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5/22/25
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BKM Capital Partners (BKM), a leading vertically integrated real estate fund manager and operator, and Kayne Anderson Real Estate, the real estate investment arm of Kayne Anderson, have entered into a $1.5 bil joint venture partnership focused on light industrial real estate – one of the strongest-performing real estate asset classes in the U.S., yet one largely overlooked by traditional institutional capital.
The $1.5 bil commitment from Kayne Anderson Real Estate will support the acquisition and value-add repositioning of a targeted portfolio of small bay and mid bay industrial properties, in a sector poised for continued demand.
The partnership allows for large-scale capital deployment into the light industrial sector and deepens BKM’s presence nationwide. The JV will focus on middle-market properties with below-market rents, high vacancy, and/or operational inefficiencies that can be acquired at a discount to replacement cost and well below peak pricing, and then repositioned to drive value.
“This joint venture marks a transformative step for BKM,” said Brian Malliet, Founder, CEO & CIO of BKM Capital Partners. “We’ve spent over a decade building an operating platform designed explicitly for small-bay industrial, which is both operationally complex and highly fragmented. We specialize in identifying value where others don’t, transforming underutilized properties into high-performing assets that meet the needs of a rapidly evolving industrial landscape. With Kayne Anderson’s support, we can now bring that model to scale across new markets with a partner who shares our long-term view.”
The investment thesis is underscored by the sector’s strong fundamentals: small bay industrial continues to benefit from near-record occupancy, limited new development, and historically wide spreads between in-place and market rents. With assets often priced well below replacement cost, the JV is well-positioned to capitalize on market dislocation while delivering strong risk-adjusted outcomes in an underserved segment.
The partnership’s focus on multi-tenant and small bay properties comes at a time when demand for light industrial real estate is surging. According to industry reports, the U.S. light industrial market saw a record-low vacancy rate of 4.1% in Q4 2024, driven by sustained demand for small bay spaces catering to e-commerce, last-mile logistics, and small-to-mid-size manufacturers. Leasing activity in the multi-tenant sector rose 12% year-over-year, outpacing other industrial asset classes.
Rents for small bay spaces continue to grow, with national averages increasing 8% annually. In key markets where BKM operates—including California, Arizona, Nevada, Colorado, Oregon, Washington, and most recently, Texas—industrial rents have surged by double digits (10-12%) over the past year due to supply constraints, reinforcing the opportunity for value-add strategies.
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