First Industrial Realty Trust (FR) 8 Feb 242023 Q4 Earnings call transcript

Good day, and welcome to the First Industrial Realty Trust, Inc. Fourth Quarter Results Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Art Harmon, Senior Vice President of Investor Relations and Marketing. Please go ahead.

Dave. much, very Thanks welcome call. and to everybody, our Hello,

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

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

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

hand me let over Peter. Now call to the

sales. once great delivered navigated the and in-service and of year a cash impactful the both growth new to XXXX. our Industrial who new leasing, Thank finished executed for rental XXXX us some key record members in transaction all to you, joining you And of We today. and year and our the the portfolio on wins in leasing investments with again another First the results. ledger sides and Art, laid thank of We attractive year on of all groundwork for some with thank strong team have rate We another produce development. challenging you renewal

industrial to saw Moving XXXX continued broader towards XXXX. of level into the and of now traffic The has market. the we tenant end increased

economic more with environment market revisiting interest rate their overall clear more the needs picture and businesses bit volatility, slightly a becoming With space lower for growth. and are

into XXXX the feet, according On for XXXX, are in to you XXXX projects square and as national nationally XXX completions customer totaling by Those standards. to way made to up and low demand, absorption meet supply with starts compared around X%, ramped million have side inventory, know, XXX CBRE. vacancy still of million square driving historical their making early net to feet

to XXX% neighboring Post pleased X our We're foot We XX% and asset. appropriately leases wins the asset portfolio, XXX,XXX new long-term big signed has Road leasing Baltimore. to government-related peak. Within market has announce of square foot Old of activity new XPL XXX,XXX [ from starts this our with portfolio broader responded Importantly, X/X our around both in the to down several in developments. resulted in-service ] a the square in imbalance and leased

submarket XX of a last our we of our we call. quarter, of at development Park In of fourth Phoenix our in inclusive venture, XXX,XXX Building leases square-foot the square In Chicago. a portfolio, signed feet since signed First our lease the total joint XXX,XXX Kenosha

in lease Loop also our at square Development Orlando. First foot XX,XXX We a signed

now with joint second the in leased in XX,XXX fully slated our our to foot Phoenix X the in to square-footer quarter. leased to bring buildings of JV signed far, in venture, Denver. completed Also, XX X at So to First that prior XXXX, leases building at third We've XXX% the be X completion. Logistics XXX,XXX signed we we Center the square a lease

We're have placed the more we we to points report XXXX activity so have we XXXX. progress third occupancy to developments approximately XXX these that fully hope opportunity. throughout most assets, in currently basis prospect in the of leased, quarters and are For seeing fourth not of at service of

we cash in lease As change rate new cash of XXXX care a new XXXX of in mentioned renewal XX%. rental run my we've at to set start. I opening by annual for related XXXX To good of to XX% income taken remarks, off rental and for date, rate record XX.X%. also is commencements, a leasing increase regarding a signings

metric. Overall expect We our growth and have portfolio XX% cash XXXX, within over balance leasing year, bolster rate renewal we're few this for currently Southern California forecasting new of a to will we leasing the rental the which XX%. opportunities of on

a feet our the fourth to Business brought assets. now XX,XXX home totaling the fully we square of X. an now Commerce $XX deals In addition, square a foot quarter few Southeast Center aggregate Beltway leased own in frontage investment side. purchase Houston, during on We million. park attractive added Energy price well-located for buildings this at building with XXX,XXX With all X this Moving we

XX,XXX investment opportunity a in a new build to Empire us for West. the square XXX,XXX provides lease the expires. Inland square the We building when Longer an a completed transaction also site foot sale-leaseback footer on term, this

tenant we XXX,XXX site build-to-suit a which square X-acre acquired Orlando foot Lastly, land project. have tow in in a a we for for

expected be will million, including the take approximately to and XXXX. land, tenant is Our in the total occupancy investment, $XX

$XX fourth $XX buildings In largest X Moving now for to for quarter, XXX,XXX million. PA dispositions. sold sales for feet square-footer Cincinnati in million. square were Central and we a The in XXX,XXX million the $XX

for plus million. X million $XXX X For a the year, we land sites feet, sold of total square

square $XX a performed sale our high $XXX our closed income range. XXX,XXX we foot our million we Investor of Cincinnati Scott markets, sales, meeting opportunity. in XXXX at how our our X-building goal shortly in you for with update target XX% XX% far markets, and the XX% on our which rental we year in laid end Thus we target XXXX, the of out the ended XX Day AFFO in will exceeded property these coastal on on million. With

For expect sales of the XXXX, full year $XXX million to million. we $XXX

Regarding our dividend.

