Duke Realty Achieves 64% Preleasing for Meadowlands Warehouse

Duke Realty Corp. DRE recently announced preleasing of its new industrial building at 5 Ethel Boulevard in the Meadowlands. Particularly, the company has struck a lease with GraceKennedy Foods (USA) LLC for 124,888 square feet of space in the building. This lease with the distributor of Caribbean, Central American and South American food products has helped achieve 64% preleasing of its new warehouse.

Slated to be delivered in early 2019, this under-construction building will have a total of 193,888 square feet of space after completion. Having considerable access to highways, the construction of this building was made on a speculative basis. It will provide large block of modern warehouse space.

The development of this speculative building was a strategic fit as demand for industrial real estate space continues to be solid, as Northern NJ and the Meadowlands enjoy close proximity to the densely populated New York City metro area, which offers distributors the scope to reach a bulk population in a short time. However, availability of such functional facilities is lesser in the region. Notably, Duke Realty has solid presence in New Jersey, with a portfolio of nearly 5.7 million square feet of industrial properties. This will help the company leverage on the healthy fundamentals in this asset category in the market.

In fact, on an overall basis, the industrial real estate asset category has grabbed attention as high consumer spending, strength in e-commerce market and a healthy manufacturing environment amid recovering economy, as well as job market are boosting demand for the real estate category. This is opening up growth opportunities for industrial REITs, including Prologis, Inc. PLD, Duke Realty, Terreno Realty TRNO and Liberty Property Trust LPT.

Specifically, Duke Realty has resorted to sale of suburban office assets and medical-office buildings in the past, in a bid to transform itself into a domestic-focused industrial property REIT. This augurs well amid favorable market environment in this asset class. Moreover, favorable preleasing activity for under-construction properties highlights the robust demand in the market for modern and premium distribution space. In fact, Duke Realty owns and operates industrial properties, comprising approximately 152 million square feet of rentable space. These properties are located in 20 key logistics markets.

However, with rising supply of industrial real estate space, there is lesser scope for rent hike. Also, any protectionist trade policies will have an adverse impact on economic growth as well as the company’s business in the long term.

Duke Realty currently has a Zacks Rank #3 (Hold). Year to date, the stock has returned 4.5%, while its industry edged down 0.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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