The FORT Podcast: Stephen Bailey – Senior Managing Director @ JLL – DFW Industrial Market Update

Stephen Bailey, Senior Managing Director at JLL, joins Chris again to discuss the current state of capital markets and the ideal situation for sellers going to market – hint: Low WALT. They also dive into land prices, forwards, and cost to construct and how the demand continues to rise, despite the volatile market. Enjoy!

Listen on:
Apple Podcasts

(03:15) – The State of the Market Post-2022 and Where Stephen Sees the Opportunity

(07:15) – When did you start noticing volatility in the market?

(08:59) – How are capital flows reacting to this?

(12:03) – Are Lenders getting hesitant?

(14:40) – The State of the Capital Markets

(15:50) – How many buyers are shifting their focus to industrial from other assets?

(18:45) – What due diligence do you conduct on a buyer?

(20:23) – What Are Some Interesting Terms You’re Seeing in Leases

(23:17) – How is Texas performing compared to other hot markets?

(24:32) – Thoughts on Amazon

(27:17) – Thoughts on Large Industrial Tenants & Development

(33:09) – Land Prices

(34:49) – Construction & loan rates

(35:44) – Class B Industrial

(37:06) – Forwards

(38:04) – Thoughts on Industrial Outdoor Storage

(41:11) – What happens to debt when you get above a certain purchase price?

(42:39) – How Fort Capital is Applying What Stephen is Seeing

(54:29) – Final Thoughts


Episode Summary

In a recent illuminating episode of Chris Powers’ esteemed podcast, Stephen Bailey, a recognized figure in the real estate sector, offered profound insights into the current landscape of the industry. Bailey’s depth of knowledge, a culmination of years of hands-on experience and astute market observations, provided listeners with a panoramic view of the real estate milieu.

The discussion commenced with an in-depth exploration of market fundamentals, emphasizing their unparalleled strength, especially in the industrial sectors. As the dialogue progressed, the duo shed light on the post-2022 real estate horizon, identifying both burgeoning opportunities and potential vulnerabilities. One of the pivotal points of the conversation revolved around property underwriting. Bailey highlighted the paramount importance of accuracy in this domain, elucidating how current market dynamics influence property values and shape both sellers’ and buyers’ perceptions.

Leasing dynamics formed another cornerstone of the discussion. With a keen focus on DFW (Dallas-Fort Worth), Bailey elaborated on the notable disparity in rent costs between markets. He accentuated the intrinsic cost structures of various markets, which often lead to significant rent differences. For instance, tenants in DFW, despite enjoying the same amenities and services, often find themselves paying substantially less than their counterparts in other markets.

Capital markets and their intricate interplay with real estate were thoroughly dissected. The resilience of debt markets, especially amidst volatile times, emerged as a recurring theme. Bailey underscored the influence of large entities like Amazon in shaping the leasing market, delving into their strategic negotiation tactics and the consequential market reactions.

Stephen Bailey also provided invaluable insights into construction loans. He detailed the inherent risks developers might face, especially when deliberating between fixed rates and potential rate risks upon building completion. A salient takeaway was the merchant-minded nature of many developers in the region, an approach characterized by rapid construction, leasing, and sales cycles.

Furthermore, the discussion broached the subject of capital market nuances, especially when navigating sizable portfolios. The challenges smaller investors face, juxtaposed against the formidable might of larger institutional entities, were laid bare. Bailey and Powers also touched upon the dynamics of rental rates, pondering over their potential plateaus and the implications of property locales, especially for Class B tenants.


The Fort is produced by Johnny Podcasts

Back to Top