As warehouse market staggers, Brookfield makes a bold $428 million move

Business Insider

14-07-2025

Brookfield, one of the country's largest property investors, is banking on a strategy that might have looked out of place in recent years —buying older and cheaper warehouses.
The Toronto-based firm purchased a $428 million portfolio of 53 warehouses located in and around Houston, Dallas, Nashville, and Atlanta—one of the largest property deals of its kind this year. The deal was completed in early July, according to a spokeswoman for the company.
The acquisition comes as the once red-hot warehouse sector cools following a boom in construction. Trade tariffs, meanwhile, are threatening to diminish demand for the goods and materials that warehouses are leased to store and distribute.
Andy Smith, the head of logistics investments at Brookfield in North America, said the purchase focused on properties that are more affordable to rent than the wave of newly built warehouses that have hit the market in recent years.
He said the older buildings will appeal to tenants looking to spend less as tariffs push up the cost of goods and materials, potentially diminishing consumer spending.
"It's put a pause on people taking new space for growth prospects," Smith said of the tariff threats.
"You're not going to pay up for something that you don't need when what you have perfectly gets the job done," Smith said, explaining that some tenants have grown more conservative in the current business environment and less eager to upgrade to more expensive, brand-new warehouse spaces.
The portfolio is 96% occupied, and Smith said Brookfield will seek to increase its average rents from "the mid-single digits" to the "high-single digits" as leases expire and tenants either renew or are replaced by new occupants.
Demand for warehouses has skyrocketed over the last decade as a surge in online shopping led to a mass transfer of goods from stores to storage. A record share of consumer spending, totaling 24.1%, was done online in the first quarter of 2025, according to CBRE, a commercial real estate services firm.
A record 1.45 billion square feet of newly built warehouses were completed from 2022 to 2024, according to JLL, another real estate services firm — leading to an oversupply that pushed the average national vacancy rate up to 7.3% in the first quarter, its highest level in more than a decade.
In April, just as President Trump began to levy foreign goods, sales of warehouse properties plunged by 34% to $4.5 billion during the month, according to MSCI, a real estate data services provider. In May, warehouse deals fell by 26% to $5.2 billion year over year, MSCI reported.
Rob Kossar, the head of JLL's industrial leasing and advisory business in the northeast, said that large corporate warehouse tenants "joined the sidelines" after April's tariff actions, putting warehouse leasing decisions on hold.
More recently, he's seen signs of a rebound, he said.
Kossar said that six warehouse leases had been signed in the past month in New Jersey, totaling about 2.2 million square feet.
"The demand has had a significant uptick over the last month, and we hope that that continues," Kossar said.