How can you create an industrial opportunity for yourself? Is it through value add or ground-up development or single tenant or multi-tenant? And also where are industrial buildings more in demand for? Is it near major airport hubs, trains, or freeways? Amy Calandrino is an expert and has been doing this for over 10 years. She has CCIM and SSIOR certifications and is the founding principal of Beyond Commercial.

Tell us a little bit about you.
I'm founder and CEO of Beyond Commercial, we are an independent women lead brokerage in Orlando, Florida. We are both WBE and WOSB, we have a women's business designation both federally and otherwise. We specialize in all different asset classes and primarily private investors in small to medium-sized businesses. However, we have taken some outside projects for corporate and institutional clients.

I've been doing this for over a decade, I was in law before this, I have an amazing business attorney husband and two toddlers and outside of this, I have a podcast and way too many hobbies to count. If I had to rank the top three, it would be traveling, I love booking trips and figuring out the logistics of it; golfing and hanging out with my family and friends.

What is the state of industrial today?
When I first got into industrial real estate and commercial real estate, deals would trade in the teens, 20s, or 30s per square foot, this is not rental rates, this is to purchase and it was incredible to see following the recession then to see those same areas now trading for anywhere from five to 10 times where they were before, which is a testament to Florida's grow.

Florida continues to be strong because we have an overall supply chain that has been realigned, a lot of what previously went to the West Coast is now coming over to the East Coast and Florida is seeing a direct benefit of that. Also, Florida has had a huge population migration and rooftops lead, and commercial follows, which is usually retail office industrial. We're seeing a lot of different uses for industrial than we ever used to see before where it's a little bit of the new retail where we are having grocers that are operating out of warehouses and delivering to people's houses rather than people going there. We're seeing a lot of fitness, distribution, and traditional uses as well, but on top of that, we're creating this modern, big tilt wall 30-foot high or more free-span buildings. It's incredible to see that and the type of uses that you can see in there that are non-traditional uses. Industrial saw a lot of growth because of that. Are there other areas that are oversaturated and cooling more quickly? Yes, but in my market in Orlando, which seems to be leading right now as far as metrics, it's strong.

You mentioned fitness for industrial.
If you're in a small bay center, you might see someone having a CrossFit gym, especially in Florida because it's so hot. All these people come to Florida and say, "Oh my gosh, I'm living in an oven." We have indoor pickleball, indoor tennis, and indoor soccer fields and that's how we beat the heat, we have so many sports uses. It was really interesting to see that Miami Marlins was played completely inside. In Florida, we've gotten so hot and I don't think people want to sweat all that much that we have a lot more indoor sports uses.

In other states, industrial is also extremely popular right now, how can someone add value or create an industrial opportunity for themselves? Do you think the opportunities are more on ground up development, value add, single tenant, or multi-tenant?
Do a GAP analysis of what's going on in the particular market that you're looking to invest in and see what industries are happening there so you know what product you're developing, and studying how those have been leasing up, their rates, etc. When you decide to do a project, it's going to be a couple of years before it comes to fruition. I see opportunities infill, and recently, industrial such as Uber Eats kitchens, ghost kitchens being retrofitted. Older B and C buildings sometimes become antiquated and if you feel like there's a large enough need, building ground up is a good call. People want to not have to use these older buildings, especially if you can't refrigerate them. There's a big opportunity in refrigerated industrial because if you don't build that from the beginning, you can't always retrofit it, and that refrigerated space goes really quickly. Modern buildings, having the tall construction, clear span, and refrigerated, if you have an opportunity in a market to add that, I think it would be a solid play.

