The Indianapolis industrial market is growing at a record pace, continuing a trend that began in the months ahead of the coronavirus’ arrival in early 2020.
More than 22 million square feet of space is already under construction, with some brokerages estimating several million more will break ground by the end of the year. And markets that have begun heating up over the past few years—particularly Whiteland in Johnson County and Mount Comfort in Hancock County—are starting to see extensive development and leasing activity.
In Whiteland, Mohr Capital recently broke ground on multiple buildings of nearly 1 million square feet as part of its Mohr Logistics Park, at the northwest corner of Interstate 65 and Whiteland Road. Cooper Tire moved into its nearly 950,000-square-foot building at the park in the second quarter.
So far, 3.5 million square feet of space is under construction or has been completed on the property. The Mohr development could near 8 million square feet when it’s fully built out in the years ahead, occupying more than 500 acres—nearly the size of the downtown Indianapolis mile square.
Bob Mohr, chairman of Dallas-based Mohr Capital and an Indianapolis native, said what’s happening in Indianapolis is a national phenomenon, albeit one from which Indianapolis is benefiting.
“Industrial [development faced] a big whammy of everything being backed up because of the pandemic, causing significant disruption to global trade. Then you have corporations that are reconfiguring all of their supply chain,” he said. “When you combine those things together, you get a big blow-up in industrial requirements” that have led more companies to seek space.
Mohr said the move to build in Whiteland was driven by a host of factors, including land availability—and, in turn, lower costs—more appetite for incentives from the town, and a stronger labor pool driven by the scarcity of industrial buildings in the area.
Mohr Capital Chairman Bob Mohr recently sat down with The CRE Project Podcast with Clayton King to discuss how he built two successful commercial real estate firms, and how Mohr Capital has thrived during the pandemic when most CRE firms have struggled.
Bob and Clayton also dive into the state of retail, industrial and office segments, and Bob provides his take on the current events and future of each segment.
We’ve officially reached the middle of 2021 and it’s already been quite a year. To date, Mohr Capital has closed on nine transactions and broke new ground in the history of our firm.
On the office side, we acquired Riverwood Corporate Center II, an office building in the Milwaukee metro area. The new property is fully leased by the region’s largest healthcare provider and is proof positive that the office market is still alive and well when occupied by credit tenants. The deal follows our acquisition of another office building in Orlando occupied by Accredo Health earlier this year.
On the industrial side, Mohr Capital is reaching new heights. Recently we sold a last-mile distribution facility in Austin that CoStar called the “priciest deal of its kind.” And on the development side, we’ve made great progress on Mohr Logistics Park in Indianapolis, broke ground on a ~600K-SF industrial facility in Nevada (our first in this market), and delivered retail spaces for Regions Bank and Chipotle in the Houston area.
Our success in industrial is due in part to the rise in e-commerce, which has led to skyrocketing demand and even higher rents. We’ve helped our tenants navigate this environment well, and last month I shared what companies can do to get the industrial space they need at a reasonable price at industry conferences and in the media.
It’s been a busy six months for Mohr Capital, and we’re just getting started. In the second half of the year, we’ll be embarking on new investment strategies and we’re extremely excited for what’s to come. We hope this year has been as fruitful for you as it has for us.
Founder & Chairman
In May, we sold MetCenter Building III in Austin, a 160,000-square-foot industrial facility and 20-acre parking lot. We acquired the facility two years ago and while we intended to hold onto it, industrial demand in Austin resulted in an offer we couldn’t pass up – so much so that CoStar called it “one of the most expensive deals in the Lone Star State.”
In April, we acquired Riverwood Corporate Center II, a 112,000-square-foot office building in the Milwaukee metro area. Along with the deal, we secured a long-term lease with the largest healthcare provider in the region, ProHealth Care. It’s been the company’s headquarters since the building was constructed and will continue to be its home for many years to come.
Industrial real estate is on fire. However, high demand has resulted in sparse supply and high rates. In May and June, I talked about how tenants can get the industrial space they need at the Industrial Asset Management Council’s 2021 Spring Forum and in an op-ed article with D Magazine. I also participated in Wealth Management Real Estate’s 7th annual industrial survey, No End in Sight for Industrial’s Strong Run, where I shared my thoughts on the state of industrial demand.
