Goodman, Birtcher Form $1.5B Partnership Targeting Industrial Properties
- Jun 21, 2012
With an eye on developing and acquiring premier industrial and logistics properties in North America, Australia’s Goodman Group has joined forces with California’s Birtcher Development and Investments. The team has already shelled out a total of $700 million on four development sites and is in the process of wrapping up a capital partnership with a goal of approximately $800 million of equity commitments.
The partnership marks Goodman’s debut in the U.S. market. “In last year-and-a-half or so, the logistics and warehouse industry in America has just been blooming nicely,” Brandon Birtcher, president and CEO of Birtcher Development (pictured), told Commercial Property Executive.
The formation of Goodman Birtcher is a timely one. Indeed, the U.S. industrial market is on the upswing, with the pace of demand having returned to pre-recession levels, and year-over-year vacancy rates having dropped from 10.7 percent to 9.6 percent, according to a first quarter report by commercial real estate services firm Cushman & Wakefield.
Birtcher pinpoints the sources of the market’s strong recovery, citing e-commerce and consumer products. And there are other factors that are pushing the industrial sector, making it increasingly attractive to investors. “The price of fuel [is another factor] and of course the railways have invested literally billions over the last 10 to 12 years in these inland ports so these facilities are now located very near these burgeoning consumer bases throughout America,” Birtcher said. “Users, as their leases come due, will reanalyze their logistics model and supply chain and move their facilities closer to the customer, so we’re seeing a great deal of new facility demand.”
A great deal of that demand is in Southern California’s Inland Empire, where Goodman Birtcher has already staked a sizeable claim. The partnership has acquired two development sites in the area that, along with its purchase of sites in the San Francisco Bay area and metropolitan Philadelphia, allow for the development of more than 9.8 million square feet. “The Inland Empire is number one; It’s been incredibly robust even through the recession,” Birtcher noted. “There’s been very good demand for the buildings over 300,000 to 400,000 square feet. There are dozens of customers in the marketplace looking for significantly large, state-of-the-art, Class A facilities, and we have tied up 267 acres in the Inland Empire that will assure that we have A+ locations for those customers.”
In addition to Los Angeles infill markets, the San Francisco Bay area and Central Pennsylvania, during the first year, Goodman Birtcher will keep its eye on New York and Northern New Jersey as well.
Goodman Birtcher will scour the market for opportunities, relying on Birtcher Development’s expertise in the partnership’s target markets and Goodman’s global funds management capability. And the partners believe there are plenty of smart opportunities for its $1.5 billion plan. “In our world where it’s capital constrained–that is the world we live in, and that will be the world we will live in over the medium term–that capital constraint will limit the amount of development and limit the amount of speculation,” Greg Goodman, CEO of Goodman told CPE. “So with our long-term capital we are very well positioned to make sure we will do very well in the next five years.”