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First Industrial (FR)

Participants
Arthur Harmon VP, IR & Marketing
Peter Baccile President, CEO & Director
Scott Musil CFO, SVP, Treasurer & Assistant Secretary
Johannson Yap Co-Founder, CIO & EVP, West Region
Christopher Schneider SVP, Operations & Chief Information Officer
Peter Schultz EVP, East Region
Michael Carroll RBC Capital Markets
Craig Mailman KeyBanc Capital Markets
Robert Stevenson Janney Montgomery Scott
Caitlin Burrows Goldman Sachs Group
David Rodgers Robert W. Baird & Co.
Vince Tibone Green Street Advisors
Michael Mueller JPMorgan Chase & Co.
Rich Anderson SMBC
Nicholas Yulico Scotiabank
Call transcript
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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the First Industrial First Quarter 2021 Results Conference Call. [Operator Instructions]. At this time, I would like to turn the conference over to Mr. Art Harmon. you. Thank begin. please Sir,

Arthur Harmon

Hello, welcome Howard. our everybody, you, to and call. Thank

may Thursday, XXXX discuss time-sensitive remind or well accurate call are as to April based our and These we be expectations, of other securities of results by only date, XX, obligation Actual statements filings. everyone today's assume forward-looking federal statements and provide. defined first materially our update We we on me cause factors Before our differ which may statements our in other let our from quarter as the XX-K described forward-looking prospects. XXXX. and information laws. SEC statements no may statements guidance, as could that plans management's as results are include estimates and updated this our Today's

our can discussed a earnings and earnings measures release. You The supplemental at Investors in tab. today's and filings of financial report, report reconciliation in our firstindustrial.com under our SEC find supplemental the are available non-GAAP call release

Asset Executive Jojo your will Investment Yap, and call Peter President we the are today Chris and and Also Baccile, Officer; Officer; Executive Chief our Musil, Vice Peter call up begin by our Chief it Schneider, for Officer, Operations; Bob open Management. on Chief of Walter, Markets Scott after President with Capital Schultz, and President; of Vice will Senior Financial which Senior President Our Vice questions. remarks

Now Peter. let me turn call the to over

Peter Baccile

in by strong growth consumer significant to We quarter XXX quarter stimulus. of and million with square that government the first first our consecutive improving recent and feet has U.S. exceeded strong quarters. Net in thank This performance, continuing first confidence we million totaled absorption were joining square XXX significantly to Per you economic industrial encouraged very are economic million exceeded square fundamentals Art, demand market. continue the XX all see pleased time completions feet. by report, flash ever call, quarter net absorption the and Similar us. also exceptionally Thanks, CBRE for fourth supported feet quarter. industrial the marks in we our the first

expect, and growth, demand, continuing development to this projects, would strong invest you I shortly. in rent in levels to we occupancy high As which are will discuss response new

start Before first you on me I since and couple last let a of by recap activity, call. results quarter our items updating

David when member he has of XXXX since Region joined our Harker the As Vice company month, of Director and our retiring valued grow President as helping as of Central will shareholders to Region served in as Nashville. company and has XXXX, shape we FR been our a Head our team the our announced David XX. portfolio. June Regional He our Central earlier Executive since this be effective

our and as of the serve Management. and was Inc., nominating Smith our at MSCI, a Marcus the Marcus newest welcome recently of where of he Director will Investment portfolio to is investment were pleased Dave's We and David's and for will enthusiasm, structure well David's quarter, energy regional Yap With Schultz, responsibility will tenacity Jojo the and into region. departure, we we portions first wish consolidate during regions with miss him X on member Director most Board, committees. MFS assuming Also manager retirement. Equity governance corporate of and in each Peter a his our

our shareholders. retiring who our for from also Peter, Thank to company of and to valued Peter you, XX more than acknowledge will We service our be Board. want Sharpe, your years

our portfolio the on quarter. was moving was end quarter Occupancy to same-store results NOI growth for at XX.X%, cash Now and X.X%.

