Industrial properties are used for non-public commercial purposes, such as warehousing and distribution centers as well as factories. The growing need for logistical facilities and last-mile distribution centers near largely populated areas makes warehouses and distribution centers an attractive long-term investment. Our goal with these investments is to generate a consistent income from commercial tenants, and position our investors to capture any appreciation in the value of these properties in supply-constrained areas.

As part of our broader strategy to opportunistically acquire high quality properties during the current downturn, we’ve closed on a 570,000 square foot Class-A industrial property near Phoenix, Arizona, for a purchase price of roughly $82.7 million. The property is conveniently located just 30 minutes from downtown Phoenix and within two miles of the Loop 303 corridor and newly-constructed Northern Parkway, providing access to major transportation arteries that lead to key markets in the western United States, such as Los Angeles, Las Vegas, Central Phoenix, and Salt Lake City.

As demand for more and faster delivery continues to grow, we believe that “last-mile” distribution facilities located close to major population centers will become increasingly important for retailers.

This acquisition was made by a joint venture between two Fundrise sponsored funds. Including budgeting for renovations, soft costs, and other fees, the Flagship Fund invested roughly $24.4 million, and the East Coast eREIT invested roughly $2.7 million, bringing our total projected equity commitment to roughly $27.1 million.

Business plan

The newly constructed Class-A building is located within the West Valley region, part of the core industrial submarket of Phoenix, and well-suited for a variety of industrial applications, including as a last-mile distribution facility. The West Valley has established itself as a thriving industrial hub as Phoenix has expanded at an exceptional pace over the last decade, shaping into the fifth-largest city in the nation. As the MSA grows, the businesses based there require efficient distribution systems, which are serviced by properties like this one.

A last-mile distribution center, also referred to as a terminal building or sorting center, acts as a handoff point to connect 18-wheeler trucks, which typically carry goods in bulk across longer distances, with the smaller vehicles that make the final leg of the journey to drop off packages at individual homes and businesses. The cross-dock configuration and high ceilings of this property makes it an ideal fit for industrial tenants and an attractive option for businesses looking to expand, further contributing to the high demand we've already seen.

We plan to hold and manage the property over the long term, leasing the space with the goal of earning regular rental income, and then eventually selling the property at a profit.

PROPERTY TYPE: INDUSTRIAL 

INVESTMENT STRATEGY: VALUE ADD

CONTRACT DURATION: 10 YEARS

MINIMUM INVESTMENT: $100,000