EQT Exeter Buys Phoenix Industrial Portfolio for $143M

Article originally posted on Commercial Property Executive on October 22, 2024

Link Logistics has sold the Phoenix Gateway portfolio, a six-building industrial collection totaling about 860,200 square feet in Phoenix. EQT Exeter paid $143.2 million for the assets in all-cash transactions, public records show.

Located in the Airport submarket, the facilities were fully leased at the time of sale by a total of eight tenants with staggered lease expirations. The properties are 1980s and ’90s vintage, with spaces ranging from 37,000 square feet to 220,000 square feet.

The new owner plans to upgrade the buildings by air conditioning the warehouse space, adding LED lighting and renovating office suites as leases roll throughout the portfolio.

“This asset class is well-positioned for continued rent increases, driven by high demand and limited supply,” Cushman & Wakefield’s Molly Hunt told Commercial Property Executive. “The ability to raise rents across the portfolio is a direct reflection of how desirable this product type has become in the market.”

Hunt, along with colleagues Will Strong and Michael Matchett, all of the firm’s National Industrial Advisory Group-Mountain West, represented Link Logistics. In addition, Cushman & Wakefield’s Mike Haenel provided market leasing advisory in the sale.

EQT has about $266 billion in total assets under management in two business segments, private capital and real assets. The firm owns portfolio companies and assets in Europe, Asia Pacific and the Americas.

EQT Exeter has nearly $30 billion of equity under management, and is on an industrial buying spree. Earlier this month, the company acquired a 312,604-square-foot, three-building portfolio in Seattle and Portland, Ore., for $49.9 million. It has also recently bought a last-mile asset in metro Seattle for $82 million and an industrial property in Streetsboro, Ohio, near Cleveland.

Supply still outpacing demand in Phoenix industrial

The Phoenix industrial market turned in an overall vacancy rate of 11.5 percent in the second quarter of 2024, a quarterly increase of 90 basis points, according to Cushman & Wakefield. The vacancy rate has continued to rise—as it has in recent quarters—due to continued supply growth and an increase in sublease availability. Even so, the overall average asking rate eked out a 1.9 percent increase quarter-over-quarter to $1.08 per square foot.

Phoenix’s construction pipeline remains the largest in the U.S., Cushman & Wakefield reports, with 35.4 million square feet underway. The warehouse/distribution sector dominates the development pipeline, with about 20.8 million square feet under construction.

Industrial vacancy in the Airport submarket of Phoenix stood at 6.2 percent in Q2 2024, the same report shows, and has seen nearly 1.4 million square feet of new leasing activity through the first half of 2024.