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Liberty Property (LPT) Sees Solid Demand in Durham Market

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Liberty Property Trust is witnessing solid activity and high occupancy in the Raleigh-Durham market. Most recently, the company renewed two leases and expanded one with its long-term tenants.

Specifically, at Bedford Place in Imperial Center, a lease renewal for 40,125 square feet at 4226 Surles Court took place with a long-term tenant, American Furniture Rentals, Inc. The other one was at Keystone Park, where another long-term tenant went for lease renewal and expansion at 324 Park Knoll Drive. This led to doubling of space to 48,000 square feet from 24,000.

Liberty Property already enjoys a solid presence in the region. Particularly, in the Raleigh-Durham market, the company owns and manages more than 1.8 million square feet of space. Moreover, apart from the Triangle, the company possesses holdings in Charlotte and the Piedmont Triad in North Carolina and in Greenville-Spartanburg, South Carolina, which makes it well poised to leverage on the healthy market fundamentals.

Notably, Liberty Property is shifting its focus toward industrial properties owing to favorable demand and supply conditions. Its premium quality industrial properties, situated at key locations, are likely to drive long-term growth by leveraging on the e-commerce boom and supply-chain strategy transformations.

In fact, not only Liberty Property but other industrial REITs, including Prologis, Inc. (PLD - Free Report) , Terreno Realty Corporation (TRNO - Free Report) and Duke Realty , have the scope to ride on growth curve backed by the strengthening fundamentals of the industrial real estate market amid healthy U.S. economy, job-market gains, thriving e-commerce market, high consumption levels and a solid consumer confidence. As such, demand for warehouses, distribution centers and other industrial properties remains strong.

Per a study by the commercial real estate services firm — CBRE Group — availability fell for 35 straight quarters to 7% for the U.S. industrial market in the first quarter, denoting the lowest point since 2000. Net asking rents increased 2.2% in the quarter to $7.51 per square feet — marking the highest level since 1989, per a CBRE report.

Therefore, banking on the robust fundamentals of the industrial real estate market, Liberty Property is focused to expand its portfolio through strategic acquisitions and development, as well as disposing non-core office properties to pursue such expansion opportunities. Further, it has a decent balance sheet, superior access to capital and ample liquidity position that lends financial flexibility to invest in its growth endeavors.

However, large scale dispositions will likely have a dilutive impact on the company’s earnings in the near term. In addition, with rising supply of industrial real estate space, there is lesser scope for robust rent and occupancy growth.

Currently, Liberty Property carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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