XX% we rate of renewed cash expirations increase XX.X%. and as approximately XX.X%, rates have today, rental rental cash of with grew we quarter, XXXX the our For of a

sales. Moving to on

$XX in-place an and significantly above X properties million at X majority and During approximately leased expect to The of properties a sales X million, the market way X.X%. Thus our we quarter, for we to to sold to of year-to-date bringing tenants $XXX total guidance of move the out. our larger million, $XX million sales far, quarter, units $XX well second on the total related cap rents sold to million. to parcel land rate in our condo vast $XXX for we

investments. Turning now to new

we remains development future profitable new As flow drive means opportunities, continue to out investment of to our primary growth. seek cash

about to initiated announce cap. this and market balance combined we X part new projects performance our second February quarter. are million. a leasing as total with addition and speculative of growth speculative manage leasing our company, the development ago, $XXX represented of X a $XXX Inland X% most you the operate leasing in strong to of When in call. it million quarter Based we growth As Phoenix, future process pleased and The ground the the fundamentals, are told significant is we new our break These risk, to our are prudent portfolio by cap earnings similar we to self-imposed aware, we level scheduled to underwriting X approximately our cap. you of increase our percentage. Further, with sheet years cap on our first opportunities, first Nashville strength, in the starts it believe to cap Empire, on represents

foot to at groundbreaking. the with feet. our the adding Park Louisville, XXX,XXX a We phase buildings new X%. and of XXX,XXX buildings phase is the X Dallas, cash targeted square final in park investment project of leased third the $XX XXX X estimated completed of first we're an to our million This prior is comprised square yield The on previously in XXX,XXX of XX% that building, and totaling so pre-leased First feet total square

targeted X%. in footer look estimated XXX,XXX This It's us our park buildings the X.X%, are developments projects XX% couple on X.X today within seeing larger on that a of cash in positions is on we of market, million X additional to Aurora margin square building million total a leased land XXX% approximately cash our expected which was totaling and we with investment the square totaled feet. of of is Including of Estimated the a of a our well remaining quarter The significant to completion. which for XXX,XXX future development forward development demand other to feet is square project in develop yield we process months square X these start to spaces airport second with building new growth serve the healthy million. building yield XXXX, a that in we of submarket completed $XX the overall At XX%. $XXX can our starts, at at third Denver. foot investment these Commerce new a adjacent Center XXX,XXX First

on acquisitions. Moving to

was in During acres The square future In and million. is and existing facility total Lehigh can the Oakland foot the Empire three price are land distribution today these X feet a square a in for million, Oakland sites of The market $XX support our building Northern of purchase accommodate submarket. we our development. and X bought XX asset X was new and and totaled total, located can X new square is XX Inland ventures more feet purchase balance total million million the East up California. share sites the sheet sites XX,XXX in and purchase expected quarter, joint million. The $XX land price Total the the $XX square XX.X price stabilized XXX,XXX land yield to than cash support X.X%. Valley of around can with our feet investments, of Pennsylvania, million,

So we're well positioned growth. for future

utilize the to secure of always, new profitable strength continue to platform As we our investments.

working over With let to is the a Scott. around turn it to team deployment execute with our Our plan on focus me clock growth. that, capital

Scott Musil

Thanks, Peter.

a activity up X.X were lease-up. were new, the XX.X% Tenant developments Cash And growth basis, recap XX.X%. overall share me XX.X% we commenced XXX,XXX share, quarter, new retention renewals termination the our occupancy. partially rates to our funds outstanding leasing Summarizing results bumps from fully for with and with X.X $X.XX were gain million was quarter. for new increasing X.X% to by operations leasing due rates XQ was per rental square and were NAREIT XX.X%. up during leases, feet up our insurance in on in primarily cash same-store and XXX,XXX and and quarter square renewals NOI leasing up excluding these, an our increase Let new per Of a leases. renewal leasing overall, on for rental acquisitions XX.X%, offset were from million for by with compared fees rental embedded settlement, were rate and of XX.X%. lower $X.XX average and the approximately diluted rental the in renewals an quarter, footage XXXX. straight-line X.X%, And rates

weighted XX, plus Now adjusted is term on a secured unsecured maturity At financings preferred stock sheet loans to average with and notes, balance debt weighted metrics. a of years March the interest of and X.X%. net average to our X.X few was EBITDA our rate X.Xx,

