Prologis’s Jesse Harty Previews CAPRE’s Industrial Real Estate Revolution: Urban, Infill and Last-Touch Logistics Driving Rising Demand
Harty: I joined Prologis in 2018 to lead operations for Prologis in New Jersey and New York. This includes overseeing leasing and property management on approximately 37 million square feet, 300 customers and 150 buildings. My daily focus is on servicing local customers by taking the time to learn about their needs and deliver meaningful solutions.
CAPRE: Jesse, how would you describe Prologis’s appetite for investment and development in 2019?
Harty: Driven by the growth of e-commerce, Prologis is investing heavily in urban,f infill and last-touch logistics real estate. In our Q319 earnings results we revealed we’re raising the midpoint for development starts by $250 million – expecting starts to range between $2.2 Billion USD and $2.5 Billion USD. And while the bar on spec development continues to be high, build-to-suits will comprise more than 40% of total starts. When it comes to land investments, our biggest needs are in the Southern California, Chicago and New Jersey markets, but we’re constantly looking for opportunities to expand our footprint across all densely populated regions.
CAPRE: In 2019, Is Prologis a net buyer or net seller of assets?
Harty: We are a net buyer as we continue to see demand for logistics facilities. We will dispose of non-strategic assets where warranted. For additional information, please refer to the latest Prologis earnings results.
CAPRE: Describe in a broad context the New Jersey industrial market. Why is it important to Prologis’s portfolio and is it more important than other U.S. markets?
Harty: Prologis research finds that rental growth is outperforming in coastal metropolis markets such as New York – New Jersey, Southern California and Seattle – so New Jersey is definitely a market where we want to continue growing. With respect to our current projects locally, we are completing construction on a 913,466 SF cross dock building in Burlington, NJ. This is the only building to be delivered in 2019 above 650,000 SF along the New Jersey Turnpike. We are also actively pursuing several building acquisitions and land sites for future development.
With respect to the NYC Boroughs, we recently purchased two buildings in the 20,000 to 30,000 SF range, with access to land that caters to customers looking for urban, infill and last-touch logistics facilities. Similar to our strategy in New Jersey, we are also actively pursuing several building acquisitions and land sites for future development.
CAPRE: Let’s talk Evolution or Revolution — with the rise of e-commerce and changing consumer and business patterns, is the industrial sector undergoing evolution or revolution?
Harty: Industrial is going through an evolution, and e-commerce is certainly a big driver. We’re currently experiencing a rising demand for urban, infill and last-touch logistics facilities. As online shopping continues to grow each year, especially as more industries enter the e-commerce space, we’ll continue to see an uptick in the need for industrial space in locations within close proximity to consumers.
CAPRE: We are late in a very long cycle. How do you see the next 12-24 months in industrial real estate?
Harty: We see a continuation of M&As, supply impact that differs greatly by market and submarket, continued infill rent growth, and proximity to customers remaining as strong drivers. Our research points to overall logistics real estate demand remaining strong, with competition for space in densely populated areas and labor shortage presenting major challenges for customers.
CAPRE: Got it, thanks for your time Jesse! We’ll see you in Jersey City.