Industrial Properties Attract Buyers in “Saturated” Texas MF Market
More multifamily investors are diversifying, looking for higher returns.
DALLAS–The recent sale of a 195,537-square foot industrial portfolio in Texas to a traditionally multifamily investor is representative of current trends in the marketplace, according to Marcus & Millichap Vice President Adam Abushagur.
On Sept. 12, Marcus & Millichap announced the sale of Shawnee Capital Trust Portfolio – a group industrial properties making up a combined 195,537 square-foot in Irving, Dallas and Haltom City, Texas. Both the seller and buyer were unidentified private investors. The price was not disclosed.
The buyer was seeking to diversify his portfolio with a different property type because he believes the apartment market in the region is “saturated,” Abushagur tells GlobeSt.com.
“This investor liked the fact that this industrial portfolio had a mix of tenants that were similar in terms of the clientele and management style he was used to, such as local, non-credit tenants and some mom and pop operations,” he adds.
In general, Abushagur notes, multifamily properties are transacting at “much lower cap rates” than industrial ones.
“That product type [apartments] is very compressed right now,” he says. “Industrial is currently transacting at a higher cap rate and attracting a lot of cross-product capital – in particular, it’s attracting a lot of multifamily investors given its similar management style and higher returns.”
The investor who purchased the portfolio first entered the industrial arena earlier this year, according to Abushagur, who had the exclusive listing to market the property on behalf of the seller and also secured the buyer.
“We had fostered a two-year relationship with the seller, executing a plan to get the properties to a condition where they would yield a price the seller deemed acceptable,” says Abushagur. “We were able to secure a total of nine offers throughout our marketing process.”
Indeed, industrial properties in the area seem to be going quickly.
On Sept. 17, Marcus & Millichap also announced that Abushagur had also facilitated the sale of COL-MET, a 112,102-square foot industrial property located in Garland, Texas to an unidentified private local investor.
“The seller needed to move quickly in order to secure an upleg property in another market. The speed with which we procured the buyer allowed us to structure a 1031-exchange for the client, creating a win-win for both parties involved,” says Abushagur, in a prepared statement. “The sale-leaseback yielded tremendous activity. Given the limited supply of advantageous industrial inventory available, a buyer was secured within 48 hours of listing the asset.”
COL-MET is located at 3333 Miller Park South in Garland, Texas. The property is situated on 6.36 acres of land and was built in 1997.
Shawnee Capital Trust Portfolio is located at 1120 Luke St. in Irving, Texas; 2526 Manana Dr. in Dallas, Texas; and 1655 Hickory Dr. in Haltom City, Texas. The properties are situated on a combined 11.47 acres of land and were built between 1975 and 1985.