In June, we closed on 40 acres in the Tahoe-Reno Industrial Center – one of the largest industrial parks in the world – and started construction on a 600,00-square-foot speculative industrial facility. The development is our first in Nevada and will provide the market with a well-positioned, reasonably priced piece of real estate.
In February 2020, we acquired a restaurant site in The Woodlands, Texas – an affluent suburb just north of Houston – for redevelopment. Since then, we razed the existing structure, built two pad sites, and have delivered a Chipotle and Regions Bank branch.
Helping young people become successful in the commercial real estate industry has been a focus of mine for the past 40 years. My current role as a member of the University of Notre Dame Fitzgerald Institute of Real Estate Advisory Board has enabled me to further that mission and support an institution in my home state that has been a significant part of my family’s life for years.
When people talk about Austin, they call it one of the best places in the country to live. They talk about the live music scene, the die-hard fans who flock to The University of Texas football games and the hills spouting bluebonnets.
They talk about Austin attracting California residents and companies during the pandemic, bolstering the city’s tech base and positioning it as a significant Silicon Valley rival. They talk about office demand and increasing single-family housing costs.
Few people mention Austin’s industrial market, but they really should, because there’s a heck of lot to talk about. At 55 million square feet, Austin’s industrial market is still fairly small, especially compared with the Lone Star State’s big three metros of Dallas-Fort Worth, Houston and San Antonio.
Despite its size, the Austin industrial market is experiencing significant demand from various companies, particularly e-commerce and service-related tenants. And even though Austin tends to be a bit of a bubble market, money is flowing in the form of new construction and investor interest.
Unless you’re Amazon or Tesla, it’s not easy to develop bulk industrial in the Austin area under normal circumstances, and the pandemic has made it even more challenging. The topography everyone loves so much because of the rolling hills makes industrial development difficult. Zoning adds another layer of complexity.
When it comes right down to it, Austin is a progressive city that is cautious about heavy industrial development. As a result, many developers who faced roadblocks before are having a tougher time now due to the city’s limited resources stemming from the pandemic.
The majority of respondents are also not worried about over supply. Those who think there is “too much” development occurring have remained in the minority for the past five years with a range of 7 percent to 11 percent, including 8.6 percent in the current survey. More respondents (42 percent) view the volume of new development occurring as the “right amount,” while those who think there is “too little” being built climbed from 22 percent in 2020 to 29 percent in this year’s survey.
According to Cushman & Wakefield, new supply totaled 352.9 million sq. ft. in 2020—a 5.7 percent increase compared to 2019. In addition, the firm was tracking 397.1 million sq. ft. of space under construction as of the first quarter of 2021.
Views were mixed on how much new supply their respective markets could absorb. Overall, 43 percent believe their markets could absorb 15 percent to 24 percent more new supply, while 38 percent said less than 15 percent of current inventory and 19 percent predict that their market could absorb more than 25 percent.
Mohr Capital is one firm that is planning to double its industrial development in 2021 with about 4.5 million sq. ft. of construction starts. The developer builds bulk warehouse facilities that it typically sells after securing leasing commitments from long-term, single net lease tenants. The group is developing a 7.5 million-sq.-ft. industrial park in suburban Indianapolis. They recently broke ground on a new 827,000-sq.-ft. spec bulk warehouse project at the Mohr Logistics Park. That project comes on the heels of a recently completed 1 million-sq.-ft. facility at the park that was fully leased to Cooper Tire & Rubber Co.
“The industrial market did take a pause last year, and everybody thought it was going to take a little bit longer to come out of the pandemic and turn around. But the industrial market is probably as hot as it’s ever been,” Bob Mohr, founder and chairman of Mohr Capital, a Dallas-based privately held real estate investment firm.
Visit Wealth Management to read the publications 7th Annual Industrial Real Estate Survey, "No End in Sight for Industrial’s Strong Run" in full.
While DFW’s office market struggles with the thorny issue of returning to the office and how much space tenants will need in a post-pandemic world, the region’s industrial market is booming.
Across North Texas, demand for industrial space is pushing vacancies lower and rents higher. That’s great news for owners who are enjoying higher property values. But at the same time, industrial tenants are grappling with fewer options and higher occupancy costs.
In an environment where demand exceeds supply, what can these companies do to ensure they have the industrial space they need, when they need it, and for a price, they can live with?
Visit DMagazine to read the full article.
