CRE Investments Driving Forward with Truck Terminals
September 28, 2022
The commercial real estate industry continues to focus heavily on the industrial market. As a result, several investors have turned to trucking terminals as their latest investment strategy – if they can locate an opportunity.
In the past four years, there have been $1.4 billion worth of truck terminal sales within the United States. This is double from previous sales volumes, largely in part from the pandemic boosting the growth of e-commerce. According to CoStar, 2022 has shown a substantial acceleration of this growth, with $1 billion closed so far this year.
Landlords and investors have progressively aimed to capitalize on this surge in truck parking partly because of the low maintenance costs and the tendency for tenants to stay long-term.
In one popular deal, JPMorgan Chase and Realterm Logistics purchased 40 acres of industrial land south of Downtown Atlanta for truck parking at $53.5 million at the end of 2021. The site has been purchased just the year before at $10 million by Price Muir, founder of WPM Commercial.
Despite the draw, deals aren’t necessarily easy to come by.
This is because the built-up demand from e-commerce companies to transport goods makes the product type difficult to buy. Further, these kinds of storage yards and terminals have historically been owner occupied; there isn’t an abundance of them, either. Because of this limited supply, the occupier that has control rarely leaves. When they are listed for sale, large corporations like JPMorgan Chase are often the kind of buyer that has enough capital to outbid the competition.
In addition, local government often do not have enough incentive to approve these kinds of projects. Unlike manufacturing facilities or modern warehouses, terminal or storage yard projects don’t generate high tax revenues, nor do they employ a large number of workers. Municipality leaders also often face pressure from their residents who oppose the potential traffic congestion, pollution, and eye sores that terminals may bring.
Despite its challenges, it is evident through a $1 billion growth in the industry so far this year that the demand is more than present. Whether or not investors can meet this demand is the question.
