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Merritt targets industrial properties with $400M investment

Money in U.S. dollars

Merritt Properties has received $400 million in financing to acquire properties in the Baltimore-Washington area.

Almanac Realty Investors has agreed to provide $400 million in capital to Baltimore-based Merritt Properties to expand its portfolio by 20 to 30 percent.

Merritt Properties intends to expand via acquisition, development and redevelopment of largely industrial properties in the Baltimore-Washington corridor, according to the company.

“Our long-standing relationship with Almanac dates back to 1997 when we entered into an eight-year partnership with a $75 million commitment,” Robb Merritt, president of Merritt Companies, said in a statement. “Twenty years later, we are continuing that initial partnership with the same individuals and same company — that’s a rarity.”

The industrial market in the Baltimore-Washington corridor has been a thriving sector in recent years. Warehouse construction and leasing have been driven in large part by the expansion of online shopping and ecommerce firms’ need for warehouse and distribution space.

Due in large part because of the Port of Baltimore, the area’s access to Interstate highways and proximity to a handful of large East Coast cities, industrial properties in the corridor have been gaining in value. A land-constrained market created primarily because of zoning restrictions in the corridor has also contributed to a rise in value of warehouse and distribution space.

A report on Baltimore’s industrial market in the fourth quarter of 2017 by NKF found continuing strong demand. Last year the market absorbed 2 million square feet of space, marking the third straight year with at least 500,000 square feet of positive absorption.

NKF described the metro area’s construction pipeline as “robust” because of the 6.9 million square feet of space scheduled to be delivered this year. The largest industrial property delivered in the market last year was Chesapeake Real Estate Group’s Port 95 Industrial Park that produced 413,000 square feet. Tradepoint Atlantic is set to deliver a 1.3 million-square-foot warehouse in March that is leased to Under Armour.

The market for industrial property in the Baltimore-Washington area is also primed to attract more foreign investment. The Association of Foreign Investors in Real Estate’s investment survey released on Monday found that industrial property ranked as investors’ top property sector for 2018.

Investors are reportedly set to bet on industrial property in the U.S. because of expectations about the growth of online shopping driving demand for space. The industrial property sector’s popularity with foreign investors in 2018 is quite a turnaround from several years ago when it was ranked as the least attractive investment of the five sectors.

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