Directors Board of XXXX low prior our declared the a This an outlook rate and in of $X.XX. per represents the Given ratio a anticipated of growth, AFFO XX.X% supplemental. or of our dividend of for have performance XXXX and from XX% defined increase on annualized quarter first as payout rate share our a based for approximately $X.XX our

guidance. Scott turn additional that, over performance to on details provide With I'll XXXX our and it our to

Thanks, Peter.

Let for NAREIT $X.XX me our from XXXX. XQ operations share per in fully results share diluted the funds quarter. $X.XX per compared to were recap

in was FFO For the share to per year, NAREIT $X.XX $X.XX compared XXXX.

recognition reimbursement associated of share tenant related tenant, was improvement a XXXX departing the share accelerated of Excluding a to income $X.XX. per with $X.XX FFO

share our As insurance of XXXX related fourth final full settlement included of $X.XX income results year a for reminder, per to claims damaged properties. the quarter and

was Excluding per respectively. this impact, year and XXXX fourth share $X.XX quarter $X.XX, FFO and full

fourth cash was for the quarter, termination growth and it NOI excluding year, X.X% Our for the same-store X.X%. fees, grew

XXXX in increases partially average by new quarter up rental leases results quarter leasing, and in Our rates renewal by taxes. held estate rate an points lower with the Chicago, offset placed occupancy rents basis prior in offset developments our service. Baltimore the occupancy and embedded finished rental driven were XX in by increase by XX.X%, and of real bumps leases and were, in from We free slightly on partially lower in-service

share, portion a AFFO take $XXX a by we that Investor of basis Investor the XXXX We $XXX to steady-state million our fiscal on like impact we'd at our is laid XXXX. XXXX we AFFO AFFO opportunity per discussed opportunity on-lease the our to out Day. developments, moment our opportunity recap share, or our NOI to $X.XX which million as year in million approximates defined million our the $X.XX our the potential $XXX to in XXXX grow Now discussed the Including Day. above funded or $XX well related supplemental per

planned capital X guidance, we our strongly let me in sufficient we are will developments options our on you complete flow of asset bank until exercise expenditures with XXXX to Peter have maturities that the cash capital our review funding Before remind of the debt and extension and sales no and with Also, XXXX, that after assuming dividends, expected loans. positioned excess process. discussed, I front, our

XXXX release evening. Moving last initial guidance earnings on for our our to

granted for Key that require rules are per assumptions million compensation $X.XX that per per the range Note value share. excludes $X.XX Including fully of of $X.XX as FFO approximately guidance to equity-based is $X.XX. guidance guidance to related per is range or for $X $X.XX accounting FFO tenured guidance NAREIT expense this certain us $X.XX employees. to to share for Our expense our expense, of follows. share accelerated share

driven cash NOI embedded new leasing, by discussed earlier. bumps leases. Note basis average our of and XX% I in calculation excludes Guidance We rates XX%. anticipated occupancy rental related to at the on X%, that in X% primarily are same-store fees quarter-end and growth XXXX termination costs of December a before developments The projecting that under includes increases renewal and the XX. rental on completed to tenant same-store to our construction the reimbursement rate XXXX

we $X.XX per year full For of to share expect the XXXX, capitalize interest. about

