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Omar Ahmed, Seagis Property Group: Appetite for Investors in Industrial is Extremely High

Jul 3, 2018
by Josh Anderson

JERSEY CITY, NJ – Industrial is on the rise, and if the CRE insiders that spoke with at CapRE’s 2018 Northeast Commercial Real Estate Summit are to be believed, we haven’t seen anything yet. That’s why Stan Danzig, Vice Chair at Cushman & Wakefield and moderator of the panel New Jersey Development, Investment, Financing & Leasing: The Amazon State and Analysis of Traditional Deals looked to one of his panelists, Omer Mir Ahmed, Partner at Seagis Property Group LP, for insight into the lending atmosphere behind all of this demand.

“Omar, you’re probably the closest person on this panel to the investors,” remarked Danzig. “None of us on this panel are as involved in the capital markets. What are you seeing out there in the investment world for real estate? What are the cap rates? What’s the lending environment like?”

“I think that overall, the appetite for investors in industrial is still extremely high,” Ahmed remarked. “Many, many large investors are still undervalued in their industrial property type. And they’ve been trying to sort of address that over the last couple of years. But it’s been challenging for them to find stuff to buy. What’s interesting for them in industrial is that there were always certain sectors within industrial, whether it was Class A or Class B, where people would sort of look to invest.”

Continued Ahmed, “So you had large investors just focused on Class A property. But that’s sort of changed now. Because there is only so much product within a class. And so the investor climate has cast a wide net to look at different property types. It’s had a trickle-down impact, where people who were looking at A’s are looking at A’s and A minuses and B pluses and B’s. And people who were looking at B’s are looking at B minuses and C’s and D’s, et cetera. So we’re seeing that on the investor side.”

The appetite for industrial has pushed down cap rates to unprecedented levels, according to Ahmed. “A year ago, a Class A property could be just breaking five. Now it’s a foregone conclusion that a Class I property that’s tenanted would be in the low 4s now in New Jersey,” he explained.

At that moment, Moderator Danzig remarked something as well: “Especially the big single user buildings where they could put out a lot of money with a good credit on a modern building, and that brings out all of the competitors”

“Yeah, we’re seeing that and a couple of big deals like that on the market today,” concurred Ahmed. “You’ll see it pushing 4 even or possibly in the high 3s. and on the lending front there is a huge appetite for industrial. Even properties that have been historically deemed as challenging. People always get concerned about environmental but lenders are really digging in to kind of figure that out – because of the appetite for industrial.”

Continue the Industrial Conversation. Check out our Upcoming Events. For more from this discussion, check out earlier CapRE Insider Reports:

Banner Photo: Stan Danzig, Vice Chair at Cushman & Wakefield, Omer Mir Ahmed, Partner at Seagis Property Group LP

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