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Brookfield Seeks to Cash In On U.S., Global Logistics Surge

Industrial Markets Starting to Boom As Brookfield Rebrands IDI, Gazeley As Global Development Powerhouse
May 28, 2014
Already one of the largest global owners and developers of commercial real estate, Brookfield Property Group is looking to quickly ramp up its presence and holdings in international warehouse and logistics markets.

Brookfield this week launched IDI Gazeley, a new brand for its $3.5 billion logistics business, a portfolio comprised of 58 million square feet of assets under management and occupied industrial warehouse space across the US, Canada, United Kingdom, France, Germany, Italy, Spain, Mexico and China.

IDI Gazeley also control prime land sites with the capacity to develop an additional 68 million square feet of distribution facilities, including 17 million square feet currently slated for this year. To date, the combined companies have developed more than 228 million square feet of warehouse space for over 900 customers.

Part of Brookfield Logistics Properties, the new brand is a consolidation of UK-based Gazeley and Atlanta-based Industrial Developments International (IDI), one of the largest U.S. industrial developers.

Brookfield last August agreed to acquire IDI from the U.S. unit of Kajima Corp. for $1.1 billion. Brookfield and its institutional partners in June 2013 acquired Gazeley, a developer of logistics warehouses and distribution parks in the UK, Western Europe and China.

The push into logistics comes as warehouse supply and demand has reached a tipping point in the U.S., with new development now accelerating.

The top 210 U.S. industrial markets absorbed a net 42 million square feet in the first quarter of 2014, according to CoStar information. Although new supply has so far been muted compared to past recoveries, warehouse rents are rising and vacancies are dropping across the country.

Construction has accelerated in the second quarter and CoStar analysts forecast that demand should outpace supply well into 2015. For example, Transwestern Development Co. on Wednesday announced the purchase of 74 acres in Katy, TX, to start construction in mid-July of two speculative warehouse buildings totaling 415,296 square feet. The buildings, set for delivery in second-quarter 2015, leave 42 acres for future development of an additional 800,000 square feet.

Also today, construction company Ledcor announced it has begun site work on Michelin's 1.7 million-square-foot regional distribution center at Transwestern's RidgePort Logistics Center in Wilmington, IL. Michelin is the first major tenant signed at the 1,500-acre park being developed by Ridge Development, the industrial arm of Transwestern Development. The park has room for 14 million square feet of buildings.

This week, a KTR Capital Partners affiliate acquired 172 acres in PA's Lehigh Valley for future construction of more than 2.3 million square feet of industrial space.

Brookfield Property Group CEO Ric Clark said "we intend to grow the platform rapidly by leveraging global customer relationships, pursuing attractive opportunities in key markets and developing our premier land bank."

"With an improving global economic backdrop, evolving supply chains, growth of e-commerce, increasing emerging market consumption trends, we expect to see significant opportunities for growth in the high-quality logistics sector,” Clark said.

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