$X Our G&A additional referred expense guidance expense $XX.X million million. to million I includes the earlier. in This to range roughly is $XX.X

higher expect quarters. We of expense first than G&A be each to quarter remaining the

of this acquisitions, the not debt does call. starts, after guidance nor issuances, repayments the sales, debt future any of development Lastly, or impact issuance reflect repurchases potential equity

it back turn Peter. to me Let over

leasing, my to of teammates market excited their from XXXX. continuing about growth to capture annual sites in developments risk-adjusted our market efforts into to are provide Also, again NOI and for We're and and can portfolio with in-process renewal production by drive warrant. Scott. all from put be well Thanks, our the growth flow positioned cash escalators and leases. Thanks in opportunity land oriented new embedded the our coastally opportunity as within returns conditions in completed, attractive our that we rent

for that, ready up questions. open it Operator, with we're to

comes Malhotra. first [Operator Instructions] question Our from Vikram

markets your on This you And strength? of Can walk which weakness have seen up? you further for Vikram. is lease George and in us signs through thoughts any on

comment and if on strengths asked leasing markets, weaknesses right? and is prospects across you can that think I we

That's correct.

want Okay. to? Peter, do you

in Schultz. the in. seen the increase spaces. an Generally [indiscernible] XX half or the last This smaller Sure. last is which are of Activity, second And markets midsized or speaking, relative better Peter tenant and days we've in is to from in that's in submarkets broadly activity those so year. speaking,

that? South some under. to and you. and Denver for XXX,XXX seen comments example, Jojo, I'm might some Pennsylvania to although I activity that of would be a cases, decisions we're But and sure we'll to anything urgency, cautious have continue feet lot about some in we're of XX,XXX XXX,XXX do somewhat In their tenants that's feet. about today. that the Florida, say We've a and seeing methodical making level you level you want be from also an decisions. Nashville, California add tenants still to in by where, higher As of have encouraged Jojo

Thanks, Yes. Peter.

over to manufacturing in days, just related. both has all I'd what last And beverage, say, to wholesale, XPLs the the touring major activity, XX and activity, retail, e-home companies and is tour activity that in would general QX So 'XX. are I like increased food other add proposed and

is rent growth this And where the trend me. for And a baked see follow-up That do year? What are into market guidance? just you helpful. spreads overall

part I'm first sorry, of your question? the

In the XX% capital XX% articulated which rental the we guidance, is script. rates ] [ in cash our to

midpoint a So XX%. of

in growth 'XX. Rent

a lot beginning XX% sure up, in portfolio quite X% range. the where the rents X%. weren't a in to year to of about be really So were our a a It of We bit ended markets grew our we, volatility. about 'XX, moving of at wide with expected kind

So that range. of we're in the right middle

that XXXX, For we're X. or point growth at plus inflation approximates looking rent X

X% is to say, X% expectation. our So

with Next question Truist. comes Bin Kim from Ki

Road. leasing project. your know Congrats Post [indiscernible] I that on Old up favorite was

Inland So Empire turning to your projects.

that talked all obvious I have X think we the multiple you you tenants spoke, time had about options. being or X the these your projects, prospects last with about for challenge

about So could like Perhaps on that we update provide demand And of in overall, you you're how the that think pace the how strategy? just market? should just an lease-up? you're seeing tenant leasing calibrating

This particular. tough more will to begin rather make be tenants for bit data little I Jojo in more difficult pace properties. time in a is would What where out. this then what mean talk call. things think will a to take easier Yes. improving. about volatility, market by honestly, if we now they The about that year is down investments, year, We're to it's period project. of economic coming are and start inspiring I is larger to large potential confidence decisions Less SoCal,

the difficult Inc. respect So to is that's Ki deciding activity all that is, with pace activity The good. what part, Bin, into turning the of

for challenge talk can And traffic. the this that's about and you So of us part Jojo, year the projection. more

oil there's in completions And bit that so absorption. of QX, quite exceed of, a term in

the digesting supply. is through market additional the So

things that the positive last of months the in 'XX at productivity of the market Some the it you seeing in to is by the now XX%. look that if increased right compared 'XX, X X months we're of last actually

if a be we that activity bottom. Recently, I from continues, that's, little then think are So definitely bit recovering truck trade activity when freight increasing. We the activity. trade, been say to more there's going -- has

