Industrial Insights

In this episode of the Industrial Insights podcast, Justin Smith interviews Rob Quarton from Walker & Dunlop, discussing the evolving landscape of commercial real estate financing. They explore the impact of the pandemic on the market, current trends, and the outlook for various asset classes, including industrial, multifamily, and retail. Rob shares insights on innovative financing strategies and the importance of networking through organizations like NAIOP. The conversation emphasizes the need for adaptability and proactive engagement in the real estate sector.

 

 

Key Takeaways

• The pandemic caused a significant pause in the real estate market, but recovery is underway.
• Interest rates have a profound impact on real estate financing and investment strategies.
• There is a growing optimism in the market as rates begin to stabilize and decrease.
• Retail and industrial sectors have shown resilience and growth post-pandemic.
• Networking and relationships are crucial for success in real estate transactions.
• Innovative financing strategies are being implemented to navigate current market challenges.
• The importance of understanding asset class performance is key for investors and developers.
• Preparation and proactive engagement can lead to better opportunities in real estate.
• NAIOP provides valuable networking opportunities for professionals in the industry.
• The market is dynamic, and staying informed is essential for making strategic decisions.

 

 

Chapters

• 00:00 - Introduction to Commercial Real Estate Financing
• 02:54 - Navigating the Pandemic's Impact on Real Estate
• 05:40 - Current Trends in Real Estate Financing
• 08:58 - Dealing with Challenges in Real Estate Transactions
• 11:33 - Market Activity and Future Outlook
• 14:38 - Strategies for Success in a Volatile Market
• 17:42 - Asset Class Performance: Industrial, Multifamily, and Retail
• 20:24 - The Evolving Office Space Landscape
• 23:32 - Innovative Financing Strategies
• 26:44 - Preparing for Future Opportunities
• 29:21 - Involvement in NAIOP and Networking Opportunities

 

Episode Resources

Connect with Rob Quarton

• https://www.linkedin.com/in/rquarton/

Connect with Justin Smith

• https://smithcre.com/
• https://www.lee-associates.com/
• [email protected]
• https://www.linkedin.com/in/justinbsmith

In this podcast episode, Chris and Justin discuss various aspects of supply chain logistics, focusing on the concept of blend and extend leases. They explore the reasons behind this leasing strategy, the importance of landlord contributions to building improvements, and strategies for landlords to attract tenants to vacant properties. The conversation highlights the current market dynamics and the need for flexibility in leasing agreements.

 

Key Takeaways

• The busiest airport for freight in the US is Memphis.
• Blend and extend leases are becoming more common in today's market.
• Landlords may need to contribute to building improvements to attract tenants.
• Vacancy rates are a concern for landlords in the current market.
• Short-term leases can be a strategy for attracting tenants.
• Understanding tenant needs is crucial for successful leasing.
• Landlords are willing to negotiate to maintain occupancy.
• Capital investments in buildings can lead to better lease agreements.
• Market rates are higher than legacy rates for many tenants.
• Creative leasing strategies are necessary in a competitive market.

 

Chapters

• 01:29 - Exploring the Concept of Blending and Extending Leases
• 03:12 - Factors Influencing the Decision to Blend and Extend
• 05:36 - The Role of Building Improvements in Lease Negotiations
• 06:24 - Strategies for Leasing Buildings in a Competitive Market

In this episode of the Industrial Insights podcast, Justin Smith speaks with Janet Ydavoy from 910 Advisors about the complexities of supply chain management. They discuss the challenges companies face as they scale, the role of third-party logistics (3PLs), and the importance of effective inventory management. Janet shares insights on global supply chain considerations, the impact of technology and automation, and strategies for managing returns. The conversation highlights the need for a cohesive approach to supply chain operations and the emerging trends that will shape the future of the industry.

 

Key Takeaways

• Supply chain challenges can often be simplified to fundamental issues.
• A cohesive calendar is essential for aligning company operations.
• 3PLs are increasingly being utilized for global distribution needs.
• Effective inventory management is crucial for meeting consumer demand.
• Returns management is becoming a significant concern for retailers.
• Technology integration is key to improving supply chain efficiency.
• Companies must consider global inputs when designing supply chains.
• The transition process in supply chain management can be disruptive.
• Automation in warehouses is essential for optimizing operations.
• Future trends will focus on streamlining supply chain processes.

