DC Velocity - March 2018

28 DC VELOCITY MARCH 2018 www.dcvelocity.com newsworthy

The battle for a share of the red-hot U.S. industrial prop-
erty market has been joined by a very big player: Goldman
Sachs.

New York-based Goldman Sachs Asset Management’s (GSAM) private real estate arm said last month that it would be the equity investor in a joint venture to develop the East Coast’s first multilevel distribution center: a three-story 370,000-square-foot facility along the docks in Brooklyn’s Red Hook waterfront section that is set for completion within the next 12 to 18 months. The unit would not comment on the project’s cost.

Seeing the Goldman Sachs name associated with an industrial project is somewhat unusual. That’s because the private real estate unit entered the industrial segment just a couple of years ago and has kept a low, if not invisible, profile since then. The unit has so far invested in 2. 6 million square feet of industrial assets, a drop in the bucket considering there are 13. 1 billion square feet of occupied industrial space in the U.S., according to data from CBRE Services, the Los Angeles-based real estate services giant.

But as Joe Gorin, co-head of the unit, sees it, footprint
size is immaterial relative to where the feet are located. In
a fulfillment world fueled by e-commerce deliveries within
densely populated urban areas, the future lies with compa-
nies that are close to the end customers, according to Gorin.
A squat behemoth of a DC sitting 40 to 50 miles from a
big population center, while not off the unit’s radar, is not
really where it wants to be, Gorin said in a phone interview.
The executive said the Goldman unit isn’t worried about
getting in at the top of the industrial property bull market,
which just entered its eighth year with no end in sight.
“There is more supply outside of the urban centers,” Gorin
said, noting that, by contrast, the vacancy rate for up-to-
date industrial space in New York is less than 1 percent.

Not surprisingly, the biggest problem in New York and other high-density markets is an undersupply of quality capacity, he said. At the same time, demand for warehouse and DC space is surging and only expected to increase as last-mile delivery fever grips the nation, he said. A good chunk of what industrial space exists in New York is functionally obsolete and not fit for 21st century distribution, the Goldman unit said.

Goldman Sachs unit sees gold in roaring U.S. industrial property market

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