Blackstone Group mega deal to ripple through Gulf Coast

EYE: Commercial real estate 

Blackstone Group’s record $18.7 billion acquisition of the U.S. industrial assets of Singapore-based GLP will have ripples throughout Florida, analysts say.

GLP agreed earlier this month to sell some 179 million square feet of industrial space to New York-based Blackstone in what is believed to be the largest single commercial real estate transaction in history.

Gulf Coast industrial real estate specialists say the deal, which involves more than two million square feet in the Tampa area and Lakeland, in the prized Interstate 4 corridor, highlights how industrial space evolved in recent years to be an integral part of the global supply chain.

“What’s happened is that warehouses have gone from places where people used to just keep stuff to an essential part of running a successful global operation,” says Ed Miller, an executive managing director and principal at commercial real estate brokerage firm Colliers International Tampa Bay.

“This sale puts Blackstone in a position to have solid market share in key areas all around the country, including Florida,” Miller adds.

Prior to the sale, GLP had owned 24 buildings in Tampa, around Tampa International Airport and in Lakeland. GLP officials in Orlando did not return telephone calls for comment on the transaction, and Blackstone representatives in New York did not respond for comment.

“Those three areas are very good places to be in this market,” Miller says. “And the variety of sizes and types of product they’ll have will allow them to accommodate a large number of customers.”

In Lakeland, four properties’ key locations, together with their 1980s vintage, represent a significant potential for redevelopment.

Among its properties there are 7105 New Tampa Highway, a 247,700-square-foot building completed in 1989 on 8.84 acres; 5200 Regions Court, a 217,850-square-foot building on 11 acres completed in 1988; and 5300 Regions Court, a 73,714-square-foot building on nearly five acres completed in 1987, according to Colliers International data.

Each of the properties are near the critical distribution nexus of Interstate 4 and County Line Road, a sought-after location by logistics firms.

Both Miller and John Dunphy, an executive vice president of industrial services with commercial real estate brokerage JLL, say the deal will give Blackstone a footing in both e-commerce-inspired logistics and “last-mile delivery” of goods to consumers, which is the fastest-growing segment of the industrial real estate landscape.

The same week Blackstone and GLP unveiled their deal, for instance, Amazon announced plans to roll out free, one-day shipping of more than 10 million products to its Prime members. The Seattle-based company also says it will spend about $800 million to halve its current delivery time throughout North America.

“I think what this says is that Blackstone really believes the industrial segment is poised for further growth,” says Dunphy. “If you look at their investment track record, it’s spectacular, and I think this deal will be a real wake up call to a lot of players in the industrial arena.”

Despite the disposition, GLP, whose U.S. headquarters is in Chicago, hopes to ramp up its North American holdings. The company, one of the largest industrial real estate owners in the world, first entered the U.S. market in 2015.

Blackstone, too, has been an eager buyer of industrial properties globally. In the past decade, the company with $140 billion in assets under management has acquired more than 930 million square feet of industrial space.

CoStar Group officials say Blackstone may have specifically and strategically targeted the GLP assets because of their familiarity: Turns out Blackstone previously owned roughly half of the GLP portfolio that was sold.

Andrew Rybczynski, a CoStar senior consultant, says Blackstone in early 2015 sold more than 1,100 buildings to GLP for $8.1 billion. Many of those same properties are part of the recent portfolio deal.

But the recent transaction, more than the one that occurred four years ago, focuses on properties that involve distribution rather than just warehousing, including a pair of 1.5 million-square-foot properties once owned by appliance maker Whirlpool. The distinction is significant, Rybczynski says, and reflects the growing importance of logistics as a part of e-commerce consumer sales.

Rybczynski also emphasizes that much of the Blackstone purchase centers on properties in the Southeast, where population growth has exceeded other geographic areas in the U.S. Florida’s population, for instance, has grown to more than 20 million and roughly 1,000 new residents migrate to the state daily, according to U.S. Census figures.

“This newer portfolio focuses more on areas of growth in terms of population as well as adjusts for the Panama Canal expansion,” Rybczynski adds.