With the U.S. industrial sector continuing to offer one of the best-performing commercial real estate investment vehicles, more companies are trying to take advantage of favorable market conditions. One of the recent entries to the space is Logistics Property Company LLC (LPC), a new real estate platform launched to acquire, develop and manage modern logistics facilities in key markets across North America.
The Chicago-based platform was formed in partnership with Australia-based Macquarie Capital Real Estate Investments (MCREI), the real estate investment and private capital advisory arm of Macquarie Capital Group.
LPC’s plan is to grow its portfolio to $5 billion in properties under management over the next five years. The company is already managing logistics facilities in markets including Dallas, Houston and Chicago worth more than $600 million. It anticipates closing on assets in Los Angeles, Seattle, Indianapolis and Pennsylvania by the end of the year.
NREI recently chatted with James Martell, LPC CEO who formerly founded and ran Ridge Development, about the new platform and LPC’s investment plans.
This Q&A has been edited for style and clarity.
NREI: What advantages does partnering with Macquarie Capital Real Estate Investments (MCREI) provide?
James Martell: Macquarie Capital Real Estate Investments is an integrated global business that creates, invests in and advises specialist real estate platforms in sectors supported by structural tailwinds. Extensive industry experience across LPC’s leadership team, combined with its knowledgeable capital partners, provide exceptional competitive strength.
NREI: What are your firm’s acquisition criteria for assets?
James Martell: LPC is focused on the acquisition, development and management of state-of-the-art modern logistics properties in key North American markets. We are targeting opportunities near large population centers and major transportation hubs. Specifically, LPC is interested in land sites of five acres and larger and improved land sites of $10 million or more in key logistics markets.
NREI: What are the biggest challenges for selecting locations for new industrial development?
James Martell: Local market knowledge and a clear understanding of the transportation and logistics flow is key to strategically selecting locations for new industrial developments. Specific considerations include: where are the goods coming from and where they going; employment demographics; availability of labor; and connectivity of transportation.
NREI: What are the most important attributes or features e-commerce tenants require in a location and facility when seeking space?
James Martell: E-commerce tenants are looking to increase productivity and reduce overall costs. Their specific requirements include:
- A combination of mega distribution facilities on the peripheral of major urban centers and smaller distribution facilities within the urban centers to allow off-peak drive times to accommodate same-day or next-day deliveries;
- Increased ceiling clear height (up to 40 feet) to allow a larger cubic space vs. square footage;
- Increased throughput ability;
- Efficient trailer parking;
- Sufficient parking for 1,000 employees at an e-commerce fulfillment center; and
- Lowest cost of occupancy vs. cheapest rent.
NREI: How long does LPC plan to hold the assets, and is there an exit plan in place?
James Martell: LPC and its capital partners are long-term investors and expect to hold our projects for many years post-development.
NREI: Does LPC have any new projects planned or in the works and if so, where and what was the rationale for building in this (those) locations?
James Martell: We have a nationwide approach regarding ground-up development and value-add acquisitions. We currently have a pipeline of credible opportunities in excess of 20 million square feet in Chicago, southeast Wisconsin, Seattle/Tacoma and Houston. We plan to grow this pipeline each year through our local market presence in major population centers to include Los Angeles, Dallas, Atlanta, Miami and Pennsylvania/New Jersey.