Blackstone Group is doubling down on the future of online shopping, agreeing to buy $18.7 billion of U.S. logistics assets from Singapore's GLP in what it says is the world's biggest private equity real estate deal.
Blackstone will gain 179 million square feet of warehouse assets, greatly expanding the size of its U.S. industrial footprint, the company said in a statement late Sunday.
As online shopping grows in popularity, the need for warehouse space by retailers seeking to expand their digital operations and cut delivery times has ballooned. That's lured investors into logistics real estate at a time when other types of commercial property transactions have slowed amid concern over rising interest rates and a pullback by foreign investors.
The sale comes amid record fundraising for private equity real estate funds and a flurry of warehouse deals. Blackstone acquired Canyon Industrial Portfolio's last-mile properties for $1.8 billion in March last year, adding to a string of similar purchases it's made in the logistics arena.
The world's biggest alternative asset manager also agreed to purchase Canada's Pure Industrial Real Estate Trust in a C$2.5 billion ($1.9 billion) deal in January last year, plus more than 100 warehouse assets from Harvard University's endowment for $950 million in September. Much of that portfolio is also made up of so-called last-mile warehouses, which have grown in value as e-commerce companies expand and seek faster deliveries.
The last mile — or getting products bought via the internet to a person's house — is becoming a key differentiator in driving revenue growth, according to Bloomberg Intelligence. This means "starting with a focus on delivery and working backward, keeping the customer experience at the center," BI analyst Jennifer Bartashus said.