Prudential Expands Bet on Warehouses as Competition Ramps Up

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Prudential Financial Inc.’s real estate business is expanding its holdings of industrial properties even as prices become competitive for warehouses and similar assets, which have held up during the pandemic.

PGIM Real Estate’s U.S. core fund bought a 2.2 million-square-foot (204,387-square-meter) industrial portfolio for $275 million from Bridge Development Partners, according to a statement Thursday. The newly built properties are in the Phillipsburg and Lopatcong areas of New Jersey near the Interstate 78 highway to New York City.

Most commercial-property types -- including hotels, retail and even offices -- have suffered from social-distancing measures since March. But warehouses have gotten a boost from the rise in e-commerce. Industrial rents rose 2% in the third quarter from the same period last year, according to brokerage Cushman & Wakefield.

“Industrial was aggressive before the pandemic and remains aggressive,” Todd Goldberg, managing director at PGIM Real Estate, said in a phone interview.

Given the growing competition, PGIM Real Estate might focus more on riskier industrial transactions next year, such as development deals or land purchases, Goldberg said.

The fund has acquired 12.3 million square feet of industrial assets valued at more than $1 billion in the past few months in markets including Atlanta, Dallas and Denver. PGIM Real Estate now owns about 120 million square feet of such space globally.

©2020 Bloomberg L.P.

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