We are pleased to announce the recent acquisition of Highpoint Commerce Center, a 120,000 sq. ft. industrial logistics facility located in the St. Petersburg sub-market just outside Tampa, Florida.
The property is a significant addition to the overall portfolio and is conveniently situated between both St. Petersburg and Tampa with direct access to several major transportation hubs, including two international airports, a CSX intermodal station, as well as the area's extensive highway system. The property, which was delivered in Q1 of this year, is one of only a handful of new class-A logistics facilities in the broader market, making it ideal for prospective tenants looking to benefit from the strong demographic growth of the surrounding region.
This acquisition fits squarely into our "buying the bottom" thesis, based on a projected stabilized yield that is roughly 150-200 bps better than the market today. Highland Commerce was acquired through a joint venture between two Fundrise-sponsored funds, the Fundrise Flagship Fund, and the East Coast eREIT.
Strong market dynamics drive higher returns
The Tampa market serves as a hub for industrial activity and has become an increasingly popular market for institutional investors thanks to a dense and affluent population that has driven a growing demand for warehouse space. Rent growth over the past five years has averaged 11.2% with the vacancy rate today standing at just 4.8%, and anticipated rent growth of more than 5% annually over the coming years (based on Green Street’s forecasts).
Key Investment Strengths
- Better than market yield: Thanks to an extensive negotiation process we were able to acquire the asset at extremely attractive pricing, which reflects a projected stabilized yield that is roughly 150-200 bps better than market. We believe this will, in turn, lead to stronger overall returns from the asset.
- Supply Constraints: Since 2019, only eight Class A warehouses have been delivered in the sub-market, with each reaching full occupancy relatively quickly. This lack of supply and lease-up rate underscores our belief in the strong demand for the asset and the potential premium to be earned as a result.
- Demographic Advantage: The greater St. Petersburg market boasts an average household income of $83,447 within a 5-mile radius—well above the national average—and once again reinforces the expected strong demand from potential tenants and the opportunity to achieve a premium return from the asset.
Continuing to buy the bottom
We continue to see attractive opportunities across multiple asset classes for those investors who have both the will and the means to be active buyers in the market.
Furthermore, we believe that newly built logistics facilities, especially those that are well located in relatively infill locations with strong and growing demographics (such as Highpoint Commerce Center), are likely to outperform the broader real estate market. We believe these periods, where well-located, newly built assets are available for investment at significantly higher returns than comparable public market comps, are rare, and that taking advantage of such opportunities is fundamental to strong performance in the long run.
We expect to continue to “lean-in” and be offensive when it comes to sourcing similarly attractive opportunities, and, of course, will continue to keep our investors updated as such acquisitions occur. In the meantime, if you have any questions, please feel free to reach out to our Investor Relations team at investments@fundrise.com.
