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DCT Industrial to Develop Build-to-Suit Facility in Houston

Industrial REIT – DCT Industrial Trust Inc. DCT – recently declared the acquisition of 13.2 acres for the development of a 222,000 square foot build-to-suit facility in Houston. The facility would be constructed for the logistics company, DHL Supply Chain USA.

The site is specifically located in the Port submarket of Houston, next to two existing DCT Industrial buildings on the State Highway 225. These buildings are occupied by DHL Supply Chain USA as well. Post completion of the project, DCT Industrial and DHL’s La Porte campus will total 535,000 square feet of space.

The construction of this modern facility is slated to commence in second-quarter 2017. It will include a class-A distribution building, with 36-foot clear height, and have rail access in the Port of Houston.

Notably, the Houston industrial market is on its path of recovery and is likely to benefit from solid growth in population, increase in online retailing, recovery in the energy industry, as well as an improvement in the overall U.S. economy. The market ended 2016 with solid absorption gains and a comparatively flat vacancy rate, per a report from Avison Young. Also, distribution spaces, which are served by rail near the Port of Houston, are much in demand.  

Moreover, per a study from CBRE Group Inc. CBG, the overall U.S. industrial real estate market remained upbeat in first-quarter 2017, with essentially unchanged national availability rate despite increased supply. Further, the market is likely to display strength with increase in factory orders, rise in inventories and shipments, growth in retail sales, especially for non-store retailers. Additionally, consumer sentiments remain positive and the ISM Purchasing Managers Index also suggests optimism in the industrial economy.

Currently, DCT Industrial has a Zacks Rank #3 (Hold).

Notably, shares of DCT Industrial outperformed the Zacks categorized REIT and Equity Trust – Other industry in the past six months. Over this time frame, DCT Industrial’s shares ascended 10.1%, while the industry climbed 5.5%.   

Stocks to Consider

Better-ranked stocks in the REIT space include CoreSite Realty Corporation COR and PS Business Parks, Inc. PSB. Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CoreSite Realty currently has a long-term growth rate of 19.1%.

PS Business Parks’ estimates for 2017 funds from operations (FFO) per share moved north by nearly 0.9% to $5.86, over the past seven days.

Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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CBRE Group, Inc. (CBG): Free Stock Analysis Report
PS Business Parks, Inc. (PSB): Free Stock Analysis Report
CoreSite Realty Corporation (COR): Free Stock Analysis Report
DCT Industrial Trust Inc (DCT): Free Stock Analysis Report
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