release our guidance earnings per XXXX to last our evening. on Moving updated

occupancy first XX excludes insurance basis an share for of the fees average from and performance guidance follows: of range XX.XX%, an $X.XX property the a first of to points basis midpoint note NAREIT property increase guidance as quarter to in first increase Our $X.XX. $X the in-service million guidance at growth on due X.X% a impact assumptions in by from sales Same-store at the an before quarter. XX.XX% the midpoint midpoint Key quarter. same-store end FFO the XX termination points remains our to that quarter cash with NOI basis of per Please $X.XX of settlement. for approximately X.X%, gain helped are of sales to

reflects XXXX of at developments our we includes G&A Park or other to to debt previously or groundbreakings, of rate In third First of First and Commerce impact the costs equity. any repayments repurchases acquisitions issuances, discussed, expected March $X.XX impact under expense any our about also issuance future debt share the development an and potential the of year construction Aurora guidance XX guidance guidance at the plus sales, this Other capitalize lastly, of of Building remains after Center the anticipated in after Our Buildings expected for with guidance excludes full also and $XX interest XXXX, total, million. debt D new to interest. C the reflect X.XX%. starts call; million And Guidance per call; secured payoff the expect than XXX of related does $XX second the completed $XX million and not this quarter unchanged quarter future E.

over to Peter. it turn me Let back

Peter Baccile

off XXXX. Thanks, We're to an start Scott. excellent in

and And chain. it with the supply in is that, on momentum the for team the would questions? continuing up capitalizing evolution please recovering economy by positive the operator, focused open Our generated and growth you on

Operator

Instructions]. [Operator

of line Carroll from the Our RBC first Markets. Michael from question or Capital comment comes

Michael Carroll

Can you I mentioned increasing guys your been your talk a about you speculative development you're guess, cap. the aggressive term, development mean of this I You've year beginning starts? pretty near just little bit that assume at we can will into the $XXX and move to development the FR mean, this of break I continue back on, kind year you half continue $XX beginning ground the starts to started year? million of of million we pace this at to as the that of

Peter Baccile

now about and capacity is $XXX the $XXX million cap under the So, of cap. got we've million,

So $XXX million construction completed. rest currently that's $XXX under has underway. About million and is been the

room expect second and you additional some in third new quarter. can to opportunities, the we've announce there. starts got and We're So some evaluating us

Michael Carroll

I you focused go to willing projects? are spec And really the the markets specific on you projects smaller X you're are or of spec willing there some markets, Okay. to too? are mean pursue on do markets Tier to

Peter Baccile

barrier any pretty also higher development the know, as Well, now you new projects acquisitions. markets on not we're our but only with focused

And dollars. so to more our we'll It's that's where new related. opportunity focus growth related. really investment not size continue really That's

Michael Carroll

bit you're to Okay. one -- X that interest activity that being release for Can at X former block? guess, seeing of space? what's little site me. the talk Great. able the And a timing in I there Is then former right you now? Pier last the about And

Peter Schultz

A good. some It's interest Peter market building. that signings We've on very had Nothing to Mike. in Activity lease Sure, of today. quarter. continues in large number our the to first report in Schultz. be

level high tenants assumption it rental the there. on given demand choices we're few is that Our rate releases about October and our outperforming the that on X. And have, optimistic of

Operator

Capital question KeyBanc comes line Craig Markets. from next Our from the Mailman of

Craig Mailman

Peter, previous question. the just to a clarification

under used said under was of capacity the You or $XXX left cap there million cap? new the

Peter Baccile

but $XXX is million not the is leased. $XXX yet Of have available. completed of underway. the X projects that million the difference $XXX We is $XXX million have And that are million we used,

Scott Musil

just we that already that QX. And the includes that start announced is projects going to

Craig Mailman

Got you.

Peter Baccile

lease pure the year starts we that the things is So of new rest unless million $XXX capacity quicker. for for

Craig Mailman

do that a costs and the bit larger to balance guys the bank then buying as you have other Kind peers with going on bit side? talking to little of steel material little You But hindrance to as the balance of materials. difficulty going replacement keep was a Or purchasing, about is the you getting land we where And starts? to bit to projects? mean of one up supply year unless I of here. continue and backfilled your the out year, ease we move materials the pace the the are a a of chains higher look here new on be

Peter Baccile

an just evolving X the popped topic So issue months to than certainly of year. up. of part expensive just been has X that It's was. on better steel, it's for the This more it

