U.S. logistics just got its next big investor from abroad.
Spanish billionaire textile tycoon Amancio Ortega, the founder of clothing brands Inditex and Zara, revealed on Tuesday that his family investment company Pontegadea had purchased five logistics warehouses in the U.S. totaling about $722 million, Bloomberg reported.
Spanish newspaper El Pais reported that the properties are strategically located in five states — Tennessee, South Carolina, Virginia, Pennsylvania and Texas — and rented with long-term leases to companies including Amazon, FedEx, TJX, Home Depot and Nestle.
The acquisitions follow previously announced deals for two logistics properties in Wisconsin and Pennsylvania totaling around $183 million. All seven properties come from Realty Income Corp., a San Diego-based real estate investment trust with properties in the U.S., U.K. and Spain.
Read: Demand for big-box warehouse leasing picks up pace, e-commerce lags
Read: After an unprecedented 2021, what can the 3PL industry do for an encore?
Ortega, the 24th-richest person in the world according to Bloomberg’s Billionaires Index, has primarily used Pontegadea to invest in assets like skyscrapers, office towers and apartments.
His purchases this year include deals for Toronto’s Royal Bank Plaza skyscraper for a little over $900 million and a 64-floor luxury apartment building in New York for about $500 million. Pontegadea’s real estate assets were valued at $15.5 billion toward the end of 2021.
Ortega’s money joins a wave of investments from large real estate investors looking to cash in on U.S. logistics. The movement kicked off in earnest in 2019, with Blackstone’s $18.7 billion purchase of Global Logistics Properties’ U.S. real estate portfolio. At the time, the firm’s acquisition of 179 million square feet of warehouse space was the largest private real estate deal in history.
Watch: Is there enough warehouse labor to go around?
Since then, other large firms like Prologis, Elion and CBRE have made large splashes in the U.S. logistics real estate market. That’s at a time when those properties are more scarce — and more expensive — than ever.
Experts believe the U.S. will need to add nearby 1 billion square feet of warehouse space by 2025 in order to quench growing demand. And according to a quarterly report from JLL, rents on industrial properties like distribution centers rose 21% year over year in the second quarter. Leasing volume was also up 6%.
That’s driven up the value of the properties themselves, enticing smaller firms to sell off their assets to large investors like Ortega for a premium. The result is a logistics real estate market dominated by the big fish, who then rent those properties to companies in need of capacity.
You may also like:
Prologis report sees modest uptick in logistics warehouse vacancies
Prologis sees ‘normalization’ in warehouse demand off all-time highs
Logistics warehouse activity may cool as interest rates heat up
The FREIGHTWAVES TOP 500 For-Hire Carriers list includes FedEx (No. 1).