Tishman Speyer, one of the private real estate market’s biggest managers, has formed its first dedicated vehicle focused on the industrial sector via a new partnership with Mitsui Fudosan.
The New York-based firm has formed a programmatic joint venture with Mitsui Fudosan America, the US subsidiary of Japan’s largest real estate company. The firms will seed the JV with an initial $500 million from an undisclosed affiliate of MFA and co-investment capital from Tishman, according to an announcement seen by PERE.
The firm is targeting investments in high-barrier-to-entry US markets: Los Angeles, New York, the Puget Sound region, San Francisco and the Bay Area, San Diego, Boston, Chicago and Washington, DC. The types of assets will vary, with the firms targeting large distribution warehouses, research and development facilities, small bay logistics properties and industrial outdoor storage facilities. The firms will employ a value-added approach, repositioning existing properties and enacting ground up development as part of the venture.
Tishman began investing in industrial properties in December 2021, acquiring distribution centers in Pittsburgh and Colorado. Before the formation of this vehicle, the manager was investing in the sector through diversified separately managed accounts and joint ventures. This included a partnership with Korean investor Hana Financial Group that marked its first foray into the sector, a Tishman spokesperson confirmed.
“We have been methodically diversifying our business, seizing new investment opportunities in a range of asset classes and global cities,” Rob Speyer, Tishman Speyer’s chief executive officer, told PERE via email.
The joint venture with Mitsui represents the next step in Tishman’s long-term plans to build a platform in the sector, coming after the firm hired Andrew Burke as managing director and head of industrial in May this year. Burke has extensive knowledge of the asset class, having most recently served in senior positions at Terreno Realty Corporation, a San Francisco-based industrial-focused real estate investment trust, and AMB Property, now Prologis.
Burke said the current market creates a good opportunity in which to pivot to industrial. The average age of a facility in the US is still more than 40 years old, creating opportunities for redevelopment and replacement.
The timing also works in terms of the market volatility. Industrial performed very well during the last cycle, and many market participants were worrying during covid that pricing had peaked. However, the softening of the economy is creating further opportunity, Burke said.
“Volatility is your friend,” he said. “Particularly when you’re starting something new when there’s a repricing going on.”