-- this, so steel. our The times not not It's trouble again, new lead mean bit are We're with. top get to a is half projects. through increase more the expensive. I longer to And as having increase the we've getting land for want I start on holding to do of said, kind appreciation any go you anticipating Jojo, steel. of projects, expense been expense up little

Johannson Yap

to increase, X%. the increase and the And you X% land increase if to another costs to land. in probably primarily about that's you steel, construction Absolutely. Due with static, have investment, the total then including X% in contributing basically land the factor then X% to increase

half so that's and basically on So half construction increase. costs land on the --

Craig Mailman

kept and one right. Scott, guys flat? All quarter one. lift, and did this It and occupancy quick then here you same-store helped the sales of really also And That's seems boost to of just, helpful. of that's enough why like it on kind kind some drag earnings guidance the

Scott Musil

Yes.

the through math, Craig, walk you. I'll So with

love first expense was X because I to to this bad the But expense. know love stack You're $XXX,XXX. going for debt you compared our of guidance bad debt our quarter

And that midpoint. So first sales our is FFO in that, Keep you're And same, of then and increase an be from will we'll fund we offset guidance we those when the reason quarter obviously that part the up, funding are the that obviously, why to those FFO. source sales the the activity. proceeds a of we starts in two is the completed dilution that to benefit new the some correct, caused some used which that leased kept discussed NOI in see the script. mind in

Operator

comes Our the from next from line question Janney. of or comment Stevenson Rob

Robert Stevenson

same-store is XX% the growth in year? drove in quarter? that what the the back the half of Scott, of expense any And over carrying

Scott Musil

the removal lived anyone felt definitely was this North the on costs. If Sure. Being I'm felt call North it we it. sure during Chicago, winter, snow and of in there, the many folks in

vast, cost it So vast increase again, net the was leases. And was in majority removal an primary snow our the leases are of driver.

recovering the leakage pretty of we're high rate, recoverable. occupancy that most And is small. our with So that's again, and

that to again, to majority bad we'll not. the is in guess be see or the going Almanac net I main So at said, far think portfolio and see vast expenses fourth when not of high is, or and a whether as Farmers' rate, later look But occupancy we have is high to experience you'd increase as with point the year, have quarter a a we're it whether the in lease going winter I exposure the recoverable. that

Robert Stevenson

to quarters, any just the expecting or leases? whether sort are previous of some to quarter was year? the size this the the of don't of I retention It XXXX the the fall of out and way. And got where remainder know Okay. known but low relative not for you move-outs And then this of over guys XXXX move-outs into rate out

Christopher Schneider

Chris. this Yes, is

you've As of seen, far average remaining as them XX% far. taken feet. remaining rollovers for XX,XXX as The so the year, care rollovers about we've of square

standpoint. from So shape pretty that good

up -- all going across XX% -- between for we're -- be all And where we granular pretty that there. it's year as to rate. markets retention, XXXX, end looking and XX% in pretty for somewhere far As to should the forward

surprises big no So there.

Robert Stevenson

the square square Okay. XXX,XXX once them? to is you all bigger? then you supporting for smaller the XXX,XXX X in to foot. asset, three that me. particular, last these assets probably is I land The feet, of And developments a land over quarter in square anything, that sub Are Oakland additional average with build assume that but small bought to sites feet, be XXX,XXX you there is combining relatively going Or are get sites all one

Christopher Schneider

Yes.

You're correct.

significantly rent building the parking we've three terms Oakland getting surface higher is coverage land because a on and higher assets, rents the In been surface of use. -- growth lower

So there in it get and FAR. right terms the all still is lower And it's of right project. through now, we a the now -- bit standalone a design to design have Peter?

Peter Schultz

in the Lehigh serving size existing is difficulty share and to and the and submarket. to adjacent about in we're some that is going demand one And given finding then, size infrastructure, excited Rob, of Valley, and properties that site our that that for sites

Operator

Instructions]. [Operator

line question next Caitlin from comes Our of the Burrows Goldman from Sachs.

