North America: Industrial moves front and center

The North American real estate landscape in 2023 was dominated by elevated rates, economic uncertainty, a dislocated market and a tough fundraising environment. However, one clear theme emerged: industrial as a consistent performer.

Major categories in the region, such as Deal of the Year, Capital Raise of the Year, Institutional Investor of the Year and Industry Figure of the Year, all featured the industrial sector in some way.

Over the course of the year, billions in industrial assets traded across the US and Canada, with some of the world’s biggest operators executing on deals of that kind.

It speaks to an environment where reliability is sought after, as well as consumers’ shifts to online shopping and an increasing on-shoring and near-shoring of manufacturing.

“2023 was a tough time for everything in real estate. The good news for logistics today is that the demand is still strong,” says Barbara Perrier, a CBRE vice-chairman who specializes in industrial and land sales.

While there was some angst about industrial supply-demand imbalance through 2023, construction deliveries are set to drop off by the middle of this year, per CBRE’s outlook, and finish at half of 2023’s total.

“This year feels really positive; I would say that coming into it, we are seeing a good amount of tenant demand and activity,” Perrier says.

Blockbuster industrial deals permeated the PERE North America awards list. Singaporean sovereign wealth fund GIC and Canada-based Dream Industrial REIT’s purchase of Summit Industrial Income REIT for $4.4 billion in February was the rainmaker for multiple categories, including nabbing Deal of the Year and landing GIC itself Institutional Investor of the Year, ahead of California State Teachers’ Retirement System by 9 percent of the vote.

The all-cash acquisition, one of Canada’s largest REIT deals ever, helped catapult GIC’s Adam Gallistel onto the shortlist for Industry Figure of the Year for his work on the sale – though he ultimately lost out to CBRE’s Julie Ingersoll, who took the top spot with 34 percent of the vote.

“[Industrial is] now the belle of the ball, now top of the food chain and what everybody’s looking for,” Perrier says.

Even with a focus on industrial, 2023 saw familiar names returned to well-worn territory. In the Firm of the Year category, the 2022 winner Blackstone took the top spot again, securing 36 percent of the vote ahead of its closed rival CBRE Investment Management. While CBRE Investment Management snapped up a slew of private real estate last year, Blackstone’s strategic venture with UC Investments and its role in a public-private partnership to build a studio campus at Manhattan’s Pier 94 appeared to secure its winning position.

Fresh faces appear 

There were new winners, too. Ingersoll, CBRE Investment Management’s chief investment officer, won an award for the first time, having led the firm’s acquisition of about $5.2 billion of private real estate in the Americas in the first nine months of the year, including $1 billion in the residential sector and nearly $1.5 billion of Class A industrial and logistics assets.

Artemis was another fresh name, taking the Capital Raise of the Year award with a sizable 52 percent of the vote share. The winner of Hotel & Leisure Investor of the Year, KSL Capital Partners, was another new name.

The emergence of these first-time winners comes as the bigger beasts loosen their grip. Blackstone goes home with just Logistics Investor of the Year and Firm of the Year, having won half a dozen awards as recently as 2020. Those days appear to be gone. This year, no single firm appeared more than twice in winning positions. GIC received both Deal of the Year and Institutional Investor of the Year, and Harrison Street was awarded both ESG Firm of the Year and Data Centers Investor of the Year.

Kirkland & Ellis won Law Firm of the Year for both transactions and fund formation. Greystar and KKR each appear just once, taking Residential Investor of the Year and Debt Firm of the Year, respectively.

Logistics deals nab the votes 

The Deal of the Year category was heavily dominated by the industrial theme. GIC took the top place, with 30 percent of the vote, thanks to the blockbuster Summit purchase, but Prologis was only narrowly behind. That firm secured one of the biggest commercial real estate transactions of the year last year with its industrial portfolio purchase from Blackstone.

The $3.1 billion deal was for a 14 million-square-foot industrial portfolio and expanded Prologis’ presence in 10 key markets. The all-cash deal garnered Prologis 26 percent of the vote, just ahead of Kennedy Wilson’s acquisition of a $5.7 billion commercial loan portfolio from Pacific Western Bank and UC Investments’ $4 billion investment in Blackstone Real Estate Income Trust.

When it came to Logistics Investor of the Year, there was very little between the top four, with Blackstone securing 31 percent of the vote, ahead of Prologis’ 28 percent.

Blackstone made some $2.1 billion worth of industrial acquisitions as of November 2023, having dropped some $297 million on a portfolio of assets in Toronto.

Both Prologis and CBRE Investment Management – which came in third with 21 percent – acquired billions of dollars’ worth of assets across millions of square feet. For its part, CBRE Investment Management invested in 264 acres of land in Southern California’s Inland Empire. EQT Exeter, was behind by the barest of margins, and Industrial Value Fund VI executed more than 26 transactions for a total $2.2 billion in North America in 2023.

First time winner: Artemis Real Estate Partners

The firm hit bullseye for Capital Raise of the Year: North America

For the first time, Artemis Real Estate Partners was named a winner in PERE’s annual awards, scooping the Capital Raise of the Year: North America by a clear margin. Hitting the target with a total of 52 percent of the vote, the firm’s Fund IV, which closed in the summer, was well ahead of other finalists. Its closest competitor, Blue Owl Real Estate Fund VI, had 21 percent of the vote, and behind them both was EQT Exeter Industrial Value Fund VI, with 16 percent.

Artemis, led by Deborah Harmon and Alex Gilbert and headquartered in Maryland, raised $2.2 billion for the flagship fund, against an initial target of $1.5 billion. Some 99 percent of the existing investors re-upped their commitments, and the fund saw investors from outside the US for the first time ever. Artemis has a “bread and butter” value-add strategy, Gilbert told PERE last year, after the fund closed. The focus of the vehicle, reportedly the firm’s first to attract sovereign wealth capital from the Middle East and Asia, is both debt and equity.