J.P. Morgan, Black Creek Enter $400M Industrial Real Estate Partnership

J.P. Morgan Asset Management has agreed to invest $400M in equity in various industrial real estate projects undertaken by Denver-based Black Creek Group. The partners have not yet specified the number or scope of any of the projects, but did say they will focus on "core, value-add and development."

The partnership comes at a time of robust industrial demand in many parts of the country, mainly because of the growth of e-commerce.

“You’ve got this e-commerce wave,” Black Creek Group Vice President Steve Young said during Bisnow’s Bay Area Industrial and Logistics Summit in late October. “Everyone has seen it and felt it, but it’s just really at the beginning stages.” 

Over the last five years, Black Creek has developed about 10.5M SF of industrial properties and currently has 11M SF under development.

Of Black Creek's more than 15M SF portfolio across the country, 15% to 20% is made up of e-commerce-related companies, Young said. 

The company is growing aggressively in places benefiting from e-commerce. For instance, it is doubling its Northern California footprint with 3M SF of industrial in the works across eight projects.

Also in the works for Black Creek are two industrial development projects in the Tacoma/Fife submarket located in the Greater Seattle area. The projects are composed of three distribution buildings that total more than 1.3M SF. 

Construction costs for industrial development are high, but that isn't putting a damper on the pace of growth, thanks to strong warehouse and distribution center demand and the limited supply of modern logistics facilities, CBRE reported earlier this year.

Pro forma market rents are more than necessary for developers to break ground, including on spec properties, the report said. Currently the spread between pro forma and break-even rents is from 20% to 40%, which makes industrial development a profitable proposition in all of the nation's 10 largest markets.