Caitlin Burrows

following that acquisition just Maybe up on topic. land

think cost Northern in I versus you time and XXXX history acquired first lands acquisition. recent was land in pretty the is the California high that this

quickly could kind of acquire what So do expect the through to build decision just you economics? given you drove And the the yields there? go And expect? to could land you how what

Christopher Schneider

your Corridor in thanks highly Bay. Sure. focused Yes, XXX question. that We're East for on

infill Bay. We which serves, the expect and It's U.S. to East industrial in Bay markets from one those most significant the continuous market peninsula, East the of creation growth the rent grow. in

the So that's strategy. overall

properties This forward, going you Bay. the specifically Oakland will epicenter the industrial North some the acquired Richmond in Hayward, last the Fremont. epicenter look being I-XXX in us, San see with down develop we of is all acquire and site is Hayward. to And and Jose you market more product East land from way actually in If which the year, Corridor,

our lot rental this a matching or and Their terms of yield that's to that site our Avenue, So will we be whole overall I Bay, right Bay And there. rent. expect a with East we in in And First -- the property, acquisition, be matching. will L.A. develop on strategy, in rate significant will of And rental experience we stabilizes now, IE. matching property, that say, that be It expect we should South and sub-X. the acquired. if market growth expect

Caitlin Burrows

it. Got

Okay. just Can at or talk about often opportunity maybe the what And land. is target imagine I seeing the there? you're priced acquisitions being on then the in more broadly high, of just that you how competition but market? you're it's

Peter Baccile

Well, the these of doing lot sites hounding agree sell. teams offers and on what a until we're land spend owners basically ground to the making most and uncle time -- of unsolicited our of cry they

successful where able But successful, -- opportunities talk we're Obviously, we're is when most they're us. are going not typically, we're brokers. to we by such these one than so have to more develop to And only of competition. limited typically, or the just just that to reasons widely margins marketed that's high being

after then, country some a every able smaller. pop. week of and at sites And So a get we're unsolicited around hundreds acres and the that's of the kind we're of XX now land Literally the or to it. XX way offers are

barrier you as and focused, markets. higher on know, the So -- we're

tougher sites are be land large by. definition, to come by going to So

Johannson Yap

where -- that. effect is We've can basis. done been multiple have we to to able that do and have is in complex And up the which of been a you simultaneously. just acquisition close land sellers land Peter successfully tie assemblages, what of most do, net we to need said you do and lower The to we very one that successful add

Caitlin Burrows

if on maintenance maybe the were higher over then building And CapEx, improvements first AFFO. it. last just you pressuring year-over-year the Got trailing one nonincremental or a in the the X nonincremental look and the again quarters, costs leasing quarter

talked of forward know pull last you year, had about I some So CapEx.

And wondering long maintenance continue higher that's the that what's Just is CapEx? for? still to how causing going

Scott Musil

Yes. Caitlin, it's Scott.

to to annual quarter. look a minus that's I to for our year if going a couple -- the of difference savings the basis, that or is but of CapEx think an feel sort same timing to more expect a $XX on our this quarter million million, we is that, of of you again, be at probably CapEx plus couple to number, next compared XXXX. CapEx size, be which we portfolio over we keep down that years. dollars And we'll the in go have

Operator

from comes comes sorry, our the Our of question Baird. I'm next question Dave or the -- Rodgers next from comment from line line

David Rodgers

on congratulations Harker, retirement. Peter added the Well work. congratulations Jojo, the Schultz deserved. on and Dave

Peter Baccile

they them Ask paid. got how much

David Rodgers

just and construction back last look of XX% under kind all the weakest changes Going about But your kind both Florida, larger X delivered typically. South development in is of know occupancy mix what's looked markets of portfolio, then to what you in comments, be today And at that. areas some I I than it's Seattle that pipeline, the of year. the at we if and smaller tenant can

part a I what is about bent do spaces you comments that in have how you of made about guess, of -- But I the assets, notwithstanding bigger questions? your recovering? seeing last you recent then you're the So portfolio activity small can the just broadly, couple and talk and guess the building in talk towards that maybe

Peter Baccile

Sure.

