Secret Sauce

Posted on August 17, 2018

Written By: Pryse Elam

It was just four years ago that we launched our Development & Investments platform. Though a relative drop in the bucket, within this time we were able to achieve so much our team should be proud of; specifically, hitting a landmark of $1 billion in assets under management that consists of seven industrial developments totalling more than $600 million and seven million square feet, along with nine existing asset acquisitions totaling more than $500 million and two million square feet across the Southeast and Texas. 

But how did we accomplish this milestone? There were a few factors that contributed to Foundry reaching the $1 billion mark. First, in industrial development, there was and still is a significant need for modern industrial spaces in markets across the Southeast. That demand is driven by the traditional growth associated with a healthy economy but is accelerated by the excess demand created by e-commerce.  E-commerce is changing the way retailers get their products into the hands of consumers, and much of that change is occurring in logistics. In fact, industry experts estimate that every $1 billion increase in e-commerce sales generates demand for an additional 100 million square feet of industrial space. To put this in perspective, Amazon’s sales are in excess of $50 billion per quarter, so it does not take much to move the needle.

Foundry operates in the Southeast and Texas – most of the “growth markets” in the U.S. Population and jobs in these markets are increasing two-to-three times faster than the rest of the country,and our economies are growing 30 percent faster than other regions in the U.S. These are the markets people want to be in, and our industrial development growth reflects that.

While we have been busy building industrial space, that’s not all our D&I team has accomplished. Our investment teams have purchased nine different existing office and retail buildings valued at nearly $500 million over the same four-year timeframe. The same growth trends that have driven industrial demand in the Foundry markets have also driven demand for office and retail. Foundry has been particularly focused on Dallas and the Carolinas, where we have purchased 1.7 million square feet of office space valued at more than $300 million. We have watched job growth in all of our markets drive up demand and absorb most of the office vacancy, making it fertile ground for new investment – and we see nothing in sight that would cause these trends to abate.
While the trends certainly support industrial growth, we may not have been privy to the ins-and-outs of each market if our ears weren’t to the ground where it mattered. As a standard for our D&I platform, we only invest in markets where our associates live and work, ensuring that we know these regions like we know our own backyards since they are, in fact, literally in our backyards. This kind of deep-rooted knowledge is precisely how we secure opportunities like developing Carrie Meek International Business Park, a 2.7 million square-foot industrial asset in Miami that will soon be home to a cutting-edge Amazon sorting facility, or acquiring West Park 85, a 100-acre industrial property in Charlotte’s Airport West submarket. 

Of course, our knowledgeable team and a ripe marketplace aren’t the only reasons for our success. We owe a tremendous amount of gratitude to our esteemed investment partners that were essential to us reaching the $1 billion milestone, among them, PGIM Real Estate, Principal Real Estate Investors, Clarion Partners, Long Wharf Real Estate Partners, American Realty Advisors and Intercontinental Real Estate. The growth of our platform has been supported by these partners and many others, and their belief in our service, our people, and our process. Without their support and belief, our growth is not nearly as dynamic. Additionally, our equity partner, HQ capital, believed in our original thesis and the opportunities we saw in the markets from the start. To them, we are truly grateful. 

While we are certainly proud of and humbled by this growth in such a short period of time, we know there is much more to be done for our clients and partners. We look forward to furthering the growth of our D&I platform with the same passion, drive, and determination that led our investment team to reach $1 billion in assets under management. Here’s to the next four years and beyond.