 

Chapters

• 00:00 - Introduction to Supply Chain Challenges
• 02:15 - Navigating Supply Chain Complexity
• 04:55 - The Role of 3PLs in Modern Supply Chains
• 07:18 - Inventory Management Strategies
• 09:12 - Global Supply Chain Considerations
• 11:41 - Scenario Planning and Stress Testing
• 13:42 - The Impact of Returns on Supply Chains
• 15:56 - Technology and Automation in Warehousing
• 18:14 - Project Management in Supply Chain Transitions
• 20:53 - Future Trends in Supply Chain Management

 

Episode Resources

Connect with Janet Ydavoy

• https://www.linkedin.com/in/janet-ydavoy-8333b09/
• https://910advisors.com/

Connect with Justin Smith

• https://smithcre.com/
• https://www.lee-associates.com/
• [email protected]
• https://www.linkedin.com/in/justinbsmith

 

In this episode of the Industrial Insights podcast, Justin Smith interviews Chelsea Tamuk Levane from Cabot Properties. Chelsea shares her journey from intern to overseeing the West Coast operations at Cabot, discussing the company's growth, market focus, and strategic decisions in the industrial real estate sector. The conversation delves into networking, staying informed about market trends, managing acquisitions, and the challenges of the current leasing environment. Chelsea emphasizes the importance of understanding tenant needs, the intricacies of the bidding process, and the significance of in-house property management. The episode concludes with insights on exit strategies and the future outlook for industrial real estate.

 

Key Takeaways

• Chelsea Tamuk Levane has been with Cabot Properties for 10 years, starting as an intern.
• Cabot Properties has grown significantly, now operating in multiple international markets.
• Networking through organizations like NAIOP and ULI has been beneficial for Chelsea.
• The focus is on core coastal markets for investment opportunities.
• Staying informed through brokers and market data is crucial for success.
• Managing acquisitions requires strong organization and communication within the team.
• The bidding process has become more competitive, especially in a changing market.
• Underwriting involves both quantitative data and qualitative insights.
• Building attributes are still important despite current market pressures.
• Regular tenant communication helps mitigate surprises during the sale process.

 

Chapters

00:00 - Introduction to Cabot Properties and Chelsea Tamuk Levane 02:43 - Chelsea's Journey at Cabot Properties 05:37 - Expanding Cabot's Global Presence 08:15 - Market Focus and Strategic Decisions 11:12 - Staying Informed: Market Trends and Data 13:43 - Managing Acquisitions and Relationships 16:23 - Navigating the Bidding Process 19:08 - Underwriting and Deal Evaluation 21:29 - Understanding Market Dynamics 24:08 - The Art of Due Diligence 27:00 - The Papering Process and Challenges 29:40 - Exit Strategies and Market Considerations 32:19 - Value-Add Strategies in Real Estate 35:00 - The Benefits of In-House Property Management 37:35 - Future Trends and Opportunities in Industrial Real Estate    

Episode Resources

Connect with Chelsea Tamuk Levane

• https://www.linkedin.com/in/chelseactamuk/
• [email protected]

Connect with Justin Smith

• https://smithcre.com/
• https://www.lee-associates.com/
• [email protected]
• https://www.linkedin.com/in/justinbsmith

In this conversation, Justin and Chris discuss lease reviews and common issues that arise during the process. They highlight the importance of understanding tenant obligations, hold-over clauses, and the responsibility for maintenance and repairs. They also discuss the significance of aligning the lease with the tenant's intended use of the space and negotiating clauses related to relocation and environmental concerns. The conversation concludes with a mention of the benefits of training with an expert in lease contracts and a recommendation for a lease negotiation manual.

 

Key Takeaways

• Understanding tenant obligations is crucial when reviewing a lease.
• Aligning the lease with the tenant's intended use of the space is important.
• Negotiating clauses related to relocation and environmental concerns can protect the tenant's interests.
• Training with an expert in lease contracts can provide valuable insights.
• Using a lease negotiation manual can be a helpful reference guide.

 

Episode Resources

Connect with Chris Vassilian

• https://www.linkedin.com/in/chris-vassilian/
• [email protected]

Connect with Justin Smith

• https://smithcre.com/
• https://www.lee-associates.com/
• [email protected]
• https://www.linkedin.com/in/justinbsmith

In this episode of the Industrial Insights podcast, Justin Smith interviews Jesse Gundersheim of CoStar to discuss the Q2 stats for Southern California Industrial. They cover topics such as leasing activity, vacancy rates, deliveries, and the impact of e-commerce on the market. They also touch on the sales market, cap rates, and the correlation between port imports and absorption. Overall, the conversation highlights the current state of the industrial real estate market in Southern California and provides insights into future trends.

 

 

Key Takeaways

• Leasing activity in Southern California Industrial is rebounding, with record volume leasing in the Inland Empire in Q2.
• Vacancy rates continue to rise, particularly in LA, which has the worst industrial market fundamentals in the country.
• Construction levels have dropped, but there is still a fair amount of supply in the pipeline, especially in the Inland Empire.
• Amazon is expanding its presence in the market, opening the largest industrial building in the country in Ontario and signing leases for one million square foot buildings in the Inland Empire.
• Port imports are on the rise, indicating strong demand for industrial space, and there is a correlation between port imports and absorption in the market.
• Sales activity has slowed, but there are still opportunities for investment, particularly in longer-term holds.
• Cap rates vary across the counties, with the Inland Empire having the lowest cap rate in the country.
• The market is showing signs of stabilization, with pricing potentially reaching the floor and volume starting to increase.
• The industrial real estate market in Southern California remains strong, driven by strong demand, historical rent growth, and barriers to entry.

