Truck Terminal Investment and Occupier Perspectives
A rapidly “institutionalizing” industrial sub-sector brings investment opportunities. Occupiers in the space are critical to the 24/7 supply chain backbone of the nation.
- Chad Buch
- Dean Brody
- Robin Stolberg
Truck terminals are not a new asset class, but after over 70 years in existence, they are now receiving increased occupier and investor attention because of their critical role in the movement of goods amidst supply chain backlogs. Truck terminals were once primarily the domain of LTL (less-than-truckload) operators but the growth of e-commerce and the need for more forward-deployed inventory to meet increased customer service expectations are driving increased occupier demand for the space.
Truck terminals fall within the specialized property sub-sector of Industrial Service Properties (ISP). These assets are classified by low building-to-land coverage (aka FAR). By virtue of the asset type, sales prices (per square foot) are typically higher than traditional industrial assets. One of the key reasons behind the inherently high values is because such properties typically have large secured lots for short and long-term parking of truck fleets, trailers, or chassis.
Investor interest is picking up for this formerly “niche” property subtype, which was once the domain of a handful of logistics-focused players. Recently a new crop of institutional investors hunting for higher yields have started making a push into the ISP space via portfolio acquisitions or dedicated funds. However, a large component of the ISP sector remains owner occupied due to the mission critical nature of these transportation-intensive assets.