Dive Brief:
- Blackstone Real Estate made its latest logistics play this week, announcing it is in "definitive talks" with Colony Capital for a $5.9 billion deal to acquire 60 million square feet of last-mile logistics assets in 26 U.S. markets concentrated in California, Florida, Georgia, northern New Jersey and Texas.
- The agreement would also include Conway Capital's 51% ownership stake in a 4 million-square-foot portfolio of bulk distribution assets, according to a press release.
- "As retailers continue to shorten delivery times and expand their last mile footprints, we believe warehouses in dense population centers will continue to experience outsized demand growth," Nadeem Meghji, head of real estate Americas at Blackstone, said in the release.
Dive Insight:
This announcement comes nearly four months after the company agreed to purchase 170 million square feet of logistics assets from investment manager GLP for $18.7 billion. Ken Caplan, global co-head of Blackstone Real Estate, then said logistics real estate was the firm's "highest conviction global investment theme today." At the time, GLP was renting facilities to Amazon.
In August, Blackstone entered talks with TA Realty to purchase 11 urban warehouses near JFK Airport in New York. According to a Crain's New York report on the deal, Blackstone was particularly interested in distribution centers to facilitate last-mile deliveries in New York's fast-paced e-commerce market. Due to their proximity to JFK's major air cargo hub, and millions of customers in the city, the properties would be prime real estate for e-commerce brands. Likewise, news of the Blackstone deal also coincided with reports that Amazon has been on the hunt for urban warehouses and distribution centers in Brooklyn and Queens to facilitate its Prime Now service in the area.
As delivery times shorten and last-mile deliveries become more frequent and complex, urban warehousing and logistics represent a significant investment opportunity for firms like Blackstone. Thus far, demand for these types of facilities still outpaces supply, as companies from giants like Amazon to startup direct-to-consumer brands are on the hunt for real estate closer to their customers.
