JP Morgan, Black Creek Group Form $400M Partnership

The equity commitment by the institutional investors will focus on industrial real estate throughout the U.S., including core, value-add and development opportunities.
Raj Dhanda, CEO, Black Creek Group
Raj Dhanda, CEO, Black Creek Group

Institutional investors advised by J.P. Morgan Asset Management are investing at least $400 million in industrial real estate deals in major U.S. distribution and logistics markets with Denver-based Black Creek Group.

“Black Creek has an outstanding track record of uncovering great opportunities and building the industrial real estate that today’s tenants seek,” Nick Firth, executive director of J.P. Morgan Asset Management, said in a prepared statement. 

The investments will span core, value-add and development industrial retail deals and the commitment may grow over time.

“We are thrilled to partner with J.P. Morgan and that they have made such a substantial commitment to our industrial capabilities. We look forward to further strengthening our relationship with them as well as continuing to be a national leader in the acquisition, development and operation of industrial real estate,” Raj Dhanda, Black Creek Group CEO, said in prepared remarks.

Black Creek’s industrial growth

Over the past five years, Black Creek Group has completed 10.5 million square feet of industrial development and currently has about 11 million square feet under development. During its 25-year history, the real estate investment management and development firm has bought or built more than $18.5 billion of investments, including office, industrial, retail and multifamily. The firm, which has nine offices across the U.S., also sponsored 18 full-scale investment platforms, including 13 institutional and five retail funds.

In April, an investment platform sponsored by Black Creek Group acquired Stafford Grove Industrial Park, three Class A industrial warehouse buildings in the Houston suburb of Stafford, Texas, from a joint venture between Crow Holdings Industrial and an investment partner. The price for the three buildings, which totaled 351,960 square feet, was not disclosed. It was 84.5 percent leased to seven tenants.

Also in April, Black Creek Group leased 771,839 square feet of industrial space at Redlands Distribution Center in Redlands, Calif., to DCG Fulfillment, a third-party logistics provider that took the entire Class A facility. Located in the Inland Empire industrial market, the property has immediate access to Interstate 10.

In March, Black Creek Group acquired another Inland Empire property—a three-building industrial portfolio totaling 743,381 square feet in Colton, Calif. The newly constructed Class A warehouses are located near major highways including interstates 10 and 215 and State Route 60.

Last month, the firm released details about two industrial developments in the Tacoma/Fife submarket in the Greater Seattle area totaling more than 1.3 million square feet. Tacoma Logistics Center, has been completed and consists of two buildings totaling 1.1 million square feet that are 40 percent leased. Sumner Distribution Center, is approximately 229,000 square feet and still under construction.

Black Creek Group said in September it was doubling its Northern California footprint, with eight projects that were either under construction or recently completed. Totaling 3 million square feet, the projects include 618,000 square feet of completed buildings, 1.3 million square feet under construction and 1.1 million square feet of entitled sites where development should begin in early 2019. The properties are located in San Leandro, Calif.; Hayward Calif.; Richmond, Calif.; San Jose, Calif.; and Tracy, Calif.

On the East Coast, Black Creek Group is constructing a 514,000-square-foot logistics facility in Bethlehem Township, Pa. Located in the Lehigh Valley industrial market, it is close to routes 22 and 191 and provides access to the Mid-Atlantic, New York metro and New England regions. The building can be used for single or multiple tenants and is slated for completion in the second quarter of 2019.

U.S. Industrial stats still strong

Black Creek Group’s activities and the equity infusion from the J.P. Morgan Asset Management investors comes as the U.S. industrial market continues to be a strong commercial real estate sector. There was an uptick in asking rents and consistent overall vacancy in the third quarter, according to Newmark Knight Frank’s 2018 National Industrial Market report for the third quarter. The U.S. industrial vacancy rate was 5.1 percent at the end of the third quarter, matching the previous quarter’s rate. The report noted vacancy is very tight in several major markets such as Los Angeles (1.2 percent) and Orange County, Calif., (2.4 percent). None of the 49 industrial markets tracked by NKF recorded a double-digit vacancy in the third quarter of 2018. NKF expects the U.S. industrial market should sustain above-average growth in 2019 as e-commerce continues to grow.

Image courtesy of Black Creek Group