Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

The Blackstone Group’s offices in New York.

Scott Eells/Bloomberg

As North America evolves into a digital economy and e-commerce steals market share from bricks and mortar retailers, real estate owners are sometimes portrayed as dead in the water. Giants such as RioCan REIT own the malls and retail plazas that struggle to fill vacancies left by the departures of stores such as Sears Canada, and investors are prone to panic.

The reality: Some real estate owners have actually profited from the digital push, particularly those with industrial properties dominating their portfolios.

On Tuesday, Blackstone Property Partners gave the sub-sector even more heft, agreeing to pay $3.8-billion in cash for Pure Industrial Real Estate Trust. The price includes PIRET's substantial debt, owing to mortgages on its portfolio. The value of the deal's equity portion is $2.5-billion.

Story continues below advertisement

PIRET owns industrial properties across Canada and select U.S. markets. Its tenants include IKEA Distribution Services and Fedex. The company went public in 2007 and, as of Monday, before its acquisition was announced, the units had returned 267 per cent, including distributions.

Just as importantly, PIRET's occupancy rate for its industrial properties stood at 97 per cent as of Sept. 30.

"The industrial asset class continues to be one of the strongest across the country," CBRE Group wrote in its latest market report. "Yields have plummeted over the past two years as a lack of supply and extremely strong leasing fundamentals have driven investor interest."

Industrial assets are particularly hot in Toronto and Vancouver, where new development is constrained either by geography or government regulations. The average capitalization rate for Toronto's highest quality industrial properties now stands at 4.5 per cent, according to CBRE, only 0.25 percentage points behind that of top-notch downtown Toronto office towers. At the start of 2014, the spread between them was a full percentage point.

Blackstone's total purchase price, including debt, implies a 4.8-per-cent capitalization rate, and the demand from such a reputable buyer sent rival industrial REIT valuations higher Tuesday. Summit Industrial REIT jumped 7 per cent and Dream Industrial REIT climbed 3 per cent.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to
Comments are closed

We have closed comments on this story for legal reasons or for abuse. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies