“We see very stable user demand in all core markets,” said Shawn Clark, President of CRG. “Everyone is pretty bullish.”
The company’s core markets include Boston, Atlanta, Phoenix, Minneapolis and Chicago. CRG has courted a million-square-foot warehouse tenant under construction in Country Club Hills near the intersection of Interstate 57 and 80, raising funds from a new fund.
Investors have invested in industrial real estate over the past few years as demand for space from logistics and e-commerce companies like Amazon has skyrocketed.The industrial vacancy rate in the Chicago area is The lowest ever 4.91% According to Colliers International, in the first quarter. And developers have been competing to complete the project. At the end of the quarter, about 30 million square feet of warehouse space was under construction in the Chicago area, according to the Koreas.
The story is almost the same all over the country.
“There is still more demand than supply,” Clark said.
But with rising inflation, interest rates, and recessionary jitter, today’s future looks a bit uncertain. And Amazon, the largest consumer of US warehouse space in the last few years, has withdrawn and has begun selling part of that space for subleasing.
Clark admits that the market is being readjusted as investors are trying to understand the impact of rising interest rates on sales and asset value. But he is still confident.
“After all, a lot of capital is on the sidelines to buy these properties, and continued user demand will continue to maintain value,” he said.
Combined with debt, CRG’s $ 450 million equity should be able to develop a project of about $ 1.5 billion over the next two years. The Industrial Fund is the company’s second. CRG has raised $ 150 million for an initial fund launched in 2018 and has invested in six developments in Atlanta, Seattle, Portland, Oregon and Pennsylvania.
CRG develops warehouses through the “Cubes” brand, which was established in 2018. Since then, CRG has built more than 25 million square feet of industrial space and has planned or developed an additional 40 million square feet. The company has already allocated about $ 80 million in its second fund, Clark said.
More than 100 investors, including family offices, wealth managers and high net worth investors, support Fund 2. The company also said it has raised 10% of its capital from women and people of color.