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Terreno Realty (TRNO) to Redevelop Newly Bought Miami Asset

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Terreno Realty Corporation (TRNO - Free Report) announced the acquisition of an industrial property in Miami, FL, for $5.8 million.

The property sits on a 5.8-acre improved land parcel and has advantageous location at 3000 NW 73rd Street, and around three miles from Miami International Airport and six miles from both Downtown Miami and PortMiami. This along with the company’s intention to redevelop the property will likely create demand at the presently vacant property.

Specifically, the property will be redeveloped with two LEED-certified industrial-distribution buildings, spanning approximately 129,000 square feet. It will offer 36 dock-high loading positions, 32-feet clear height and a parking lot for 104 cars.

Terreno Realty estimates to spend $20 million on such efforts, with a stabilized cap rate of 5.1%. The property is anticipated to achieve stabilization in fourth-quarter 2022.

Notably, the company is eyeing expansion opportunities on the back of acquisitions. It targets functional assets at in-fill locations, which enjoy high-population densities and are located near high-volume distribution points.

In line with the acquisition-driven growth strategy, the company recently shelled out $17.6 million for the purchase of an industrial property in San Leandro, CA. The property comprises three industrial distribution buildings, encompassing roughly 112,000 square feet on 7.8 acres of land. Also, it has an advantageous location at 2002-2150 Edison Avenue, west of I-880, and immediately neighboring the REIT’s three-building Whitney Street portfolio.

Such efforts will likely enable the company to gain from the strong industrial real estate fundamentals. Markedly, amid an e-commerce boom, growth in industries, and businesses’ heightening attempt to improve supply-chain efficiencies; the demand for logistics infrastructure and efficient distribution network has been increasing. This has been helping the industrial real estate market flourish.

Apart from the fast adoption of e-commerce, logistics real estate is anticipated to benefit from an increase in inventory levels post the global health crisis over the long term. This offers scope to industrial landlords, including Terreno Realty, Duke Realty (DRE - Free Report) , Prologis (PLD - Free Report) and Rexford Industrial Realty (REXR - Free Report) , to enjoy a favorable market environment.

Terreno Realty currently carries a Zacks Rank #3 (Hold). In the past month, the company’s shares have gained 7.2% compared with its industry's rally of 6.9%.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 


However, the resilience of this asset category in these challenging times has attracted developer interest, resulting in a development boom in a number of markets. This is leading to high supply, and might fuel competition and curb the pricing power for landlords. Specifically, new supply is likely to put pressure on the vacancy level, which might shoot up to some extent in the upcoming quarters.

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