The FORT Podcast – Jack Fraker – President, Global Head of Industrial & Logistics @ Newmark – Macro Overview of Industrial Real Estate
Jack Fraker is President and Global Head of Industrial & Logistics Capital Markets for Newmark. He is responsible for driving Newmark’s industrial & logistics business, primarily capital markets but also leasing.
Jack has personally completed over 1,800 industrial & logistics capital markets transactions totaling 1.5 billion square feet | $85 billion in more than 60 U.S. cities, Mexico, Europe, Japan, and South America. He has also advised on approximately 12,000 acres of development sites and over 300 office/industrial leasing assignments. As a partner with other firms prior to Newmark, Jack was cumulatively involved in over 3.3 billion square feet | $220 billion in various projects.
We discuss:
- The global state of Industrial real estate
- Development, leasing, and sales trends
- The Future of Industrial in Texas and Mexico
Listen on:
Spotify
Apple Podcasts
YouTube
Topics
(00:00:00) – Intro
(00:04:21) – Nokia ’94-’00
(00:11:20) – “Inventing” investment sales in the industrial world
(00:17:20) – How is industrial positioned globally?
(00:20:56) – How is America viewed globally regarding industrial?
(00:23:37) – Is it harder to close deals with foreign investors vs. domestic ones?
(00:25:39) – What have you experienced in the market in the last 2 years?
(00:32:52) – What does a good spec developer look like and what does a bad one look like?
(00:38:28) – The pressure of AI on rents
(00:39:54) – Mexico
(00:41:57) – What does the future of Industrial look like for Texas?
(00:44:38 – Development, leasing, sales, and TI
(00:50:36) – What data do you pay attention to most when thinking about the industry?
(00:53:19) – Retail-to-industrial
(00:54:25) – Technology trends
(00:57:51) – How do multi-billion dollar deals get done?
Episode Summary
Fraker began by recounting his work with Nokia in the 1990s, when he facilitated the company’s expansion into the United States by securing a distribution center and later a North American headquarters in the Dallas-Fort Worth area. His strategy focused on utilizing the region’s tax exemptions and attractive logistics infrastructure, specifically Fort Worth’s Alliance area, which offered Nokia significant operational and tax savings. This partnership grew into a long-standing relationship, with Fraker assisting Nokia in acquiring spaces in other U.S. and Latin American cities, including major hubs like Silicon Valley, Ottawa, and Mexico City. His success with Nokia exemplified his ability to anticipate client needs and work across international markets, establishing a precedent for large-scale industrial real estate development.
Fraker then discussed the evolution of the industrial investment sales market, highlighting his pioneering work in the 1980s. At that time, institutional interest in industrial properties was uncommon, with most sales happening among local investor groups. Fraker’s work on a sale to Prudential marked one of the first major institutional transactions in industrial real estate. He and his team further cemented this trend by winning bids on key projects with firms like LaSalle Partners, ultimately expanding their business beyond Dallas to places like Columbus, Ohio, and Houston, Texas. By emphasizing hands-on knowledge of properties and markets, Fraker and his team successfully differentiated themselves from other brokers, which helped them win additional national and international assignments.
Shifting to present-day trends, Fraker described the growing global interest in U.S. industrial real estate as a preferred investment class. The asset class has attracted capital from Asian, Middle Eastern, and European investors who view U.S. logistics and industrial properties as stable, high-performing investments. According to Fraker, investors are increasingly drawn to this sector due to its resilience, low maintenance costs, and potential for steady returns. Industrial properties, now known globally as logistics assets, have become more desirable as investors seek diversification beyond traditional office and retail properties. Fraker explained that the COVID-19 pandemic accelerated this trend, as demand for warehousing and distribution surged to support the growth of e-commerce and the shift in consumer buying patterns.
Fraker also explored the impact of international investments, especially from Asia, where large companies like Samsung and Mitsubishi have shown interest in expanding operations in the United States. He noted that these firms are not only focused on investing in industrial properties but also in leasing spaces near their existing operations. This approach, where firms seek out properties near their supply chain hubs, has led to increased competition and collaboration with local investors. Fraker emphasized that while large deals may require additional due diligence, the closing process for foreign investors has become streamlined, with both local and international investors now operating within similar financial and legal frameworks.
Discussing current market dynamics, Fraker addressed the effects of rising interest rates on industrial property transactions and development. Despite recent increases in interest rates, he observed that investor interest remains strong, especially as U.S. rates begin to stabilize. Many global investors plan to increase their involvement in U.S. industrial properties starting in 2025, once political and economic conditions become clearer. Fraker forecasted a promising future for industrial real estate as developers manage supply, focusing on speculative projects in high-demand regions like Dallas-Fort Worth. He highlighted that rental rate growth, once uncommon in industrial leasing, is expected to continue, particularly in areas with high population growth.
Fraker provided insights on emerging challenges in industrial real estate, including competition for power resources and the rise of automation within logistics facilities. As industrial spaces increasingly compete with data centers for electricity, he noted that securing adequate power has become a critical factor for future development, especially in tech-intensive facilities. He also pointed out the rising importance of automation and robotics, which can enhance operational efficiency within warehouses. However, he warned that automation demands substantial power and facility adaptations, underscoring the importance of infrastructure planning for long-term leasing and investment value.
The conversation then shifted to regional growth, with Fraker discussing industrial trends across Texas and Mexico. In Texas, he highlighted cities along the I-35 corridor, particularly Laredo, which serves as a major trade hub with Mexico. Fraker shared insights into the rising demand for industrial space in Mexico, where economic and trade conditions have made it an attractive area for investment. Industrial properties in Mexico benefit from proximity to the U.S. market, low labor costs, and a growing middle class, which contributes to consistent demand for manufacturing and logistics facilities. He described industrial properties in Mexico as highly institutionalized, with stable tenant bases and many multinational corporations choosing to invest in or lease these assets.
Fraker noted that market shifts over recent years have led developers to focus on building larger facilities, particularly one-million-square-foot speculative properties. However, he cautioned against oversaturating the market with large facilities, as smaller, strategically located buildings often yield higher long-term occupancy rates and consistent rents. He suggested that while some developers maximize site usage, others are adopting a more thoughtful approach, incorporating power charging infrastructure for electric vehicles and maintaining flexibility for future tenant needs.
Addressing the impact of technology, Fraker discussed the increasing role of AI and data analytics in real estate. He explained how sophisticated investors use AI to analyze tenant behavior and supply chain requirements, enabling them to maximize rental income and better understand tenant retention. By evaluating tenant logistics and supply chain data, landlords can justify higher rents and reduce vacancy risk, ultimately optimizing investment returns. Fraker’s insights underscored the importance of technological integration within industrial real estate, which he sees as a driver of competitive advantage and operational efficiency.
In terms of investment strategy, Fraker observed that industrial real estate offers unique advantages due to its relatively low maintenance costs and strong market fundamentals. He explained that, unlike office spaces, industrial properties require less capital to re-lease and offer greater flexibility in lease structures. This adaptability has made industrial real estate attractive for investors seeking stable, long-term returns. Fraker emphasized that, although high-value deals garner attention, his approach has always been to treat all transactions with equal diligence, regardless of size, a practice he believes has contributed to his long-standing reputation in the industry.
Throughout the conversation, Fraker emphasized the importance of understanding demographic and economic trends when evaluating industrial investment opportunities. He noted that Texas’s pro-business environment and population growth, particularly in Dallas-Fort Worth, are key factors driving industrial demand. Looking forward, he expects industrial assets to remain a core focus for investors as these regions continue to grow.
The FORT is produced by Johnny Podcasts