“Continued strong performance by our team, our portfolio and the industrial real estate market overall drove another excellent quarter. We grew occupancy 70 basis points to finish the quarter at 97.6%.” That is according to Peter Baccile, president and CEO of First Industrial.
Baccile said on the firm’s Q3 call that “Cash same-store NOI grew at 6.8% and cash rental rates were up 9%. These metrics and others provide a firm foundation for a continued strong rental rate growth in 2019. We’ve already inked approximately 40% of next year’s role at a cash increase of 10.7%. We know that this is only a portion of leases to roll, but directionally, it’s a useful data point for you on 2019 rents at this point in time.”
Moving on to the bigger picture, he said that fluctuations in the stock market, concerns over trade and tariffs, and the increase in interest rates rightly have many wondering about the direction of the economy. However, he said, “the U.S. economy is strong with solid GDP growth, high consumer confidence, and record or near record unemployment that is driving a strong labor market and some real wage growth. From our viewpoint, we continue to see tenants investing in their supply chain to accommodate future growth and consumption.”
When he turned to development leasing, he said that during the third quarter, the REIT was successful in leasing its 644,000-square-footer at First Park @ PV-303 in Phoenix on a long-term basis to XPO Logistics. “Our total investment was $41.1 million and our cash yield was 7.8%. The lease will commence during the fourth quarter and the building will also be placed in service at that time.”
Moving on to sales, he noted that the company had a successful quarter with dispositions totaling $22.5 million, which included four buildings and three land parcels. “In the fourth quarter to-date, we’d have – we’ve had one additional sale in 84,000 square foot building in Southern New Jersey for $4.2 million. Including this fourth quarter sale, we’ve completed $125 million of sales year-to-date. As noted in our last call, our original guidance for the year was $100 million to $150 million and we now expect to be at or above the top end of that range.”