The wallflower of the commercial real estate business is attracting more lookers these days, thanks to the online shopping revolution.
While Amazon.com and the like eat into the fortunes of brick-and-mortar shopping center owners, they're driving up demand for storage and distribution space in warehouses and other so-called logistics properties.
The proposed sale of a large industrial landlord in South Carolina underscores the trend.
Gramercy Property Trust recently announced that it agreed to be sold to the investment powerhouse Blackstone Group in an all-cash deal valued at $7.6 billion. The sale is expected to be finalized later this year.
"We believe this validates the quality of the portfolio and platform that we have built," Gramercy CEO Gordon DuGan said in a written statement.
Included in the transaction is more than 5 million square feet of commercial space the New York-based company owns in the Palmetto State, mostly in the Upstate and the Charleston region. Gramercy made inroads in South Carolina when it acquired Chambers Street Properties in 2015.
Deep-pocketed investors are looking to hitch a ride to the real estate side of the electronic-commerce boom, as executives of Blackstone's industrial property business explained in video posted on its website.
"E-commerce sales have more than doubled over the past five years, and, when you think about what that's done, it really has shifted the landscape for logistics assets," said Wesley LaPatner, chief operating officer.
Blackstone Real Estate Income Trust CEO Frank Cohen pointed to his necktie as an example.
"I'm almost definitely buying it online, and I want it today," he said. "So what does that mean? It's likely sitting in a warehouse. Which means we need more and more warehouses closer and closer to the urban core."
Blackstone's Gramercy acquisition was announced days after Prologis Inc., the largest warehouse owner in the world, said it was snapping up rival DCT Industrial Trust for $8.4 billion, giving it an instant foothold in key U.S. markets that online retailers want to be near.
"E-commerce has taken a business that was already pretty solid and turbocharged it," Prologis CEO Hamid Moghadam told Blooomberg News last month.
Boston-based Stag Industrial, which owns 36 South Carolina buildings in the Columbia and Upstate markets as part of its national portfolio, estimated that more than a third of its properties have an e-commerce component. Most of that shift has taken place over the past two years, CEO Ben Butcher told analysts during a May 2 conference call.
"We believe this incremental demand driver will persist for the foreseeable future," he said.
Other investors are clamoring for a piece of action. For instance, New Jersey-based Monmouth Real Estate acquired a newly built package delivery center leased to logistics giant FedEx in North Charleston last year, partly as an online-shopping play.
Analysts are predicting more consolidation among landlords. One of the names bandied about as a potential buyout target is Liberty Property Trust, which owns a handful of warehouses in the Greenville area.
Not everyone is bullish, including billionaire real estate investor Sam Zell.
“My guess is it is getting too exciting, and we are building too much industrial space,” Zell said during a Bloomberg Television interview last month.