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Duke Realty Witnesses Solid Demand in Atlanta Metro Portfolio

Zacks Equity Research

Duke Realty Corp. DRE has been witnessing solid demand for properties in the Atlanta market. According to a latest press release, the company achieved leasing of 1.5 million square feet of space in the first half of this year, together with the expansion of its portfolio with three new logistics facilities aggregating more than 1.2 million square feet.

There is a high demand for efficient warehouse and distribution space in the Atlanta metro market, and Duke Realty is well capitalizing on the trend with its modern, well-located properties. In fact, excluding the two recently-delivered buildings, Duke Realty’s vast industrial portfolio of 13 million square feet of space in the Atlanta metro area has been able to achieve 93.5% occupancy, highlighting the solid demand for its properties in the region.

Particularly, in the first half of 2019, the company added six new tenants with the signing of new leases and one with an existing tenant for additional space, for a total of 1,453,740 square feet. Further, the company has signed renewals with four existing tenants, aggregating 83,868 square feet.  

Moreover, Duke Realty delivered two new buildings — a 589,680-square-foot building at 1380 Jesse Cronic Road in Braselton and a 193,440-square-foot building at 4900 N. Commerce Drive in its Camp Creek development in East Point. Also, a 499,250-square-foot, build-to-suit warehouse for HWC Logistics at 2929 Roosevelt Highway in College Park is under construction.

The company also remains well poised to bank on the favorable environment, given its inventory of land sites that has the capability to support an additional 3 million square feet of new development.

Notably, Duke Realty has a solid presence in the Atlanta metro area, with more than 13 million square feet of industrial properties under its ownership or operation. This poises the company well to leverage on the asset category’s healthy fundamentals in the market.

On an overall basis, the industrial real estate asset category has grabbed attention as resilient consumer sentiment, low unemployment level and rising wages are playing key roles in keeping up the industrial and logistics sector’s healthy performance. Services like same-day delivery are gaining traction, and last-mile properties in high-income urban areas are witnessing solid pricing, occupancy and growth in rentals. This is opening up growth opportunities for industrial REITs, including Prologis, Inc. PLD, Duke Realty, Terreno Realty TRNO and Liberty Property Trust LPT.

Nevertheless, recovery in the industrial market has continued for long and a whole lot of new buildings are becoming available, leading to higher supply and lesser scope for rent and occupancy growth. Intensifying trade tensions is another concern.

Duke Realty currently carries a Zacks Rank #3 (Hold). Over the past six months, the stock has gained 13.1%, outperforming the industry’s 10.9% rise. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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