Co-warehousing comes to the industrial sector – wealth management | Candle Made Easy

The last few years have been a period of massive growth in the US industrial sector. Industrial space was so coveted that many tenants signed leases in anticipation of future growth, while more developers invested in building multi-storey warehouses in urban cores.

However, not all commercial tenants are able or willing to invest in large-scale warehouses and conclude long-term leases immediately. For example, some startups want to start with a smaller entity that fits their current business volume and grow from there. Other companies looking to expand may also want a proving ground to play with their logistics networks. To serve this segment of industrial end-users, private equity real estate firm Capstone Equities launched its concept of portal warehousing last year, a type of flexible warehousing solution that offers smaller spaces and shared facilities that co-exist in office Working sector membership bases have become common.

The Company’s first Portal location opened this month in Salt Lace City with a 30,000 square foot space. Incubator short-term rooms with a size of 250 sq. ft. to 2,500 sq. ft. offers. Property amenities include high speed internet connection, front desk services, business growth support and community events, among other offerings. Capstone Equities executives say that of the 22 suites available at the property, 14 already have tenant commitments.

In the future, Capstone plans to expand this offering to several other cities including Brooklyn, NY, Las Vegas, Los Angeles and Phoenix.

WMRE recently spoke with Alex Morrison, CEO of Portal Warehousing at Capstone, about what types of tenants the company hopes to attract, what types of spaces it is looking for and how it sees the future of the concept.

These questions and answers have been edited for length, style, and clarity.

WMRE: What types of space does portal warehousing offer tenants and how does it differ from traditional warehouses?

Alex Morrison: Traditionally, industrial spaces are only available in large sizes (minimum 5,000 square feet) and [through] long-term leases (five years). Small spaces with flexible conditions generally don’t exist, so growing businesses have to work in garages, self-storage facilities, or corners of other people’s warehouses.

Portal institutionalizes the co-warehousing space. We give companies of all sizes access to high-quality space with critical logistics infrastructure. Rooms range in size from just 50 square feet to 2,500 square feet and everywhere in between. We enable businesses to source just the right amount of space they need today, with the flexibility to grow into more space as their business grows.

We’re rethinking what a warehouse is and bringing in amenities that people have become accustomed to in co-working spaces but don’t exist in the industry, like art, networking and collaboration spaces, coffee bars and photo booths. Portal also transforms warehouses into spaces for people, not just for products.

WMRE: What types of businesses is this best for?

Alex Morrison: Portal is suitable for companies that need space for both physical products and people. We are a great fit for e-commerce retailers of all sizes, logistics companies and growing businesses. Portal’s current customers include e-commerce retailers just growing out of their garages; established brands using the space to run their D2C operations or to prototype new products; and generate national companies [more than] $1 billion in revenue per year that require excess storage space.

WMRE: How does Capstone Equities source new properties for portal warehousing?

Alex Morrison: Capstone Equities has invested in real estate and real estate-related companies for the past 15 years, with a track record of over $2.5 billion in invested capital. Capstone has extensive relationships within the brokerage community, private equity owner groups and high net worth individuals with private portfolios that it leverages to source new space.

Capstone also has its own balance sheet that it will use to opportunistically acquire land to operate Portal. As Portal’s early locations have opened up to strong tenant interest, we are seeing more opportunities from landlords interested in partnering with Portal to optimize their industrial portfolios.

WMRE: How many portal warehouses does your company plan to open in which markets? Why did you choose these markets? What is your schedule for opening new portal facilities?

Alex Morrison: Portal today has two facilities. The Salt Lake City facility opened in July 2022 and the Phoenix facility opened in August 2022. Portal has teamed up with major institutional landlords for the first two properties.

Salt Lake City and Phoenix were selected for a variety of reasons including population growth, e-commerce activity, economy and favorable business environment. Looking ahead, Portal plans to select several new markets by the end of 2022. It plans to open 10 locations in 2023 targeting last mile infill locations in primary and secondary markets.

WMRE: How do prices per square foot in portal real estate compare to traditional warehouses? What rental conditions does Portal offer tenants?

Alex Morrison: Portal offers flexible terms from three months to one year. Comparing Portal’s prices per square foot versus traditional warehousing is an apples-to-oranges comparison. Portal’s suites range in size from 100 to 2,500 square feet, which is generally unavailable for industrial spaces. Portal memberships include access to private space and shared access to ramp and canvas doors, logistics equipment, an office area, and other amenities.

WMRE: Your company also offers to help retail startups build fulfillment operations, access the best shipping rates through its aggregated volume rates, secure new capital, and offer mentoring. What is the additional charge for these services or are your prices all inclusive?

Alex Morrison: By bringing merchants together under one roof, we can offer benefits to all members in our facilities that are difficult to replicate alone. At the moment our services are all inclusive and include elements such as shipping/receiving support, a network of local mentors and advisors to help with starting and growing a business and access to best practice information.

The current world of e-commerce is fragmented, as is information on common pitfalls and best practices. We create a network in which tenants can learn from each other and grow together.

WMRE: How do you market portal warehousing?

Alex Morrison: Co-warehousing is a whole new industry. That’s why we work hard to create brand awareness in every market. We do this by building strong connections with business clusters, local brokers and e-commerce communities. We want Portal to be a meeting point for companies and brands with physical products, so we host events, invite speakers and offer community members our space as a venue.

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