Can you give us some guidance on what should people look for price per square foot for the land, and what kind of rents they could be getting? Please take an example of a specific area in Orlando and a specific type of space because they're all different in price.
It depends on where in Orlando because we have a giant beltway that is about completed around the city and the more central in the south of Orlando that you are, the higher rental rates are because of the proximity, you're closer to the Cocoa Beach port, to the Orlando International Airport and to Tampa that also has a port. When you get up into the northwest side of Orlando, it tends to be a lot of wildernesses, springs and there's not as much commerce there. What has been trading there has been on average, about $150 a square foot, but it depends on the size. If you're developing something that's a 20,000 square foot project, versus a 100,000 square foot project, it's going to completely vary and it also depends on whether you found someone to do a build to suit for.

A couple of years ago, you'd be looking at three to 400,000 per acre, and my rule of thumb is you need one acre per 10,000 square feet, depending on wetlands. We have a lot of wetlands here in Florida that you have to mitigate for and figure out what's it going to cost to engineer this project. But what would you rent it for? If you're talking about something that's more like 20-30,000 square feet, it would be in the teens, and for refrigerated I think you'd get a couple of dollars more. That's my gut from looking at all the different comps but you'd be looking at probably 12,13, 14 per square foot for a brand-new project if you did a custom build, and add a little bit for the additional building envelope, that's going to be more of the core area of the Orlando market.

Is there a location that is even more ideal for industrial such as major airports, trains or freeways?
You want to be close to railways if you are getting a lot of products, so you need to be rail served. I have a client that has 10s of 1000s of square feet and they are in the northwest area because they don't really need to worry about the airport, but they do get some product by rail that they work through. The most popular right now, if you're doing a heavy distribution, is on the east side of town so that you're close to both the port, the airport and you have a rail. Having all the options is why that is the most expensive. It used to be the majority of port traffic was going over to California and then it would have to work its way all the way across the country, we're seeing a lot more shipments going through the Panama Canal and coming to the ports and then working through rail serve to get to people, or even working up the river ways. My answer would be all the above, however, with a slight emphasis on ports on the East Coast, they are more valuable than before.

I recently did a podcast on the demise of San Francisco and California. I want to highlight that it is indeed happening, Amy lives in Florida, and is seeing things moving there. You need to really think about where you're investing next because that is where people are going.
Cell phone usage is 31% of what it was pre-pandemic in San Francisco.

If industrial is in high demand right now, why do you think Blackstone is selling a lot of their industrial portfolio?
They sold a lot to Prologis just a few months ago, I don't think it was so much of a decision of Blackstone, I don't think they were looking for a buyer. I wasn't able to figure out whether they solicited it or not but I know Prologis has been in huge expansion mode and from what I understood, Blackstone was able to turn a huge profit on this, they're going to reinvest into some other things so they had a good basis. Prologis also had an opportunity, these properties were being under-managed because it wasn't their specialty. Who is the king of industrial? Prologis. I think Prologis thought of an opportunity to acquire in some of these key locations, and they were able to pay a number that Blackstone couldn't say no to, and I think that's what ended up happening.  I don't know if it was so much of Blackstone's lack of belief in industrial as Prologis really wanted all those properties. I did try to reach out to a couple of contacts there but wasn't able to get that confirmed ahead of time but that's my gut.

Is there anything else that you think is important for our audience to know that we haven't touched on regarding industrial?
What's important to understand about industrial that is different is if you are not a cash buyer and you're acquiring, or if you are a seller, being much more creative in structuring a deal is going to create win-win opportunities. If you are a seller, perhaps consider the opportunity to provide seller financing, first consult your CPA, but having an installment sale could be beneficial and that could keep you having some cash flow coming in and help to mitigate some of those losses. If you're undercutting the bank by a point, you're still maybe doing well, it's something that you can consider. I'm seeing more of that happening because if you're going to the bank and you're paying 7%, the seller may not get what they want, but maybe the seller can get more if they look at doing creative seller financing. If you're building anything new, we still haven't seen material and labor come down, I don't expect any huge increases to the labor and materials from what I've read, I'm not expecting there to be any huge increases as well as far as constructions, but it's still high, so it makes it challenging.

Amy Calandrino
(407) 641-2221

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