By Justin Spittler, editor, Casey Daily Dispatch
I’ve never seen anything like it in my life.
Construction cranes dotted the skyline. There were too many to count.
Just look at this picture.
I took this photograph a couple days ago. I could have taken 10 more like this if I wanted.
There are literally dozens of construction cranes like these in the downtown Seattle. And apparently, the city’s looked like this for the last two years.
• This is why some folks are now calling Seattle “Crane City”…
And one local company is almost single-handedly responsible for this.
I’ll tell you the name of that company in a minute. I’ll also explain how you can profit from its almost insatiable appetite for real estate.
But let me first tell you why I’m in Seattle.
• Two months ago, I did something I’ve been wanting to do for years…
I sold most of my belongings. I turned in my apartment key. And I hit the road.
That’s right. I left sunny Florida behind to become a digital nomad.
I did this because traveling helps you understand the world better. That makes you a better investor.
Traveling also exposes you to opportunities that you would never learn about sitting at a desk.
• I began my world tour in Vancouver…
I’m now headed to San Francisco…but I decided to visit some family in Seattle first.
I didn’t plan on doing much “boots on the ground” research. But I couldn’t believe my eyes when I drove around downtown Seattle.
There were more construction cranes there than I’ve seen in my entire life…and I just left Vancouver, which is having a real estate boom for the ages.
But you must understand something.
• Seattle is the hottest real estate market in the United States…
In May, home prices jumped 13%. That’s more than double the national average.
May also marked the ninth straight month that Seattle led the country in home price appreciation.
But housing isn’t the only thing booming in Seattle. The commercial property market is on fire, too.
In fact, office space in downtown Seattle is now renting for 34% more than it did in 2009. And the vacancy rate for office space is now half of what it was eight years ago.
• Amazon is a huge reason for this…
Amazon, which is based in Seattle, is the world’s biggest online retailer.
It’s also one of the fastest-growing companies on the planet. Just look at the chart below.
It shows how much Amazon’s market value has increased since 2002.
You can see that it’s 116 times bigger than it was 15 years ago. The S&P 500 barely doubled in value over the same period.
• Amazon is hiring like crazy to keep pace with this insane growth rate…
Last year, the company hired 110,000 people. And many of those workers live in Seattle.
That’s why there are so many cranes in the city right now.
You see, Amazon could occupy as much as 12 million square feet of office space in Seattle by 2022. That’s about 20% of the city’s current office space inventory.
In other words, Amazon is almost single-handedly reshaping Seattle’s skyline. But that’s not all it’s doing.
• Amazon is also fueling an industrial real estate boom…
These companies own and operate warehouses and distribution centers.
It’s not a sexy business. But online shopping wouldn’t be possible without these companies.
Think about it. When you order something online, it doesn’t just appear on your front doorstep. It comes from warehouses that store and distribute things.
And thanks to the rise of online shopping, this kind of real estate has never been in more demand.
In fact, Amazon’s warehouse space capacity has soared 35% per year since 2007. The online giant now uses more than 100 million square feet of warehouse space.
That’s a lot of warehouse space. But let’s be real.
• Amazon isn’t the only retailer using a ton of warehouse space…
Walmart, Alibaba, Overstock.com, and many other major retailers have also invested billions in warehouses.
This spending spree has created a huge boom in industrial real estate. According to research firm Jones Lang LaSalle, online shopping now accounts for 40% of industrial real estate.
It’s also a big reason why rental rates for industrial space have surged 25% over the last three years. And it’s why the occupancy rate for warehouse space is at the highest level since the dot-com bubble.
But don’t worry if you haven’t invested in industrial property yet.
• This boom is just getting started…
You see, online shopping accounts for just 10% of retail sales today. But Jones Lang LaSalle says it could account for 20% of all retail sales within five years.
If that happens, online retailers will need an additional 600 million square feet of new warehouse space.
There’s just one problem.
There won’t be enough warehouse space to supply the next leg of this boom.
• That’s great news for industrial real estate companies…
It means they can charge retailers sky-high rental rates.
And that’s why I encouraged investors to buy industrial real estate investment trusts (REITs) in July.
These companies own, lease, and operate warehouses. They’re an excellent way to profit from the online shopping boom. And yet, most people have never even thought about investing in these companies.
REITs also trade on the New York Stock Exchange. They’re as easy to buy as any blue-chip stock.
So, consider adding an industrial REIT to your portfolio if you haven’t already.
August 8, 2017
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