Industrial Logistics Properties Trust has expanded its footprint into Kansas with the acquisition of a state-of-the-art net leased distribution center in metropolitan Kansas City. The REIT purchased the 645,000-square-foot building at 17001 W. Mercury St. in Gardner from USIR II – GARDNER LLC, an entity of USAA Real Estate, in a transaction valued at $44 million.
With this acquisition, Newton, Mass.-based ILPT now has a presence in 32 states across the U.S. The REIT has been eager to bolster its portfolio, but the right opportunities have not exactly been plentiful over the last several months. “Strong performance of industrial real estate during this pandemic has continued to attract capital looking for deployment opportunities,” John Murray, CEO of Industrial Logistics Properties Trust, said during the company’s second quarter 2020 earnings conference call on July 29, 2020. “As such, competition has been strong and cap rates continue to hold steady, especially for newer, long-term leased credit tenant buildings, which ILPT targets for its portfolio.” With 17001 W. Mercury, ILPT emerged victorious.
Located roughly 30 miles southwest of downtown Kansas City, 17001 W. Mercury opened in 2018, having been developed by USAA and LS Commercial Real Estate as a build-to-suit for current tenant Excelligence Learning Corp. at a cost of $38 million. Excelligence occupies the fulfillment center under a long-term lease with approximately 12 years remaining.
Room for Growth
In addition to a steady income stream for the next decade-plus, 17001 W. Mercury offers ILPT upside potential; the 57-acre property includes land capable of accommodating future expansion.
While ILPT has not committed to any development projects, a new addition to the site would likely be met with a warm reception. Industry experts expect the industrial sector to continue to perform well across the U.S. in 2021, and the Greater Kansas City area—of Kansas and neighboring Missouri less than five miles away—is no exception. “Bulk Industrial demand remains high, with total vacancy near a 14-year low,” according to JLL’s 2021 Midwest industrial outlook report, and developers have broken ground on 5.8 million square feet of industrial space in 2020.