Opportunistic Investment Strategies: Where to Look?
Background: Acquisitions for industrial fund based in SW. 

As of now we're pencils down on nearly everything with dry powder readily avail to deploy. Where are opportunities you all are seeing? 

With how much industrial supply our market has under construction, we're naturally skeptical of the amount coming online (double digit %, &gt;60% of the stock being spec) and are thinking the buying opportunity will come in a few forms dependent on situation. 

Developers who broke ground and were underwriting 2021-early 2022 prices, cap rates, interest rates and inflation along with a softening economy (also skeptical if leasing demand is as strong as brokerage community presents) are likely to get hit hard. 

To us, this creates an opportunity to invest in multiple arenas of the capital stack if they can't exit at favorable terms - (i.e. many developers underwrote 4.00%-4.50%cap exits. Heard from buddy at Trammell this has shifted to expected 5.25%-5.75% cap exits on new projects they're chasing.) 

Oversupply: if select developers are unable to lease 500kSF+ buildings to Amazon's of the world by completion, it's likely developers will sell the vacant building at a loss as they don't have the business plan/risk tolerance to hold onto negative cash flowing assets. For those who got buildings leased but are unable to exit at proforma terms, they'll likely kick the can down the road and seek capital to cover equity. The amount of equity needed will be greater than expected and likely won't pay catch up to pref's until exit. 

Contracted Lending: Have heard a few anecdotes in capital markets arena that many banks are also pencils down. Exec @ multi billion AUM fund mentioned many big banks are sufficed with exposure to CRE and will only lend to a) existing relationships who must put up additional deposits with them and/or b) grand slam deals that would be silly to pass on. 

Don't even get me going with multi/SFR/BTR. Higher leverage, more greed. Lots of opportunities..
[{"id": "itwf5fk", "text": "I'm seeing what your seeing.  Be patient.  In 2010/2011 we had the chance to buy a large block building shell in LA for like $20/ft which was about the same as the shell cost alone at that time.  Plenty of similar deals but most developers didn't have the capital to take advantage.    \n\nWest coast is absolutely a boom/bust market and has been so there is a reasonable chance of that outcome being on the way.  People buying sub 4 cap deals means just those deals going to 6cap would be a 34% drop.  Rents are pretty sky high too, in LA just your property taxes on a purchase over the last year would be higher than the entire gross rent for the same space 6 years ago.  \n\nI'm guessing you are in Phoenix?  That's been similarly boom bust and this phase of boom has been massive but cap rates coming back to reality alone will destroy this market.  Add desperate spec developers delivering unneeded space and it's cause for concern.  Also Amazon was a major force of absorption nationwide and now they are flat or even negative absorption in some market so that alone is scary.", "replies": [{"id": "itxlmmp", "text": "$20/SF, holy moly. Cushman Q3 2022 report came out today and spoke with a few of their research managers. Equally as concerned for how much space is coming online. My 60% spec figure was off. More like 80%+. \n\nTo allude to your cap rate expansion point, we're seeing deals negotiating for the most part around 7%+ yields. While this is known, comps haven't reflected this yet due to time it takes to close (private values lagging public values/info). Markets go up the escalator and down the elevator. Rising cap rates will concern them; however, you're right - the double whammy will be when rents drop (Cushman reported \\~60% YOY $/NNN gains, how sustainable can that be...)\n\nInvestors for the most part in the trailing 18 months have been pricing everything to perfection. Low cap rates yields, high growth assumptions, little-no vacancy/downtime @ lease roll-over. Was struggling to get solid deals in the pipeline with how far bid/ask spreads were in the past year, only to be exacerbated by rising IR's. Saw a 4.5% cap ask on the market rise 100 bps within 60 days. Obviously still aggressive, even for your cash buyer and this has only begun.", "replies": [{"id": "iu13heo", "text": "Your username suits you my friend :)\n\nIt is interesting in how much the comps lag because of how long it takes to close deals in this business.    Should be interesting to observe all of this over the next 3-9 months.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]