Bethesda, MD-based company has acquired 14 assets totaling more than one million square feet of space and 38 acres across seven states in 2021, with $57 million total transaction value
1601 Wicomico Street
1788 Holdings, LLC, a privately-owned commercial real estate and investment firm headquartered in Bethesda, Maryland, has recently acquired two industrial properties in the Baltimore City submarket as part of a regional strategy that has included the purchase of 14 assets totaling more than one million square feet of space and 38 acres across seven states. The group has acquired approximately $57 millionworth of assets in 2021, with a goal of nearly doubling its portfolio size with the acquisition of an additional two million square feet of space throughout the Eastern United States over the next 18 months. 1788 Holdings now owns 17 properties totaling approximately 1.5 million square feet of space, as well as an additional 50 acres of outside storage space in Alabama, Florida, Georgia, Maryland, North Carolina, Pennsylvania and South Carolina, with a total market value of $137 million.
“A confluence of enduring positive fundamentals, combined with our sustained confidence in both the national economy and commercial real estate industry, has fueled our approach over the past year, and we intend to remain aggressive and active in our approach for the foreseeable future to seize emerging opportunities,” explained Larry J. Goodwin, Principal, 1788 Holdings. “These factors include the sustained strength of the industrial, warehouse and outside storage asset categories, declining inventories, the availability of ready capital and the opportunity to acquire under-performing properties in which we can create significant value for our investors over the long-term.”
6901 Rolling Mill Road
Summary of recent Baltimore City acquisition activity
Since August, 1788 Holdings has separately acquired a 75,000 square foot light industrial/manufacturing building at 6901 Rolling Mill Road, as well as a 351,000 square foot light industrial/manufacturing asset at 1601 Wicomico Street for a combined $22.8 million. Situated on 6.4 acres of land, 6901 Rolling Mill Road is located just over one mile from the Eastern Avenue exit of Interstate 95 and features outside storage land and direct access to the Port of Baltimore. It is presently 100% leased to one tenant. 1601 Wicomico Street is positioned directly adjacent to Interstate 95 from the Russell St. North exit and features nearly three acres of outside storage land. It is 100% leased with three tenants.
“Acquiring Outside Storage Land (OSL) remains a point of emphasis in our acquisition strategy, as we believe the availability of this acreage represents a significant competitive advantage in the Baltimore City submarket,” Goodwin added. “As a port city, Baltimore is a primary destination for roll-on/roll-off cargo, particularly automobiles, trucks and heavy equipment cargo, and there remains continuing demand for storage sites with immediate proximity. Most of the infill light industrial properties in the immediate trade area do not have excess land for this type of storage, and we are filling this ongoing need.”
Industrial strength of Baltimore City submarket
Prologis, Inc., a real estate investment trust headquartered in San Francisco, recently published a market report which ranked Baltimore as the top performing market internationally, in terms of rental growth, at 11%. The report additionally stated that “in the years ahead, replacement cost growth and barriers to new supply in urban areas would continue to provide significant lift to the rental growth in Baltimore and other land-constrained markets.” The Prologis report stated that Baltimore had recently modernized its distribution network, and is now in line to serve the logistics needs of larger markets such as Philadelphia and New York.
Commercial brokerage firm CBRE reported a 1.6% vacancy level for industrial product in Baltimore City, which is significantly below the 5.1% vacancy rate in the larger Baltimore Metropolitan Statistical Area (MSA). CBRE further listed Baltimore as its fifth-best market in the United States for projected rent growth over the next five years, with cumulative rent growth expected to approach 32%. The group cited the limited ability to add new supply and rising replacement costs as major reasons for this increase.
Long-term acquisition strategy has multi-regional focus
1788 Holdings created the company’s light industrial platform in 2018 with the purchase of Riverside Business Center, a 435,000 square foot industrial building located in Lehigh Valley, Pennsylvania. The company has since expanded its targeted geographic footprint to seven states and continues to seek opportunities in additional markets.1788 Holdings is particularly interested in acquiring under-performing warehouse/industrial assets with the opportunity to re-tenant, complete leasing programs and improve operational efficiencies.
In its 2021-2022 North American Industrial Outlook the brokerage firm Cushman & Wakefield stated, “the tailwinds of e-commerce and heightened focus on supply chain resiliency will keep the industrial market in an upswing with record construction and new all-time high rental rates on the horizon.” More than 481 million square feet of industrial space is expected to be absorbed throughout North America during this time period.
“Unprecedented times such as these present extraordinary opportunities and we have the team, the determination and the capital to take advantage of economic and market conditions to the benefit of our investor group,” Goodwin concluded.