For the buyer, there’s the value of the existing asset, and also redevelopment potential. The CEO mentioned ”future development potential along transit” and ”there will be a much higher and better use for those buildings,” so it’s an assembly strategy. For the seller, industrial values are up tremendously, which makes profit taking attractive. There’s also a suburban office, which is similar: adjacent to properties Soneil owns.
Institutions have been less active on the buy side than pre-COVID, and this year it’s even more extreme. Now, we’re only 4 months into 2023, so it’s not quite a fair comparison – a big deal could change this number dramatically. But you can see the trend beginning years ago. The big players like pension plans and lifecos have shifted towards international acquisitions, or more niche areas of real estate like lab space and retirement homes. The previously ”core” assets of retail and office have been left to the private buyers. Perhaps industrial is the next frontier for private investor dominance.