So that's maybe bit their bit from little clearly GDP a a side impact a positive inventories. a of of restocking little maybe positive retailers growth,

top of new that's say, of won't At day, the the our but at. functionality, would of say, what looking on. at each in tier. XX%. through even top assets, on we're -- But top one submarkets. the them, would they if I about on that Maybe them each each would trying focused to I of of of are they're So our terms developments, look submarkets, so we're end I some in you quality,and lease in say I XX% go the

on little I investing, equity Are that repeat? program? year, want equity programs just And, understand portion a and million won't better. next a the multiyear the these like G&A of So Okay. $X $XX that accelerated guidance million to

other we program similar companies place very to the tenured have employees. [indiscernible] is in for

we is they incur equity say milestones, this going XXXX. expensed awards reverse. to in charge that a And years of for would that probably not to lot So reach I once basically, we're the year, going of purposes. accounting fact, $X certain million immediately that are specifically, service, in age, assume

impact basis. going on So of the a million be to that's $X that go-forward

question The next Janney. Stevenson comes from Rob with

margin about And in pricing? the projects current talk next profit trends labor X current of under X.X% on to the XX% XX% you the to how and construction? material cap starts batch Can compares

that? take to want you Jojo

take the pricing part. construction I Yes, can

down look to and labor X% material So at prices of anywhere yearn last if you X%. middle came the prices overall 'XX, from

Our that to going XXXX now, view construction our underwriting and of of But It's but flat half, have be that's labor of or we're any flat that. ] the prices. underwriting trend material first in inflationary [ development not to right outside We're [indiscernible]. we in is announce will any it projects. kind unrelated supply nothing even new declining. be of And

last the and a it's much now better, chain of better. Everything supply of due really The low into right year, getting environment now, cliff is And is facing terms this that in development just schedule starts. record of coming lot is materials. terms In materials, the to now year. better industry supply than right except basically, that's is

with cetera, as today's we of or I.f opportunity. at have, we that's so X% respect underwritten yield entitlements portfolio And margins, at the large our being very on that a opportunities, et better, portfolio, question rate. your have, will look you the it's landholdings taken has and that to That investment a

there. opportunity margin significant So

the projects that the those in where beyond upside is move-outs and assets developed just vacancy any this biggest at constructions? the now And 'XX are known helpful. And consequence of then That's recently Baltimore 'XX, leased, under Okay. point? largely

you want Chris, that? take to do

Yes.

known As feet we've move-outs, population. XXXX. no -- far got no growing million move-outs there's still X.X as in significant in And that square

here pockets And just is looking at any the up Or targets vacancy beyond that all portfolio to pipeline? of point? and little stabilized vacancy lease development in this the you're sort that of there

lease Rob. we scheduled take year. budgeted up couple for It's are thousand of hundred that, leases feet I'll that couple of that square this a a have forecasted do Scott. There's to

in so the portfolio, core development. that's So not

Capital comes question Thomas with Todd Our KeyBanc Markets. next from

what's to are follow last into bit that embedded and for the will additional I in-service of anything the embedded the that there not projects? terms are to last in in Is that commencements question, in developments XXXX? transitioned up, guess, Just and lease-up Scott, the guidance related during service those on there. terms wanted that be completed,

Yes.

guidance to that feet of to half say I square fully XXXX. of the scheduled XXXX have So and relates in 'XX, service we in related not in lease in placed are our budgeted up that leased developments that completed X.X other million in development lease-up. developments to the half we would are

concerned, up end is remaining lease scheduled the far up As is X.X to quarter feet in lease million timing of X.X XXXX. square with back as the to scheduled square the feet in second million

originally Okay. Road, wondering, just That's lengthy you that anything everything I there commencements Was helpful. think, it XXX for a there. And Or what's the the process But was the with were XXX change Post or Old know to signed? I I timing with mark-to-market? XXX Old that at Post any anticipated? and regard Road both consistent changes? at did with XX% roughly, leases And was those rent

It's Peter Schultz.

