The industrial real estate market continues to amaze us! Cap rate compression continues across all geographic regions, including the rural markets we specialize in. We never dreamed of selling properties in our markets at 5.5 – 6.5% cap rates. We have partnered with some of the leading capital market brokerage firms and are confident in our ability to hit a few grand slams. We highlight those sale offerings in this Q3 report, and we look forward to writing about the successful closings in our Q4 2021 and Q1 2022 reports.
As you all know, the automotive industry has been a large part of our growth over the years. The global supply chain disruption caused by the pandemic has resulted in a microchip shortage that has sent a ripple effect throughout the industry, including the suppliers leasing our buildings. OEM sales volume are way down (as evidenced by the graph below) as millions of vehicles sit in vacant lots across the country waiting for microchips. A few of the sales we are pursuing are properties leased to automotive suppliers as we monitor our automotive concentration, but we remain very bullish on the industry long term as volumes will eventually normalize. Ford’s Blue Oval announcement in West Tennessee is the most recent example of OEM’s investing in the future.
The market is ultra-competitive, and the construction challenges Mark Keller wrote about last quarter still remain, but we are still winning great projects and putting the finishing touches on our next investment offering, Copperfoam Properties, LLC. Expect the offering to hit your inbox by late October or early November. As always, thank you for entrusting us and for standing by Team Agracel. Should you have any questions about your individual portfolio, please reach out to us.
Ryan C. Witges
Chief Operating Officer