We’ve acquired an approximately 213,229 square foot distribution center in Goodyear, Arizona, for roughly $30.6 million. The property is located about 20 minutes from downtown Phoenix and less than a mile from I-10, a major highway that runs all the way from Los Angeles, CA, to Jacksonville, FL.

As demand for more and faster delivery continues to grow, we believe that “last-mile” distribution facilities located close to major population centers will become increasingly important for retailers.

This acquisition was made by a joint venture between two Fundrise sponsored funds, the Fundrise Interval Fund, which invested roughly $27.5 million, and the East Coast eREIT, which invested roughly $3.1 million.

Strategy

Core Plus

Acquire and operate stabilized, cash flowing real estate

  • Risk-return profile: Moderate
  • Expected timing / delay of returns: Shortly after acquisition
  • Expected source of returns: Income with some growth

More about our strategies

Note that this section is intended to provide a general overview of the Core Plus strategy for educational purposes only, and is not meant to be representative of the specific details of any individual investment. All investments involve risk and there are no guarantees of any returns.

Business plan

Completed in 2020, the building was designed for use as a last-mile distribution facility serving customers in the Phoenix area. Goodyear, AZ, has grown in recent years into an important industrial submarket, tied closely to the Phoenix area’s more general, national pace-setting expansion. As Goodyear develops, fewer industrial locations with direct access to I-10 remain available, making this property’s proximity to the highway all the more valuable.

A last-mile distribution center, also referred to as a terminal building or sorting center, acts as a handoff point to connect 18-wheeler trucks, which typically carry goods in bulk across longer distances, with the smaller vehicles that make the final leg of the journey to drop off packages at individual homes and businesses.

While it’s critical that these types of facilities are located close to major population centers and easily accessible to the major highways, the availability of industrial zoned land that meets this criteria (generally speaking) is in increasingly short supply, which we believe will help drive long-term value.

At the time of our acquisition, roughly half of the building’s space was leased to Hardware Resources, a national hardware, lighting, and cabinetry manufacturer and distributor, with roughly seven years remaining on their initial lease term. Our goal is to lease up the remaining space, earn regular rental income from the property, and then eventually sell it at a profit.

Why we invested

  • Prime location: The property is located less than one mile from I-10 and only 18 miles from downtown Phoenix. According to the 2020 US Census, among all large cities in the country, Phoenix grew the fastest over the past decade, with a growth rate of 11.2%, which we anticipate will also drive the growth of e-commerce in the region, increasing the demand for efficient delivery options.
  • Growing e-commerce demand: Same-day and short-term delivery is becoming not just essential, but the expected norm from customers. In order to fulfill increasing demand, companies ranging from online grocery delivery to e-commerce retailers need space in highly specific locations with access to regional transportation.
  • High-demand property type: Despite the continuing, fast growth of e-commerce delivery — a trend that was only accelerated by the COVID-19 pandemic — zoning restrictions have limited the amount of new supply of industrial, last-mile properties available. As Phoenix continues to expand, fewer industrial sites with prime locations and highway I-10 access remain available, increasing the potential value of properties like this one.

As always, if you have any questions or feedback, please visit our help center or reach out to us at investments@fundrise.com.