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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.

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.

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