10. Close-end funds with cross-promote continue their downward trajectory..

For @sweatystartup and the RETwit storage crew. Why I’m LONG self storage.

Here is my experience as a self storage customer of 1 unit. I wonder if others are in this camp?

House eventually gets cluttered, clothes, furniture, “sentimental” items, baby stuff, etc. I cave in and get a unit.

1st timer here so need to get a place close to my house w air condition.

I’m buying on the smaller end bc I refuse to admit I’ll eventually need something larger.

Make a deal with myself…

GP's who are also operators. It's your job to tell the story of how your operating company actually operates.

What services and expertise are being used to operate the asset?

Some questions to think about answering for LPs. Who is the talent on your team and what is their track record?

What is the acquisition strategy and how is it executed?

What do you offer in the way of asset mgmt, finance, property mgmt, accounting, construction management, acquisitions, investor relations, marketing, & tech?

I recently had a conversation about SFH supply & pricing that I can't stop thinking about.

If true, it adds some interesting dynamics to SFH going forward.

Please chime in if you have more detail or if something said isn't accurate. The sites that people search for homes on - Zillow, Redfin, etc. all have detailed search history data on what homebuyers are looking for - submarkets, pricing, types of homes, etc.

They also have data on the demographics of those buyers.

Owners of SMB's (most of which have big goals for growth) regularly say," I can't believe the big companies do things this way."

I do this regularly - but now I frame what I do next differently. Generally, the answer back is... "It's b/c you don't have a true understanding of how the big companies actually operate."

In real estate owning 1 building is a different set of circumstances than owning 1000 buildings. Same industry and concept, but the operation to manage 1000 buildings is the polar opposite

On a beach vacation with the fam. One business has caught my eye - Beach Chair & Umbrella Rentals.

A local business here charges $450 to rent 2 chairs and 1 umbrella for 5 days. $90 a day. There are thousands rented daily during the summer.

It gets better... Where does all the money flow? Who does the business pay to lease the beach rights? The County?

A comparable set is $200 online (would be much less buying at scale.) Even at retail pricing, the payback period is 2.5 days and I'd guess turnover is minimal b/c they're durable.

🚨THREAD🚨: A list of all the @theFORTpodcast episodes I've done with the ReTwit crew.

@Keith_Wasserman - Value-Add MF Investor from LA and Co-Founder of Gelt, Inc.

Invests in: CA, Colorado, Utah, NM, TX, Oregon, WA

open.spotify.com/episode/4fvTYq… @moseskagan - Value-Add MF Investor from LA & Co-Founder of Adaptive Realty.

Invests in: Los Angeles, CA submarkets

open.spotify.com/episode/0kM8Yx…

open.spotify.com/episode/2gGl1d…

We did a deal with Tesla and it created a lot of value - here's how it went down.

A THREAD:

In 2017, We bought this 16,500 sf building (100% vacant), on 2.5 acres, which was an old catering facility.

Happened to be in W 7th - the fastest growing area of Fort Worth. We loved our land basis, the potential to lease to a commercial tenant, and the fact it provided more surface parking than virtually any property in the submarket.

6 months in Tesla knocked on the door to establish their Fort Worth maintenance/distribution facility.

Want to learn how to invest “where the pucks headed” in real estate?

One very simple (and free) way to really understand where a city is headed and where to invest in real estate is paying attention to Zoning Commission (ZC) hearings held by city staff/government.

A Thread 👇👇 ZC meets monthly and is a public hearing that you can go sit in or most cities have live steaming / recordings so you can watch the hearing from the comfort of your office.

Your city will usually do these on a set day every month & will have their calendar up on their website.

If I were looking to do my first real estate deal with zero prior experience and no money, here's what I'd do (I did).

I'd start with the target of buying a single-family, duplex, 3plex, or 4plex in an area close to where I lived and that I was familiar with. I'd take an online RE course to get my license as quickly as possible (I did it in 2 weeks). Upon completion, I'd sign up for the MLS system so I could start looking at deals.

I'd call the listing agents involved and pepper them with questions about active and sold listings.

Who is creating a company that focuses on picking up or monetizing used cardboard boxes from homes and businesses?

The amount of boxes we throw away annually (80B in US) is insane and it’ll get worse.

There has to be some kind of opportunity here. My initial ideas (zero clue if these could actually be profitable).

1.A subscription service (like the trash company) that comes by weekly and collects customers' boxes (maybe even pays you a small amount).

I’d assume lots of ways to monetize the billions of boxes collected.

So you want to be a landlord?

One of the first duplexes I bought back in 2009 was infested with millions of African Killer Bee’s.

When doing my DD, we saw that there were a few bees always buzzing on the back porch.

No problem, I’ll get a can of Raid once we close.

https://twitter.com/moseskagan/status/1352286287768633347

2 weeks after closing, I get a call from my contractor who is screaming bloody murder.

“Bee’s, bee’s, bee’s!”

African Killer Bee’s (AKB) often nest inside the walls of abandoned homes - they love nesting in the insulation.

It’s damn near impossible to know that until...

My dad died 8 years ago and one of the most precious things I have left are a few voicemails he left me.

Nothing special about the message, except I get to hear his voice.

When I started the podcast, I said early on that if nobody listened, maybe my young kids would one day. Getting some equipment to record a few messages every now and again that you can share with your kids later in life, isn't a lot of work.

Even easier, Download the @anchor app on your phone and record moments in time and how you felt.