Let jump you occupancy or to referred is Jojo The with in of me start property. in. Peter that, these can and weaker weakening some one really and markets that then

in in Broward still huge We County. In square but it's vacancy Seattle, got not So We're XX,XXX for working a there. it, got don't square large a example, a Seattle. South portfolio. vacancy foot we've in on XX,XXX we've Florida, foot have

we're full Houston. Parkway, to. in So Other than you pretty in that factors Parkway that vacancy into that referred Houston. Grand Grand

to no Peter XXX,XXX in sizes the demand, from know there. don't of I feet. that? there's to rent square really you coming are in the tenants Jojo, terms of increases if to XXX,XXX largest building add And and issue want So the

Peter Schultz

what basis. size, a as demand the on say It's we're we Sure, would building view to strength Dave. terms submarket in Peter. of of building I

tenant an flexibility bigger In for in remember, Jojo? example, accommodate that multiple focused But of to with we these might a and a in where surprised And So up is we've or the we've cases the as of ended buildings. single buildings. a built better multi building. demand strongest been on tenant. is for be some larger tenants couple other submarkets, in it buildings mid-sized single Pennsylvania, always tenants, we're

Johannson Yap

Yes.

So building just Leases to add itself, First a quickly Logistics leased example, an I in we asset, and very this Peter B. example already, XX,XXX basically foot the IE for to square Building Redwood That's successful. completion. very, very, after very

If smaller you were have there. is like came and building at [indiscernible] -- significant feet -- to go we why became going XXX,XXX building, considered it some demand acquire. IE. in this This but and we build-to-suit, wanted to square East in that's because And there's Nandina. a only tenant small This look spec First the the is

Another going IE building, XXX,XXX First we said the to foot, that Wilson. in called again, we're square with start

answers just size build well, we Dave. your bigger live assets who lot bit find little if question, if to suits a of we'll it the of of of about East breadth what Peter size in marketplace. the a market. East It's number we will [indiscernible] because it. to in just asked be like demand And what is. you Caitlin this that's a asset like But asked here. of and as the our Bay, build gentleman other people I don't said, are shows it to the smaller But lack demand know continue again, So going Bay. In a just

David Rodgers

It does. the I color. appreciate all added

I the increases they so below guess, biggest there, heard the do how compare? against in foot different? as square and to that the XXX,XXX Are XXX,XXX think larger component XXX,XXX, range, are I meaningfully those among above maybe I you boxes. smaller rent rank and XXX,XXX

Peter Baccile

So The the a well. little over strong under XXX,XXX. bit pretty as XXX,XXX and XXX,XXX XX,XXX are lower to growth is

that's So we're but what seeing. broad a that's generalization,

David Rodgers

No, me, you. that's maybe for Scott, for helpful. Last

you that, now it cap part you year financing that of leverage you've for think maybe do more selling makes the having lower sense, thanks as equity guess, got to aggressively assets the So pool, speculative can the add As how right? but I about kind numbers. you of increase you think assets running or the development the more to then through and keep about more using do progresses?

Scott Musil

little Yes. dividend. used you're it's X.Xx. your to up And a opportunities we We excess I a our the there at is proceeds the do to said right, attractive, leverage consider equity. have because flow your use before, in sales past, after great think see same going low and formula you're to is bit cash lever the we've we'll equity, going room is -- like issuing we Dave, investment we're if paying and price

very We definitely And that's did So it 'XX. the of have November, call great spec 'XX on capital. money on into Day vast the -- thought we table. was in last of use put what we our development. looked the were And And margins as at we strong. in 'XX, back and Investor there issuances XXXX, again, we discussed majority we'll equity year in that a

we we like the have a to the is and but equity investment pipeline. have So piece, to price have stock

Operator

the Our Street. Green Tibone comes from Vince question from of line

Vince Tibone

stay are trending, development competitive you can how in mind? some market now? At costs replacement profit margins believe the these do overall levels and land point longer what at forces are they how much Given does push your just impressive down

Johannson Yap

is This Jojo. Sure.

costs to is expect we're In this the believe, be to think to actually Investment And pretty most have because up reality -- X I stayed X%. that year -- did too. the come much that I exceeding but not have gone as XX%, rate X% so, Phase actually is X% have flat down, And the I. high investors then experiencing. growth rental rents because rates gone rightfully rates with cap probably have terms And well. submarket going of up, in margins of that. Everybody have the was

that the cost. right management It significant as cost Not still hear the comment make can the transportation, now grow and come component talk we logistics The is really in and competition more we last to remains X%. I going small. just anything, away the that inventory under charge will acquired question I of in. stage lowest rents was and is component any structure. biggest total that logistics coming of lot. think a one There cost But rate that rental overall, of that rest as continue. other the labor because about at logistics we're It's And company the room -- we cost our actually go it's customers to we're there's down. -- always costs. is And comes So lowest margins the to have up a

