Champion Realty shifts focus to target industrial

Posted By Mariah Brown On August 15, 2018 @ 9:11 pm In News 

Champion Realty Advisors
, a Chicago-based commercial real estate firm, refocused its strategy to focus on transportation- and outdoor storage-related acquisitions. “We are capitalizing on [our] solid reputation in the industrial real estate community, rather than creating a new entity to grow and diversify the transportation and outdoor storage assets we already own,” said J.D. Salazar, CEO.

The company, which represents family offices and high-net-worth individuals, made the shift due to high prices for vacant land in many of its core markets. The decision to create new yards for parking trucks, trailers, containers and chassis fit in with Champion’s existing focus on the industrial sector. “This is an asset class we have a deep knowledge of. It’s industrial real estate that is still primarily owned by entrepreneurs, so we don’t face institutional competition for acquisitions,” Salazar said.

Some of the challenges in the company’s new sector is finding the appropriate zoning. Those same barriers exist for properties that are designed for outdoor storage of products like building materials, sales, and rentals of heavy equipment, Salazar said.

In the 27 markets Champion follows, the vacancy rate for transportation and free storage properties is less than 2% as compared to an overall industrial vacancy in the mid 5%, according to data from the firm.

Major consumption zones are a focus for the firm. Champion has its eyes on 10 primary markets and 17 secondary markets. Rounding out the top 10 primary markets are some of the most significant consumption zones and transportation centers in the country, including Atlanta, Charlotte, Miami and South Florida.  There attractive for Champion because of their pro-business regulatory and tax environments, according to Salazar.

Additionally, Kansas City is a top market for the firm. Although it is not a significant consumption zone, the submarket has three intermodals and a strong manufacturing base. “Tons of goods from Mexico travel on the rail through KC,” Salazar said.

Some secondary markets the company is eyeing include Nashville, Memphis, Salt Lake City, Denver and San Diego.

Key acquisition criteria for the company is a minimum going cap rate of 8% unleveraged and a minimum 18% internal rate of return over the hold period. In the last 12 months, Champion and its previous partners acquired three properties in Atlanta and one in suburban Forth Worth and another on the I-55 Corridor in Chicago, all of which exceeded the acquisition criteria, Salazar said.