Big box industrial real estate went through one of its biggest growth cycles over the last decade. E-commerce accelerated demand, COVID pushed warehouse and distribution needs even higher, and for a period, almost every industrial development seemed to work.
That environment has changed. Leasing velocity has slowed, capital and construction costs remain challenging, and developers have to be much more disciplined about what they build, where they build it, and how they underwrite the deal.
In this episode of Commercial Real Estate Secrets, Aviva Sonenreich and Nick Sansone discuss how the big box industrial real estate market is changing and how experienced developers are adapting.
Nick, a Principal at Sansone Group, breaks down what drove the industrial development boom, why the market has cooled, and why his team continues to rely on the same fundamentals regardless of where the market is in the cycle.
They also discuss how Sansone Group underwrites development opportunities in a volatile environment, why Nick avoids relying on projected rent growth or optimistic exit assumptions, and how the rise of data centers is creating a new source of demand for land, power, and industrial development.
Key Topics Discussed
- The evolution of big box industrial real estate over the last decade
- E-commerce and its impact on warehouse and distribution demand
- The COVID-era surge in industrial development
- Slower leasing velocity and the normalization of big box demand
- Industrial development fundamentals that hold up across market cycles
- Conservative underwriting in a volatile real estate market
- Evaluating deals using current rents instead of projected growth
- Exit cap rates, reserves, construction costs, and development risk
- The importance of land, location, and demand when selecting development sites
- Data centers as an emerging real estate development opportunity
- The growing importance of power availability for data center development
- Building enough margin into a deal for unexpected development costs
- Nick’s advice for getting started in commercial real estate development
About the Guest
Nick Sansone is a Principal at Sansone Group, a family-owned, nationally recognized commercial real estate firm based in St. Louis. Alongside his brothers, Nick helps lead the firm’s development and investment activities across the United States, with experience spanning industrial, retail, office, residential, and data center properties. Sansone Group provides development, redevelopment, brokerage, and property management services, giving Nick a broad perspective on identifying opportunities, executing projects, and creating long-term value across commercial real estate.
About the Host
Aviva Sonenreich is the Managing Broker and Owner of the Warehouse Hotline, a Denver commercial real estate brokerage specializing exclusively in industrial properties. She leads the firm’s brokerage operations, negotiates industrial sales and leasing transactions, advises clients on acquisition and disposition strategies, and oversees the company’s marketing and business development efforts. Through Commercial Real Estate Secrets, she interviews leading investors, brokers, developers, and industry experts to provide actionable insights on commercial real estate investing, brokerage, leasing, development, and market trends.
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