Despite Commercial Real Estate Crisis... US Texas Pension Fund Invests 2 Trillion Won in Warehouses

Increased Demand for Warehouses Due to Growth in E-commerce

The Texas Teachers' Retirement System (TRS) in the United States is investing $1.5 billion (about 2 trillion KRW) in warehouses, a type of commercial real estate. Despite growing concerns over a potential collapse in the U.S. commercial real estate market, which has recently shown signs of stagnation, the decision is based on the belief that demand for warehouses is increasing due to the expansion of e-commerce.

According to Bloomberg on the 1st, the TRS board approved an investment proposal from Bridge Industrial, a real estate company focused on warehouse operations.

TRS, the largest pension fund in Texas, held assets worth $173 billion (about 232 trillion KRW) as of September last year. Of these, approximately 17% are real estate assets.

Bloomberg stated, "The growth of the e-commerce industry has driven demand for warehouse space," adding, "Although commercial real estate has been hit by high interest rates, warehouses still appear to be one of the attractive investment options." Earlier, the Wall Street Journal (WSJ) also reported concerns about a crisis in the U.S. commercial real estate market but noted that demand for certain sectors such as data centers and warehouses remains solid.

In fact, Blackstone, one of the world's largest asset management firms, invested $1 billion in the second half of last year to acquire industrial spaces like warehouses. In December last year, it agreed with Toronto-Dominion (TD) Bank to purchase six industrial properties in Toronto.

Global pension funds have also expanded their investments in industrial real estate over the past few years. According to a report by S&P Global, investments in industrial real estate investment trusts (REITs) increased by 103% from December 2019 to April 2022.

Meanwhile, Bridge Industrial, which proposed the warehouse investment to TRS, was established in 2000 to develop and acquire industrial real estate in the U.S. and the U.K. In 2021, it announced the formation of a joint venture with the Canada Pension Plan Investment Board (CPPIB) to develop supply-constrained U.S. industrial real estate. The two companies invested $1.1 billion (about 1.47 trillion KRW) in the joint venture, in which CPPIB holds a 95% stake.