Marshall Loeb: I think it’s – Blaine, it’s Marshall. I think it’s inevitable, I guess, if you don’t lease it, or depending on how long you want to carry it. Again, I think we could see some of that, but depends on how big the big box is, really, when we think of our average tenant size is 34,000 feet, we certainly have tenants that are larger than that. But if you’ve got an 800,000 foot building, for example, that may be 500 or 600 feet, 8 million square foot building, that depth is probably twice the depth of a large building for us. And so for that tenant, what you end up whether it’s a very long narrow space with very few dock doors. So it’s not efficient for those tenants, ideally, and you’re running the forklift, up and down and awfully long run.
If that inventory is going from one side of the warehouse down to where the two or three dock doors. So, I think, they will break those buildings up. But I think depending on how big they are, that’s going to be awfully expensive. When you think of the cost of adding that much more office in which wasn’t in their original plans, and then the demising walls where you build floor to ceiling, sheetrock fire rated walls, that’s going to be awfully expensive for those developers. And at the end of the day, the loading efficiency it’s not going to be ideal for those tenants. So I think some of it will happen. But the dies kind of cast, you’ve built what you’ve built, and you can maybe move it doesn’t have to be single tenant. But it’s probably hard to put 7 or 8 tenants in those buildings, the way they were designed to what they were designed for.
Brent Wood: Yeah, I would even add, Blaine, when you’re building some of those bigger box properties that sometimes an easy way to look at pretty much the maximum way to divide a large bulk building would be by 4. I mean, they don’t want to do it but you they probably say we did what we could do it into a quote quad, where you can put a divided into quarters, but even there, if you’re talking about a 500,000-600,000 square foot building, you’re still talking about 125,000 or larger minimum tenant size. So I like what Marshall said kind of that the die is pretty much cast once you commit to the bigger building. You could put a few tenants in it, but you’re still not going to get down into that 30,000, 50,000, 75,000 square foot tenant size like you would see in a multi-tenant type building, they still really aren’t going to cross pollinate very much.
Blaine Heck: Great. Thanks, guys.
Marshall Loeb: Thank you.
Operator: And our final question comes from Rich Anderson from Wedbush. Please go ahead with your question.
Richard Anderson: Final question. Sorry about that. So I do have a question as it relates to acquisition, specifically, you are unique and your disposition guidance came down and your acquisition guidance went up. So that is obviously specific to you guys. But when it comes to operating acquisition to operate property acquisitions, you mentioned some of the things that developers coming in the fourth inning, but specifically about operating assets, are you seeing any trends materializing there in terms of the nature of the seller or banks involved at all in any cases? I’m just curious if you can sort of give an idea or a picture of what the pipeline looks like of potential sellers of operating assets.
Marshall Loeb: Good morning, Rich. We’ve seen a couple that – no banks involved, although, we’ve been – we’ve seen a lot of distress, hopeful, that that might come in time. It’s been we have seen a couple of pension funds that we’ve either acquired from or had conversations or looked at portfolios and where they need – like I mentioned it earlier that you’ve needed to raise some liquidity and industrial is what you could sell kind of some of the funds that are raised are different things, whether it’s pension funds, or just to fund itself and they’ve wanted liquidity, and they were selling their industrial, on the dispositions. And against that there weren’t big numbers, what I would say, maybe the difference, the $60 million we had assets more of a placeholder a little bit, whereas this quarter, and I’m hopeful by the end of the year like our next update, we’ve got – it’s more specifically got funds at risk on a disposition.
We’ve got one that we’re looking to sell where the tenant is the buyer, and hopefully that gives me a little bit higher probability, since they know the asset better than we do probably at this point. And another under our letter of intent that really that we thought we might close this year. But as they get their financing, it’ll probably drift and hopefully January of 2024, they’ll get that close. So that’s what drove the drop. So it’s a 2, 3, 4 transactions that total that $40 million to $50 million, but I do feel better, call it 60, 90 days later of where we stand on those dispositions, in terms of just a little bit further down the road with those than we were last call. And we’ll kind of keep learning, it’ll be a good source of capital of equity stays where it is, I like the idea of trading some of our older assets.
And if we can find the right one-off acquisition to kind of move chips around to just kind of nudge growth at a little bit higher rate in the future.
Richard Anderson: Yeah, I was more interested in the acquisition side, but thank you for that color. And then the second question is, you talked about how all the development largely is in bigger assets that aren’t necessarily competitive with you and your 95,000 square foot average. But do you concern yourself with the secret getting out about this shallow bay model and if developers maybe want to dial down their cost profile and build something that’s not quite as expensive? Do they come into your market a little bit more in terms of being more competitive with you and you start to see some of that pressure? Or are you just not seeing that and why not? I guess, since I would think it would be an easier pill to swallow for a merchant developer. Thanks.
Marshall Loeb: Yeah, probably two or three fall, I mean, one at all. It’s hard to be a secret and have a public company and website, and got a Nareit and do all the other things we do. So I wish we could be more secretive than we are at times about it. So I think it’s out there. And certainly the number of developers ballooned kind of industrial development, everybody became an industrial developer, we said it was your Uber driver giving you stock tips you knew it was things were too hot, probably twofold that makes us comfortable as an adult, it’s not like it’s a well-kept secret. The big pension funds are larger public, private peers, they have so much capital to put to work in if our average developments maybe 14, 15 may end a building or the next phase.
You can stay awfully busy, but miss your allocation targets, doing what we do. So I think that’s one of the reasons and even talking to some of those kind of local, regional merchant developers, they’re working for promotes and things like that. So you can make so much more money flipping a half million square foot buildings and 100,000 foot building, and then probably I’m doing in reverse or the biggest reason is we struggle to find good infill land sites and it’s edge of town, low price point, bigger tracts of land, South of Dallas, South of Atlanta, Southwest Phoenix, Inland Empire East, it’s easier to find the land and put it into production more quickly, then go through all the zoning permitting issues that we deal with it can be measured in a couple of 3 years on an infill site.
And so I really think and it’s actually gotten worse. It’s interesting with the ecommerce. The dilemma is everyone wants the delivery or the repair person to their house immediately, but they don’t want it to originate from around the corner. So, I think, our zoning challenges have gotten harder over the last couple of years.
Richard Anderson: Yeah. Okay, sounds good. Thanks very much.