 

 

Chapters

00:00 - Introduction and Collaboration with CoStar 02:16 - Leasing Activity and Vacancy Rates 06:08 - Construction Levels and Supply Pipeline 15:22 - Amazon's Expansion and Market Impact 19:39 - Correlation Between Port Imports and Absorption 23:05 - Sales Activity and Investment Opportunities 26:21 - Cap Rates and Pricing Trends 28:24 - Stabilization and Future Outlook of the Market    

Resources

Connect with Jesse Gundersheim

• https://www.linkedin.com/in/jessegundersheim/
• [email protected] 

Connect with Justin Smith

• https://smithcre.com/
• https://www.lee-associates.com/
• [email protected]
• https://www.linkedin.com/in/justinbsmith

Michael Bucci, an investor in the industrial asset class, shares his journey and approach to investing in industrial real estate. He focuses on value-add properties for warehousing and distribution, with a preference for multi-tenant spaces. Bucci emphasizes the importance of understanding the market and the needs of the owners when approaching deals. He also discusses the financing process, including bridge loans and long-term loans. Bucci highlights the resilience of the industrial real estate market and the need to adapt to different market cycles. In this conversation, Michael Bucci discusses his experience in real estate acquisitions and the challenges he faced. He talks about how he navigated the market during the COVID-19 pandemic and the strategies he used to educate and negotiate with sellers. Michael also highlights the differences between the Canadian and US real estate markets, including tax advantages and market size. He shares examples of successful deals and explains his future plans for expanding his business. The conversation concludes with a discussion on the potential for condo conversions in the multi-tenant industrial sector.

 

Key Takeaways

• Understanding the market and the needs of owners is crucial in industrial real estate investing.
• Value-add properties with upside potential are preferred, especially those with low rents, expiring leases, or vacancies.
• Bridge loans are often used to finance value-add acquisitions, with refinancing as a long-term strategy.
• Adapting to different market cycles and structuring deals strategically is key to success in industrial real estate investing. Navigating the real estate market during challenging times requires creativity and flexibility.
• Educating sellers on the current market conditions and the value of their property can help facilitate deals.
• The Canadian and US real estate markets have different tax advantages and market sizes.
• Successful deals can be achieved by finding unique opportunities and leveraging seller financing.
• Condo conversions can be a profitable strategy in the multi-tenant industrial sector.

 

Chapters

00:00 - Introduction and Background 03:00 - Investing in Industrial Real Estate 07:36 - Finding Value-Add Opportunities 17:40 - Staying on as an Equity Partner 19:25 - Building an Acquisitions Pipeline 22:21 - Catering to Owner Needs 26:25 - Financing Strategies 28:25 - Adapting to Market Cycles 31:06 - Educating Sellers and Negotiating Deals 34:42 - Differences Between the Canadian and US Real Estate Markets 45:42 - Successful Deals and Future Plans 50:49 - The Potential for Condo Conversions in the Multi-Tenant Industrial Sector  

Resources

Connect with Michael Bucci

• https://www.linkedin.com/in/michael-bucci-real-estate/ 
• https://investingrealestate.com/

Connect with Justin Smith

• https://smithcre.com/
• https://www.lee-associates.com/
• [email protected]
• https://www.linkedin.com/in/justinbsmith

In this episode, Justin Smith interviews Ralph Asher, an expert in network design and optimization. Ralph shares his background working at Target and General Mills, where he focused on supply chain design. He discusses the challenges and opportunities of network design during mergers and acquisitions, as well as the importance of data management in the process. Ralph also talks about his experience at Target, where he worked on omni-channel and last-mile e-commerce network design. He then shares his transition to independent consulting and the importance of marketing and sales in running a consulting business. Ralph Asher discusses the transition from working in-house to running his own consulting agency and the types of projects his team works on. They specialize in supply chain design, inventory optimization, network design, manufacturing optimization, and data analysis. They work with a wide range of sectors, but the common thread is that their clients want a data-driven approach. Ralph also highlights the importance of data in making supply chain decisions and dispels the misconception that perfect data is necessary. He emphasizes the impact of their projects, such as opening new facilities and changing organizations' approach to inventory optimization. Ralph discusses the handoff process and the role of supply chain project managers in executing the recommendations. He also mentions the increasing trend of using supply chain models for shorter-term decision-making.

