Older, Multi-Tenant Industrial Assets Attract New Demand: JLL

According to a new report, the vacancy rate for multi-use logistics is less than 9 percent.
120 Interstate Northwest, Atlanta. Image courtesy of JLL

Warehouse and distribution space has been a hot sector for many years—especially logistics properties that are sizable and have easy access to major highways, rail service and/or airports.

But now a new report from JLL highlights a slice of this sector that has been rather overlooked, yet is garnering investor interest—a niche the company has dubbed “multiuse logistics.” These typically are older multi-tenant properties in infill locations within urban markets, run from 20,000 to 100,000 square feet and can accommodate distribution, flex showroom, industrial showroom, R&D, warehouse and/or manufacturing uses.

Many of these properties “boast compelling rent growth profiles” and enjoy diversified tenant bases, according to the JLL report. Other factors driving the value of this sub-class include very limited inventory and hyperlocal or regional tenants that want to stay in the market they serve. Current owners of these properties are often the original developers, and they, too, are typically more local.


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“The long-term outlook for multiuse logistics is strong, with clear industry momentum from ‘fabric of society’ tenants and growing investor demand for this sub-class. With new yield-focused investors entering into the industrial space, small-bay product is desirable as an alternative to the ever-tightening bulk industrial market,” Senior Managing Director John Huguenard, co-head of JLL’s Industrial Capital Markets group, said in a prepared statement.

“This sub-class has huge potential upside on rent growth driven by low vacancy and limited new supply,” he added. “Multiuse logistics rent has grown more than 54 percent since 2010 and nearly 21 percent since 2017, outpacing the national average for the broader industrial market.”

Often these older properties have seen urban development became denser around them, making them difficult to replicate or replace, yet highly valuable as last-mile logistics facilities.

According to JLL’s research, multiuse logistics is both the smallest part of the U.S. industrial real estate market (15 percent) and the sub-class that’s seeing the slowest inventory growth—just 5.1 percent since 2010, versus 12.2 percent for industrial space overall.

Meanwhile, the increased demand for these assets has pushed average vacancy down nationwide, to less than 9 percent, according to JLL.

Counting 2020 transactions over $5 million, 1,973 of these properties traded at an average of $128 per square foot with an average cap rate of 6.62 percent, JLL reported. 

An example in Atlanta

Just a few months ago, JLL represented the seller of an Atlanta light industrial business park that checks the boxes for a multiuse logistics asset. The four-building 120 Interstate Northwest totals 281,677 square feet, but that space is split among 43 suites averaging about 6,500 square feet—classic small-bay spaces.

The 22.7-acre property sold for $38.5 million. The asset was 87 percent leased to 36 tenants at the time of sale.