Target Information

1788 Holdings has made notable strides in the Baltimore City area with its recent acquisition of a light industrial/manufacturing building at 6901 Rolling Mill Road, encompassing 75,000 square feet, and an additional facility at 1601 Wicomico Street measuring 351,000 square feet. The total investment for both properties amounts to $22.8 million. Located on 6.4 acres, the property on Rolling Mill Road is conveniently situated just over a mile from the Eastern Avenue exit of Interstate 95 and is completely leased to a single tenant. Meanwhile, the Wicomico Street property, adjacent to Interstate 95 by Russell St. North exit, offers nearly three acres of outdoor storage and is fully leased to three different tenants.

1788 Holdings highlights the importance of Outside Storage Land (OSL) as a significant component of their acquisition strategy, believing that access to such land creates a substantial competitive edge within the Baltimore City submarket. The company recognizes Baltimore's position as a key port city for roll-on/roll-off cargo—especially automobiles, trucks, and heavy equipment—and anticipates sustained demand for storage space in proximity to the port. With many light industrial properties nearby lacking extra land for outdoor storage, 1788 Holdings aims to meet this ongoing demand effectively.

Industry Overview in Baltimore

According to a recent market report from Prologis, Inc., Baltimore has emerged as the top-performing international market for rental growth, achieving an impressive rate of 11%. This upward trend is projected to continue as challenges in urban areas regarding replacement costs and constraints on new supply could further bolster rental growth. The city’s logistics infrastructure has also seen modernization, aligning its capabilities to serve larger markets, such as Philadelphia and New York.

Furthermore, a report from CBRE indicated a low vacancy rate of 1.6% for industrial properties in Baltimore City, significantly lower than the 5.1% average in the broader Baltimore Metropolitan Statistical Area (MSA). The report deemed Baltimore the fifth-best market in the United States for projected rent growth over the next five years, forecasting cumulative increases close to 32%. This projection arises from the limited capacity for adding new supply and the rising costs associated with property replacement.

In the current environment, 1788 Holdings stands to benefit from a trend shared in Cushman & Wakefield’s 2021-2022 North American Industrial Outlook, which notes that ongoing tailwinds in e-commerce and an emphasis on supply chain resilience are set to maintain upward momentum within the industrial sector. A significant absorption of over 481 million square feet of industrial space is anticipated across North America during this period.

Rationale Behind the Deal

The strategic acquisition of these properties aligns with 1788 Holdings’ long-term approach to expand its portfolio of light industrial assets. The emphasis on acquiring properties with substantial outdoor storage land reflects a commitment to addressing a growing niche in the market. Baltimore’s unique position as a logistics hub presents a compelling opportunity for investors, given its unprecedented demand for accessible storage solutions.

1788 Holdings’ leadership cited their strong conviction that these acquisitions not only fill current market gaps but also position the company favorably within an industrial sector poised for considerable growth. With the projected rent increases and the current low vacancy rates, this investment is likely to yield fruitful returns.

Information About the Investor

1788 Holdings, founded in 2018, has been actively building its light industrial platform starting with the acquisition of Riverside Business Center, a substantial 435,000 square foot property in Lehigh Valley, Pennsylvania. The company has since broadened its investment reach across seven states and is focused on capitalizing on opportunities presented by undervalued warehouse and industrial assets. With a goal of enhancing operational efficiencies and re-tenanting properties, 1788 Holdings possesses a robust strategy for maximizing returns on their investments.

Committed to leveraging economic conditions, the company’s leadership emphasizes the importance of seizing extraordinary opportunities when they arise. Their experienced team is well-equipped to navigate the complexities of the market, ensuring their investor group reaps the benefits of their strategic investments.

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The recent investments made by 1788 Holdings in Baltimore's industrial properties exemplify a well-calculated move in a thriving market. Given Baltimore's strong logistics infrastructure and low vacancy rates, these deals appear to be promising investments. The continuing demand for accessible outdoor storage alongside the projected increases in rental rates creates a favorable environment for property appreciation and income generation.

The focus on Outside Storage Land places 1788 Holdings in a beneficial position, distinguished from competitors who lack similar assets. As the industrial landscape evolves, the strategic foresight demonstrated by the company suggests a keen understanding of market dynamics that should lead to value creation for stakeholders.

Furthermore, the expertise and experience of 1788 Holdings’ management team bolster confidence in the execution of their acquisition strategy. Their proactive approach positions them well to navigate potential challenges and seize growth opportunities within the changing industrial sector. Overall, these acquisitions could pave the way for significant returns, aligning with both the company's long-term vision and the broader market trends.

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