At CPG, our mission is to be of service to all of our constituencies. To that end, our goal is to serve:
CPG is entirely focused on multi-tenant flex and industrial property in the Charlotte metropolitan area. Why? Because we see a confluence of factors that we believe create superior investment opportunities for this specific asset class versus the alternatives. Those factors include such items as vacancy risk mitigation, barriers to entry, quicker upside achievement and limited on-going capital expenses. The specific advantages we see in this product type which allow us to leverage superior returns for us and our investors are:
Current market conditions allow us to buy proven, in-fill properties at 20% - 50% discounts to replacement cost, with none of the risks of speculative new development.
Two trends continue to reduce the supply of competitive properties, inverse to the increasing demand created by Charlotte’s rapid ongoing growth – the continued conversion of “for lease” space to “for sale” industrial condominiums, and the rezoning of various areas of the city to higher uses, leading to the demolition of existing product.
Current construction costs, and the cost burdens created by new development standards, make new development unfeasible based on current market rents. This allows the focused operator to better forecast absorption and rent trends without having to factor the impact of new construction.
Smaller unit sizes typically are leased on a shorter term basis and with more frequent rent adjustments, allowing rents to be increased in response to improving market conditions much more rapidly than larger spaces.
Numerous tenants and shorter term leases require a “hands on” management approach for successful property operations and to create value over time. Most investors lack the needed expertise and focus to efficiently manage and market this product type.
Many of these properties are smaller than the size required by institutional investors with their lower yield thresholds, creating the opportunity to capture improved initial returns.
Lenders and investors historically like the product as it provides a hedge against vacancy risk versus single tenant properties.
Due to the low percentage of office space in each unit, upfit costs are typically minimal, decreasing the amount of capital required to re-tenant spaces.
Due to small unit sizes, lease transactions for this type of property are seldom tracked by commercial real estate research providers, who also lump this product type in with unrelated industrial asset classes in their market reports. This dynamic allows the astute operator with real-time market knowledge to capitalize on less-recognized market opportunities.