Vince Tibone

Got it. follow-up development seeing helpful. a enter traditionally appetite made, Are the the growing who their existing saw more That's you maybe or new players you one to kind of players haven't pipelines? of lot and development just it's done of on space growing of I risk industrial kind competition. want comments you

Johannson Yap

-- in competition. lot much new much, actually a We're Exactly types is what cited money from exactly and the industrial. you we -- tailwind No Both. of seeing better both. source from new entrants existing increasing product the see investors was and the where other

Vince Tibone

markets? more space, think come you over X barrier about you of As Does some at supply kind capital in just all years? that the worry into risk more the for various next your markets how to do overall and the lower wants of ramping supply

Johannson Yap

supply/demand. we that's platform look We closely. about because at the given very, watch always our We it. We we demand/supply of each very why a worry it investment submarket. have don't And calibrate

-- this we've foot the XXX square far, surprised pleased whole the supply. absorption really on net a been over QX million so in just and million XXX bit constrained a versus market And

was industrial. -- that's to everybody welcome the So that in news

Peter Baccile

retail, as good aggressive buyers some entrants, want there we're Yes, they're industrial. they in are really And assets, of actually stuff become selling. that in et or cetera, mentioned, managers get apartments, new to the traditional Jojo and where involved investors investment of lots of extremely

So from that's for that us. standpoint, plus a

Johannson Yap

value. or getting The only management, is we a terms the platform new remember, advantage said that other leasing that to platform do all in I'd not management at basis property have. embedded what our you -- creates new entrants thing add relationship, deals in And Peter finding development, asset deals, construction, of that have low we

Peter Baccile

knowledge. market And

Operator

Instructions]. [Operator

Our line Mike comes the next from from Mueller of question JPMorgan.

Michael Mueller

you terms about vacant what but opportunity starts, talked buying seeing for a little You about a new bit you're talk the can lot of buildings? in development

Peter Baccile

whole market on There's with. to lot a start the not

it that of We call transactions And out all has That's done considerably. past years, that analysis see over term. track We'll old away. track. the most we an So the few deals happen. We them. banking thinned

it criteria. shrinks and So to first of sold. where high a those you and evaluate barrier We all, markets would buying being would there's down to that's more. break met a but even not consider acquire want lot the volume. that higher our vacant pool we or if opportunities available certainly it time, do not of all it's a time We from building Then

Operator

of the from Rich from SMBC. Anderson Our comes question next line

Rich Anderson

that at sort located don't can much to the time risks in that? tweak you just that a constraints a of there's just But willing you space or the would know is on a today of Are in it all know, Is decent location don't you get way building land industrial at moderate-sized to the strip Are the doing get days. way not I that these and poorly of position, of that your there. creative for necessary re-entitling And Mike's if this that a for there's any perhaps, distress I question wondering building? industrial crosshairs? -- center to I'm I in your level a dirt point? take and wonder be in

Peter Baccile

what Well, a entitlement risk. we do absolutely take we basis. on It's regular

Rich Anderson

me the let rephrase just -- mean I question. Well,

to I do mean I would you But I'm course, more in that. trying guess, I say, way Of describe. the opportunistically,

Peter Baccile

I Sure. are There out opportunities to some well. that as some there. we doing would. hurdles There yes, are mean,

tend be retail than higher know, per rents. industrial you to rents foot As

of There's want economic to the there's there. XX-foot overcome an also neighborhood. whole rolling through most that surrounded retail fact residential challenge the are and going to these the neighborhoods aren't So centers trucks by

look those at all now. opportunities. challenges. looking a at are So We're these right couple We do

for in a -- out shareholders. So it may And to some cases, some retail can value find yes, to we're redevelopment or reuse where we're like everyone a of site. trying be well turn else, create we

Rich Anderson

future space, cheek. is much evolved, then guess success rate industrial tongue year what is a got somewhat And trading. reiterated guidance -- or reacted viewed just follow-up XXXX, operating cut, in future at your XXXX, saw you -- and of environment excited single what own that down the don't had Or your won't I is approaching you perspective as get last that your hence, e-commerce day's going the pretty kind the maybe as guidance saying guess excited looking too year, the growth in it of of environment is, away because perspective quarter to I have you -- from year? a sort like which more I that fact normal you a past you today, And like But periods? of slowly. that of demand am your how will sense But what in we've despite of product is unrelated of of as of asking look environment? in build last question demand good hopefully, and that's my this more you are want XXXX just worth redo into call in Okay. is we're doubling kind and I a of how lower a markets an In