 

Key Takeaways

• Network design and optimization play a crucial role in supply chain decision-making, especially during mergers and acquisitions.
• Data management is a significant challenge when integrating supply chain models from different companies during M&A.
• Omni-channel and last-mile e-commerce network design require innovative approaches and considerations for proximity to customers.
• Transitioning to independent consulting requires a focus on marketing, sales, and business administration in addition to supply chain expertise.
• Professional networks and public speaking engagements are effective sources of business for independent consultants. Transitioning from in-house to running a consulting agency involves working on a wide range of projects for different organizations.
• Supply chain design, inventory optimization, network design, and manufacturing optimization are some of the key projects Ralph's team works on.
• Their clients value a data-driven approach and are willing to provide data for analysis and recommendations.
• Data quality is not a barrier to making supply chain decisions, and even limited data can be used to make strategic insights.
• The impact of their projects includes opening new facilities and changing organizations' approach to inventory optimization.
• Supply chain project managers play a crucial role in executing the recommendations and coordinating with stakeholders.
• Supply chain models can be used for shorter-term decision-making and provide insights for adjusting strategies.
• Ralph emphasizes the importance of professional development for individuals working on supply chain projects.

 

Connect with Ralph Asher

• https://www.linkedin.com/in/ralphasher/ 
• https://datadrivensupplychain.com/ 

Connect with Justin Smith

• https://smithcre.com/
• https://www.lee-associates.com/
• [email protected]
• https://www.linkedin.com/in/justinbsmith

Eric Ruehle of West Harbor Capital discusses the company's background and their focus on the industrial real estate market. They specialize in value-add investments in the Southern California region, with a deal size of $10 to $50 million. Ruehle emphasizes the importance of relationships in the industry and the value of high barriers to entry, such as entitlement and zoning challenges. He also discusses the current state of the capital markets and the leasing market, noting that while there are challenges, long-term trends in the industrial sector remain positive.

 

Key Takeaways

• West Harbor Capital focuses on value-add investments in the industrial real estate market in Southern California.
• Relationships and high barriers to entry are key factors in adding value to properties.
• The capital markets are stabilizing, and there is plenty of equity available for industrial investments.
• Leasing fundamentals are softening in Southern California, but long-term trends remain positive.
• The company is optimistic about the future of the industrial sector, with strong tailwinds from e-commerce, manufacturing growth, and supply-demand imbalances.

 

Chapters

00:00 - Introduction and Background 01:20 - Founding of West Harbor Capital 03:16 - First Deals and Capital Partnerships 06:24 - Expansion into New Markets 08:01 - Regional and National Approach 09:06 - Favorite Markets and Market Dynamics 13:35 - State of the Capital Markets 15:54 - Leasing Fundamentals and Underwriting 18:09 - Bread and Butter Deals 23:12 - Adding Value and Exit Strategies 29:16 - Optimism for the Future of the Industrial Sector  

Episode Resources

Connect with Eric Ruehle

• https://www.linkedin.com/in/ericruehle/
• https://www.westharborcap.com/ 

Connect with Justin Smith

• https://smithcre.com/
• https://www.lee-associates.com/
• [email protected]
• https://www.linkedin.com/in/justinbsmith

In this episode of Industrial Insights, Chris Vasilian discusses tenant representation frequently asked questions. The two main topics covered are the need for office space with a small warehouse component and the decision between lease renewals and relocations. Chris explains the different options for combining office and warehouse space and the considerations for each. He also discusses the factors that influence the decision between renewing a lease or relocating, including cost savings, space optimization, and market conditions. The conversation also touches on topics such as rental rates, free rent concessions, and negotiating operating expenses.

 

Key Takeaways

• When combining office and warehouse space, options include adding a storage component to an office building, leasing flex space with a high office percentage, or leasing pure office space and using an offsite self-storage facility.
• The decision between lease renewals and relocations depends on factors such as cost savings, space optimization, and market conditions.
• Rent rates have softened in certain cities and size segments, but the extent of the decline varies depending on the location and ownership structure of the building.
• Free rent concessions are common in lease negotiations, but the way they are structured can vary. Some leases add the free months to the end of the term, while others adjust the rent schedule to account for the free months.
• Operating expenses are typically not included in free rent concessions, but it is possible to negotiate for their abatement as well.

 

Chapters

00:00Combining Office and Warehouse Space 03:17Lease Renewals vs Relocations 06:21Rental Rates and Market Conditions 08:55The Structure of Free Rent Concessions 13:21Negotiating Operating Expenses

 

Episode Resources

Connect with Chris Vassilian

• https://www.linkedin.com/in/chris-vassilian/
• [email protected]

Connect with Justin Smith

• https://smithcre.com/
• https://www.lee-associates.com/
• [email protected]
• https://www.linkedin.com/in/justinbsmith