Why New Jersey's STRO Is Bullish On The Southeast After First Florida Industrial Buys

When The STRO Cos. closed on its first industrial acquisitions in Florida this year, the two deals were a demonstration of the company’s ability to act fast, honed by its decades of experience in this asset class.

The New Jersey-based industrial investor, operator and developer acquired a two-building, 104K SF complex in Largo and a single-tenant, 33K SF warehouse in Jacksonville in September. Both buildings are shallow-bay light industrial infill properties that are well-suited for last-mile delivery. The two properties were acquired with STRO's partner for the Southeast, KRE Group.

STRO founder and principal Steven Millstein said these types of properties have long been the sweet spot for his company, even prior to the e-commerce boom of the pandemic. In the 30 years since Millstein founded the company, STRO has put together a 4M SF, $1B industrial portfolio in New Jersey. The company now has similar plans for the Southeast, he said.

“Both of these Florida properties are great starting points for us to let the marketplace know that we're serious, credible and looking to expand our portfolio,” Millstein said.

The Largo complex provides access to Pinellas County and Tampa, while the Jacksonville property is in a strategic location for distributing goods via interstates 95 and 10, said STRO Managing Director of Acquisitions and Capital Markets Albert Fitch, who is leading STRO’s growth in Florida. Fitch said the two deals are only the tip of the spear for the company in the Southeast.

“We view Florida as a great opportunity and an area in which we want to grow another multimillion-square-foot platform,” Fitch said. “Tampa, Orlando, Jacksonville and South Florida are similar to what Northern New Jersey was one or two decades ago based on macroeconomic trends. With the growing population and average household wealth, this market is poised for continued growth.”

STRO opened its Florida office just over a year ago, but its business approach and industrial expertise began to develop soon after Millstein started purchasing industrial properties in New Jersey in the 1990s. 

In a competitive local market, he grew STRO’s portfolio in New Jersey to 1M SF by the mid-2000s, and then doubled it approximately every five years. His goal is to reach 5M SF in Northern New Jersey by 2025 while also duplicating the company’s fast growth in the Southeast. 

The Sunshine State is a magnet for investment these days, but Millstein said he is also motivated by his desire to diversify the family business so it is in a good place when the next generation takes the reins of the parent company, The Millstein Family Office, in coming years.

STRO’s growth has been exponential, but its approach has been methodical — a philosophy the team said believes serves it well during current market disruptions.

“There's immense opportunity in the industrial asset class to really diversify across the Southeast,” Fitch noted. “We also feel we have an advantage at a time when the cost of lending isn't at historic lows anymore and you can't rely on market momentum today. Instead, you need to really critically evaluate every acquisition of every property within your holdings.”

One of STRO’s advantages during an era of rising interest rates is its supply of what Millstein calls its “dry powder” — both his and KRE's private capital coupled with strong relationships with lending institutions.

“Not a lot of buyers have the wherewithal we have,” Millstein said. “We have great capital sources, both equity and debt, and we can move quickly. That is a considerable edge to have in this economy and when entering a market like Florida that doesn’t have the competition that we have in Northern New Jersey. We're pretty excited about building our platform in the Southeast, and our goal is to acquire 3M to 5M SF in the next three to five years.”

To reach this goal, Millstein has recruited what he calls a “young, aggressive team.” However, aggressive doesn’t mean the firm takes unnecessary risks and then hopes for the best. Fitch, who is the face of the acquisition and capital markets team, said STRO’s first two Florida acquisitions were examples of the company’s ability to act decisively, but only after rigorous analysis of the properties.

“Prior to STRO, I worked with pension funds that had a thought process on investing that was very similar to STRO and to The Millstein Family Office,” Fitch said. “You make sure that you are investing in fundamentally sound real estate that is going to remain relevant for the next 20 to 100 years. We are willing to wait for the right assets, vetting through all the upside and downside scenarios. That’s why we feel good about our first two Florida acquisitions and look forward to making many more.”

This article was produced in collaboration between The STRO Cos. and Studio B. Bisnow news staff was not involved in the production of this content.

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