Peter Baccile

of that what tends trajectory sticky. nobody be be going to you growth of except did by call Well, year. It e-commerce want that, we of it the millions customers, adoption is online buying new to see if to knows last

as was not I which that. call continue going up, hockey we've stick to to good if trajectory a we had pre-COVID, Probably to you be step sales. was it as at but So least still online the it in guess, expect want you strong. this trajectory, growth pretty that And would saw

a very, there's optimize to we maximize on again, to stick in Everybody e-commerce going footprint XXXX. continue And their trajectory, a and probably their So the growth very supply look, grow we and believe not -- strong do of hockey chain. there. competing and to is trying saw is out to competition lot

sellers It So guys. services rent good and goods, us is e-commerce the for of competition. just not It's and it's good traditional products for it's the and that growth. we like

Operator

the question Nick Our of from line next Scotiabank. Yulico from comes

Nicholas Yulico

into was Day, just forecasted we you land Investor some as there as for on a pipeline first construction record on did that Inland maybe just I came a people for Inland well yields cash I'm quarter Empire. the guess in give quarter off, the there wondering then, And whether So speed there's At on the seeing you've the announced later Inland starts, just future starts. minute. some construction just I think future Empire guess of year wondering, do And X.X% sort some some XXXX. any that first there, saying of the focus increase were it since you Empire? as cited yield I you're the and and besides the you were in the market development in starting I'm already and this the for what that yield on of of in that dynamics pipeline XXXX, market starts well based up

Johannson Yap

land. our actually To in accelerating, to yields When are lot is function increase, This increase and yes, kept mentioned IE, rents. that of to relation yes, your of the which And back if rate higher therefore, the includes is in projections, that's a of market look construction terms the rents in of the I steel. have X% increasing than the forecasting we due increased combined to Jojo. costs land the static, cost construction increasing and we that's project at total wherein a X% was cost, in over and IE rents question

where we're is the yes, So tightest why that's that I the your to I'd add a seeing. of couple of you're one question, like there'll only in if is that's market that be was -- The -- that the thing trend U.S. think reasons

IE West in East, at and look you you're itself, If sub-X%.

March record ports only. versus you shattered And example last 'XX of and sub-X%. of the we years. year-to-date in the year, The a of an the terms in XX% container have through gave inbound South XX just Beach. XX all the U.S. throughput, activity, of increase ports, over in XXXX, Bay, top as throughput the know, if top This increased Long of is probably QX ports L.A. QX X I QX was port

IE that mentioned of impact Long that terms tight is from continued And goods the rental that, because of absorption Beach. coming of and port on L.A. market has and reason for the IE so really port is biggest the I rates and all of repository the in

Nicholas Yulico

That's Okay. helpful.

of cap rents on mentioned doing going above-market sale. also there's going one normalized you above on we sales, there question forward? How be be property on that, asset and drove is cap market some up the Just sales think higher rent think terms this that quarter rates the that were lining other about need should should impact more an other or to some that if you sales we about, rate in may forward, the of

Peter Baccile

tenants market a building a low give to month. out deals in are just next those stabilized rents moving buildings Xs. Well, you point, reference to is in take are project closer one the those out where on When the and cap rate we look moving at you there,

buildings. reported the just opportunity, is standpoint is a it X.X%. obviously, building a the to from be is we a risk in going sold lease-up think those getting the today there we and back the So rate. basis, why are it growth with not the sales set forward, of balance tenant we that's and both low But On X so stabilized and stabilized that's the like that, X, year what high basis, the for more why cap going opportunity to

Operator

the I'm at time. for showing in turn any no remarks. to Peter I'd back additional like queue the questions Mr. this to closing conference over Baccile

Peter Baccile

Thank participating you, today. thanks and to the operator, on everyone for call

or please some either look connecting to free year. with we at or As Scott with in person, me, forward and Art point, any out feel to Take follow-up this of virtually questions, many always, to care. reach you

Operator

thank today's participating concludes This Ladies program. for and in the you gentlemen, conference.

may disconnect. You wonderful now Everyone, a day. have