at for date Old the first be for is commencement quarter Post XXXX. Post XXX December commencement Old the So date Road to in The half of of the the XXX XXXX. of lease was scheduled in

economics terms mark-to-market described Road, calls. for In XXX of we did than better we earlier Old that the in Post the

that space and So on all certainly result. the of through did mark-to-market that The Post we were time XXX and better path economics not pleased But smaller any government on we And yes, process. was that. than yet a again, Old did with reduce it our Road. with rates or the terms long we took dealing torturous

back also the the Is realized all then be that for shares. accounting said explain expense just that expense the the and future. And will real in work? you that How corresponding treatment that reversed be quick expected I you to think just Okay. comp Great. of will Can the quarter. one I noncash lastly, right? And for the to is just that the accelerated in question, guess, expense first is,

ratably expensed were we quarter be quarters. in employees that's other quarters, remaining the that the XXXX in it's tenured that that's in first XXXX. about about to we quarter causing, going per are G&A that as okay? year getting this last year well tenured $X X are the have quarter $X of of expensed going over million be and the script, spoke than what's higher tenured for to So the think And what first the to we be million Now

process, as have majority concerned, of reaching expense. tenure, that don't reversal you far coming in through we're to going have folks is we the the million not so that about not going But when we math incurred XXXX, to As be work through the additional are any basically vesting is vast any talked next really really $X the the this year.

cause Does in G&A. it will So our a reduction Todd? clarify that it

so. think I

So year-over-year? equal, G&A the if plan all lower 'XX $X in of comp million be by unchanged. else would outside is G&A roughly

That's costs XXXX. increases Plus are correct. in whatever in

So that's correct. Yes.

Next comes Mailman from Craig question with Citi.

at are the development looks expected the those maybe are are up moving? that? rents little And of about rising. kind of sense at looking guys it that's looking like Just up Or underwritten and of walk free rents? how to quarter-over-quarter. time, a yields us when just get of guys to of kind or concessions trying the time why how picked you pipeline, rent [indiscernible] the how thinking through I'm were At rents bit, those are a the maybe of same softening period underwritten kind are just rent you kind and yields

Jojo?

Craig, this Jojo. is

there's a one. all, of mix, change in First number

Second the market we all, think these are for can in all we of today. get adjusted what

we QX last that And them rates every QX in market terms second the change to better quarter. think year than didn't So will of this be half although we adjust year. of, we always cap

change no in that. So

do that looking have IE? pricing kind have in other the you competition from the given of like sounds the Okay. is competition you kind there of good the also are is like developers it who space how out guys, trending? I lease stuff But mean, on activity like what's what

done when completed, asset That's of you development, at now, example, for ]. so So right [ unique about AAR in in we look service a our [indiscernible], there. development XX,XXX footer XX% is have kind

footer footer. is there. to need across a not clear in in residence, going and And XXX,XXX user a kind we is If really for there nothing XXX,XXX square the use especially there. tenants getting look have market to with competing out anybody there, hike, What square that facility. there we're this as look we So with of we that at functionality

the X of about is be with finishing market, So it's we say, kind I are to construction. really buildings buildings under X compared But still buildings that there. asset would great off got we have have to would it the compare. It hard That's to going there. of in We've X a Paris. each

clearly it. XX% choppy. last a But there's are supporting of down the rents comps the of but are come lot about not year, tenants So in to X% QX talk have

think the going And spec have how kind a just optimal just maybe think, an Okay. a this in of risk guys in of level from but past, asked I standpoint, you Peter, do? about bigger [indiscernible] forward spec higher you some adding just I've cap, that mitigation mix do guys of the of complement the you you

Yes.