Throughout three-and-a-half decades in the commercial real estate industry, Mohr Capital Chairman Bob Mohr has invested as much of his time mentoring young professionals as he has leasing, buying, and selling properties for corporate tenants.
Now, as an incoming member of the Advisory Board for the University of Notre Dame’s Fitzgerald Institute of Real Estate (FIRE, the Institute), Mohr is leveraging his time in the industry to provide direction to the Institute’s students and alumni.
“A lot of young people set their sights on commercial real estate because they’ve heard it’s a great profession to be in if you want to make good money. And while it can certainly be lucrative, what I try to impart to students and young professionals is that, more than anything else, this industry is about shaping the world we live in for the better.” said Mohr. “FIRE’s academic curriculum and research efforts align with that manner of thinking.”
In addition to Mohr, FIRE’s advisory board consists of prominent alumni, parents, and friends in the real estate industry from a range of backgrounds, sectors, and disciplines. Members include FIRE Advisory Board Chair and EQT Exeter Partner & Head Ward Fitzgerald, JLL International Director Stephen Collins, and Black Rock Managing Director Bob Karnes.
Mohr and the rest of the advisory board will serve as ambassadors for the university and provide strategic direction on the continued improvement and success of the Institute and Notre Dame's real estate academic initiatives.
“I’m honored to share this board appointment with so many esteemed individuals in this industry. Our combined experience and accomplishments will no doubt have a positive influence on the Institute, as well as the students and alumni of Notre Dame,” said Mohr.
Mohr’s appointment to the FIRE advisory board is the latest in a long history of involvement with Notre Dame. He and his wife, Leslie, generously established the Bob and Leslie Mohr Scholarship which previously endowed the football team’s quarterback coaching position, and served on the Advisory Council for the Student-Athlete and the College of Liberal Arts and Letters Advisory Council.
The Indiana-native’s children – Brooke, Trey and Molly – all graduated from Notre Dame. Furthermore, Brooke and Molly were both cheerleaders at Notre Dame and Mohr’s son-in-law, Bobby Renkes, who graduated in 2007, also played football for the Fighting Irish.
“Our relationship with Notre Dame is as personal as it is professional,” said Mohr. “The university has provided us with some of our favorite memories as a family, as well as a lot of beneficial connections. When an institution is that important to you, you look for every chance you can to give back as much as it has given you.”
A New Jersey investor scooped up an Amazon-leased distribution facility in Austin, Texas, in what could be among the most expensive deals in the Lone Star State as properties are snatched up and demand only increases in the capital city.
Four Springs Capital Trust, a private real estate investment trust based in Lake Como, New Jersey, purchased a 160,000-square-foot industrial facility in Austin's MetCenter and an adjacent 20-acre parking lot from Dallas-based Mohr Capital, according to a statement. Mohr Capital had initially expected to keep the property for several years after buying it as a part of a $100 million, or about $247 per square foot, five-building portfolio deal in 2019 from Zydeco Development.
But the sale to Four Springs Capital was for a higher price than what Mohr Capital bought it for just over 18 months ago, said Rodrigo Godoi, managing director of Mohr Capital. Godoi declined to disclose the price but said he “wouldn’t be surprised” if it was among the pricier warehouse trades in Texas. For reference, industrial buildings in the Austin industrial market traded for about $351 per square foot in the first quarter across publicly known deals tracked by CoStar.
A relative lack of properties on the market in hot cities for investors such as Austin has been driving up prices for real estate this year, according to CBRE's "Americas Investor Intentions" survey.
Austin ranked No. 1 as the preferred market for investors of all sizes in 2021, as well as the top market for large investors with more than $50 billion of assets under management and midsize investors with between $10 billion and $50 billion of assets under management, according to CBRE's survey.
“We had no intention of selling, we just got a good deal and decided to make it work,” Godoi said about the Amazon-leased building. “Originally we were looking to get the building refinanced. We just made the decision to deploy that capital elsewhere.”
The property is within the MetCenter, a 550-acre, mixed-use business park about 8 miles from downtown Austin and near the Austin-Bergstrom International Airport with immediate access to the city’s major thoroughfares, including state Highway 183, U.S. Route 290, state Highway 130, state Highway 71 and Interstate 35.