We regular on deploy highest returns. basis. looking the for at a that are in we risk-adjusted have We're the pretty to market land the build-to-suit

sometimes and build-to-suit mean will that sometimes, it won't. And

I build-to-suits high more think not specs say, the meaningfully, going our in, expect barrier change to just while going let's Craig, mix build-to-suits, And coastal are probably very forward. we holdings locations. to and do

it Inland sites much be, the country. is the much, business the say, would markets those in in in So better spec obviously than

X% then Scott, growth? translates helpful. if That's And walk could the you kind FFO kind Okay. of the through to the same-store difference just into more X% between of kind X% sneak in. how of maybe I one that could and

Sure.

there. midpoint we expense in interest two reasons What's on incurring So side, gave happening a Craig, we're on interest is more same-store. XXXX, X.X% of though the expense,

going is higher XXXX. Our in than to be is average scheduled was XXX. be what weighted rate average the two, it in XXXX interest in higher compared slightly to And indebtedness to 'XX then

main offset that So to that's of driver the the same-store.

Nick comes The with next Baird. Thillman from question

you sales just deals? seeing bit who a touch deals differentiation seeing like kind there, portfolio little then to are what and of you're between on wanted single any market and investment the are the asset Maybe And buyers?

talk to want about you that? Jojo

Jojo. is This

market. or actually investment was and QX in obviously, private see of So in institutional. slow terms are in -- market, their XXXX there's XXXX. every in Institutional, continued as QX, investment today, buyer in of QX. terms and markets, been for kind But the private very investors investment users, demand buying the users XXXX there's we of

been, the markets to So today capital more market. that stable, the major say capital There's offers with become when today of started the have now. more funding since rates are more 'XX. more the is regarding second products significantly markets interest getting half actually they on brokers that in put people, interest I more players than the

So the market of for seems to terms in a appetite quite investment to be -- investors increase bit.

then guys in that you big developments on on And service. a more more are have vacant maybe for but give helpful. placed seem That's bit just, XXXX, maybe here some and some commentary box outlook maybe multi-tenanting these for that appetite little of the demand been optimistic

commentary guys to get You the in wanted some Nashville to are spots sweet some like mentioned Denver. of just But midsize in there? and the small areas

Denver off want Peter to the you cover multi-tenant?

Sure.

spaces, would so million again, softer. in for I has most So say, up largest the X been demand the markets

I earlier, feet. and and midsized was XXX,XXX comment to and My Denver, and Central under. Florida feet kind South XXX,XXX smaller square XX,XXX better. As said Pennsylvania of Nashville

we dynamic seen focus Florida. the think will most several years. over buildings our something multiple that that to of last that have similar see tenants calls, endeavor not We be both is opposed And tenants I our, slightly that leased in about designed buildings flexibility to we've talked prior are if we there as single we've be to all on. It's As multi-tenanted. on of

know, the in our feet you of least already we've As Pennsylvania, half XXX,XXX building that. at

to is midsized for Jojo, smaller anything will it be or think to mix. activity seeing more the that? we're I a definitely, So space. seeing But want multi-tenants you market and add

No.

I secured that, and them our again, lower all to want Looking that. almost every could the emphasize, to multiheaded all be [indiscernible] are designed time buildings buildings, size [indiscernible] we our larger access

it us lot So of a gives flexibility.

Mike Mueller with JPMorgan. comes The next question from

of I just I about on to Actually, feel? really developments the think the kind ago? going X seeing my just today months how levels larger I of some real compared were and activity what discussions to questions you're X do And answered. was or guess, ask

again, some proceeding Schultz. most is are Engagement a but urgency, greater prospects across has Peter the cautiously. would better. it's Mike, say I demonstrated better. activity I Decision-making say, still little is would bit

a move to activity there's be under surface, still while forward. of deliberate in their to the making lot So tenants need decisions

commitments large handling like you buildings, particularly large seeing As it's of And one of costs have when lot a we've earlier, Peter money and some costs elevated for elevated with mentioned buildings. material previously, seen those the for equipment. these they're tenants, of construction

it's that's much on decision-making midsized partly faster we're activity and better seeing and slower So smaller tenants. a decision, why the

question Carroll RBC Next Michael comes from [ ] with Capital Markets.

is Cindy how of for leasing Southern I remaining Apologies Mike. the quick in I guess, if just question. California? but XXXX a on missed this, much

Chris, cover do you want to that?

Yes. There's California. actually a higher percentage in Southern Remaining in XXXX.

in rollovers Southern of those California. X that in in And our guidance If you renew. X/XX XXXX, assume we X at the top will our look

guess, think just, for you And I be spreads where do renewal? would do, where that

increases of more. both rental rate XXX% those expect would We or be

Yulico with Scotiabank. comes question Nicholas Next from

be what at you're the to an square us larger converting McGinniss increase? expected Can benefit some like multi-tenant. that give understanding some feet Greg on idea of is This with And to just be? into the looking you going the vacant of get that spaces in conversion Just that of cost of Denver, spreads the Nick. XXX,XXX will of trying kind an and of understanding of

assumed Greg, In our we multi-tenant. it's Peter underwriting, Schultz.

cost, it's might So some most incremental material. going to there a couple be spaces, costs extent be additional covered. but demise the To not to of of those we are

And increase bit with situation unique a this up? activity seeing, that kind from and could you're see quarter. pick vacancy do here a back Okay. developments. feel back a Orlando Orlando? We on more follow-up in to in build-to-suits like We know that of Or just we see the that the that pipeline tenants more and you of This build-to-suit added the pulled does potentially deliveries. build-to-suits urgency growing

The business. situation in business mechanical the They're company, growing. that capacity Orlando because in their a manufacturing additional the is equipment is is for

the have sponsor real So they here for deal struggling a the space, we opportunity into had a financing. with and need to was where step additional

buildings. I of the this. were markets, we jump in is, supply and speaking, to that environment may may where say it consider to take more return on in and additional So expectations where would for you given interest opportunity. depends can expensive there's some on tenants It are less happy be existing rate broadly be advantage where Peter some

So we'll that? you see, Jojo, on Peter, want to add anything

came the The examples good in that as are well of is money. only acquisition our build-to-suit that I'd up say the as couldn't opportunities thing raise owners because Houston the

to good an step had some economics portfolio. assets we and in some obviously, the to there add get So opportunity and great

Goldman Our with from comes next Caitlin Sachs. question Burrows

Hi. everyone. in later Good development slowed Maybe starts, on XXXX. they morning,

So wondering talk conditions about XXXX when you would developments? additional start you some I if under or could was for spec expectations your what and

Yes.

do probably to call starts the far that start dependent year. so The go we we this anticipate that in X be we starts So be say and the expect a I'll of volume leasing it, upon as the in that pace terms level South of of new But first have to next, to experienced over will very do months. Florida.

square what you that lease? little a was long sale you was And existing the give competition then the on building? to also asset? detail it build, more you And for announced, maybe that it. can XXX,XXX is I could the Is that Got the leaseback And the think mentioned over you like that addition how Okay. site. in feet

Sure.

West. Far Inland the So

term. our be acquired our a leaseback and are construction XXX,XXX foot. there. we on and rent new build new, the value completely we good we value, potentially And And costs from it and The foot now new based a square square the just on is say one XXX,XXX feet building a on can land And demolishing expires. we that achieve numbers land today based and value square enjoy can basically think creation we would long is So building lease new basically, tenant. where long when right will the existing that that term, lease XXX,XXX and

a While asset an market of we valuable have [indiscernible]. value infill --

that terms came of it marketed be? was market could in dealer anything And or say like to you a cost how

a to just to about tenant through their the needed relationship being this monetize monetize estate. was real came needing market this that space, in How be? leasing to corporation, we It came

And in, off so market. we yes, came

comes Next question Fargo. Heck Wells with from Blaine

with opportunistic or think you seeing in continue you to to projects development capital of emerge? of that help or far a expect between? talked those Or you acquisitions to quarter, kind Are I and few funding. more on deals few stepped do any those last opportunities opportunistic you needs be about had distressed

Yes.