When Mohr Capital bought the portfolio in 2019, the deal included the 160,000-square-foot industrial building at 7000 Metropolis Drive that at the time housed Uber Advanced Technologies and Amazon, and four office buildings totaling 244,000 square feet.
Visit CoStar News to read the full article.
The combination of a flight by investors to highly targeted segments of the physical retail market and a lack of new development in 2020 is keeping prices high for select properties in some of Texas’ biggest markets. Retail investment sales brokers in Dallas and Austin say that for specific subtypes of well-located properties — such as single-tenant, net-leased assets and multi-tenant strip centers with essential businesses — there simply aren’t enough of these deals being brought market to go around. These supply constraints ensure that pricing continues to rise and cap rates continue to compress for these in-demand assets.
According to data provided by CoStar Group and Real Capital Analytics, Dallas-Fort Worth was a top 10 market in 2020 in terms of average retail sales price growth. Although total transaction volume was, unsurprisingly, down for the year, the metroplex saw an average price of $396 per square foot for single-tenant retail assets, a year-over-year increase of 5 percent…
The dearth of new development and store openings in 2020 is understandable. With the economy rocked by COVID-19, construction projects that were underway or set to begin were delayed, and deals for new stores that were being negotiated were put on hold.
Many retailers, particularly nonessential and local mom-and-pop businesses, found themselves in survival mode practically overnight. This massive disruption to new development and leasing last year is driving the supply shortage this year.
“If projects had been ongoing and more de novo locations were built in 2020, now — the first and second quarters of 2021 — would be the time when that product would typically be delivered and on the market,” says Rob Solls, director of retail investments and acquisitions at Dallas-based Mohr Capital. “That’s causing the existing supply to see more competition and compressed cap rates.”
Solls adds that he has noticed a pronounced flight to quality over the last 12 months. Investors in Texas are duking it out for newly delivered product leased to internet-resistant tenants in markets with the strongest in-migration and job growth, driving up prices for these assets in the process.
“We didn’t really see a mass exodus of investors out of retail in response to the pandemic,” he says. “But by the third and fourth quarters of last year, retailers had generally done their triage and were starting to brainstorm about growth strategies again. In 2021, we’ve started to see those strategies — preferred development programs, rolling out of smaller prototypes — start to play out, which led to an uptick in deals at the end of the first quarter.”
As chairman, I spend as much time on the day-to-day business of running an investment firm as I do contemplating our larger role in the community. Sure, I can make the argument that new developments bring new jobs and, consequently, spur local economies.
However, I think CRE firms should invest in more than just real estate. Which is why I’m happy to announce Mohr Capital has donated more than $55,000 in the last two months to make sure young people have a promising future.
Having the time to consider Mohr Capital’s impact is only possible with a team of experienced professionals who I can depend on to keep our firm running smoothly. I’m pleased to announce that in the first half of 2021, that team has grown to include four new members.
In the coming months, we'll be focused on completing some of the largest transactions in our history while managing to deliver substantial risk-adjusted returns. It feels especially nice to be able to give back, grow our organization, and see record returns all while operating during a challenging pandemic.
We sincerely wish the best to you and your organization as well.
Founder & Chairman
Mohr Capital sponsored Tackle Tomorrow’s inaugural Charity Poker Tournament in Dallas, Texas. Tackle Tomorrow is a 501(c)3 nonprofit founded by NFL Super Bowl Champion Charles Haley and Dallas Civic Leader Bob Bowie. Tournament proceeds provide resources and support to students across Dallas who struggle to read and write.
For decades, Mohr Capital has been a loyal supporter of Jonathan’s Place, a private 501(c)3 nonprofit organization. This year, we made a significant donation to the organization’s “Be the Tie” spring giving campaign to provide a safe place, loving homes, and promising futures to abused and neglected children.
In the first quarter of 2021, we welcomed four new team members: SVP of Development Tom Theobald, Principal Trey Mohr, Controller John Cervi, and Investment Analyst Nick Kaldis. Our expanded team will help us build upon last year’s momentum and execute our strategic plan for 2021.
Speaking of last year’s momentum, we all took a few days off in March to celebrate our hard work and accomplishments during an undoubtedly difficult year. When it comes to fostering a team environment, letting loose together is just as important as working hard. We enjoyed a few days of great food, strong drinks, and excellent golf in sunny Punta Mita, Mexico, and came back energized and ready to get back to work.