looking, definitely are beating we bushes. So the

opportunities. Houston in ago, a a I category. would There's lot for capital and similar mentioned of looking the As bit institutional Orlando that deals fall

is of And it's So has -- lot means out it's is, opportunity opportunities. that A of fleeting. There's try that very the on these just in, was that lot, the it's so arbitrage probably lot bid capital and competitive on money very sidelines. opportunity there a to the there competitive. come a to

just you markets new All starts. given development talk the XXXX, deliveries right. given rise development market a see the significantly rate growth then Great. weaker are might in think despite That's you rent any there into that as hitting the Can look whether in drop that still availability? are we helpful. And about at higher-than-average

have markets No, ones you the I be Denver, traditional be barrier markets that are the to are that would think grow, going faster. that then like Houston, barrier think higher it the would be that Chicago, to going markets are and less high obviously, of lower would growth, would coastal

comes Next question Jessica from Street. with Zheng Green

you increasing concessions provide couple rent around last view please your seeing years? the markets your for you're seeing some to trends you in Are compared the Could color concessions. of

do you for rent to Peter, start? want concessions. Trends

I more, rent abatement has month month Peter Sure. more per higher really term concession. X.X little year than less the been are, than a largely is be it additional been bit, where bit X.X have But because up per cost not say, trending little would would as TIs a term. speaking, per really is generally This Schultz. it. that year is an

the And NPI [indiscernible]. changed. past very very, only the has been renewals thing [indiscernible] the that current, has add renewals, sticky, basically I'll is And

at you're flip impacting SoCal Great. the negatively year-over-year you helpful. in was follow-up. all? on wondering, East markets you optimistic port then volume. on I and guess the shift that was markets side, back seeing given the Gulf SoCal And the just are That mentioned to I XX% Coast import a increase

East advantage in a diversified [indiscernible] Coast. the know, Companies and as time and of Suez West West been have the will long There we Coast, Canal No. disruptions now, chains the Coast to back both go the forth. There's to change. their supply all are right? It take certainly Canal. Panama and issues labor on

on Coast to agreement the be There's East a done. labor

change of slow. is pace The

that. a They to add redundancy. usually that just their port access one mean, always might think because close in of just they strategic our retailers corporations And things or major don't happen That something to I one is have report. about.

don't a there's long that's think going lot to chains. they're We term change. supply of So redundant times,

need end customers goods. close to companies to their be to not of where At That's are really the going deliver to much. their the day, change

from Crow James. The with next comes Bill Raymond question

XX have a and little getting I to XXX going square is get may spreads from that may feet investors. call stop got as to construction interest question little rates along the forward, down What's point have from the back a we've us I'm months Peter, eased bit we And a that pass starts? it, look where come regularly bit. and million of the to

Yes.

pause. the big you way So there's been from Starts are know, about in down up, peak as a X/X XXXX.

people from over COVID, to and In the the when that of 'XX of around XX%. saw e-commerce just, direct you thing. and over XXX square go year. Here's a of feet XX% activity business each And million 'XX, was starts result sales were

I catalyst which huge these we're that's upward was that new starts. come stick, an need yet the don't should Demand you more this what surge pushed capital, million hockey upward so where mean to is. that another appropriately which "Oh, today each on feet demand now. digesting and capital neighborhood net right And created starts, of what trajectory That see behaves be trajectory in, flatter in all around year". XXX a now in we we for instead to of influx say, starts massive of ought but that absorption would that of those mean catalyst don't, a and the I expect. square that's starts and to XXX million

the would So question. that we that way look at be

one that up so every later of is companies this the public talking ramping year. fact starts the And about

attitude guess? is in You don't sector private much, think of the as I that sort

when do later, very worry a Right hard depends someone expensive. and development. very part can, construction on they in is That investment could lot that. cash some to and now, If that get. the financing in about they're new incur the loans how come going are you all And to debt

markets where In make fact, And impossible deal the most barrier holdings the land high to are. our for part, pencil. barrier going that's in it's are. highest we and that's any where to We're

that. maybe a from bit So insulated we're

This back to closing question-and-answer the Peter any would Baccile concludes like our remarks. session. to for conference turn I over

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

any questions, you Scott me. with have reach in quarter. you follow-up out Take of many If Art, or connecting first look please forward We to the to care.

concluded. now has today's Thank conference attending The you for presentation.

You disconnect. may now