Scott Musil: Yes, it’s definitely significantly higher. Our place in service policy is 12 months after developing completion. And we’ve — generally, if you look at year 3, 5 years ago, we’ve leased up everything inside of that 12 months. So that spread is definitely higher. We did have a little bit of that type of dynamic during COVID with a couple of our developments, so I would say at this point in time, it’s higher. On a go-forward basis, Rich, it really depends on an asset-by-asset basis when we get leased up and we’ll go through our budget process here at the end of the year and we’ll give you a little bit more color on our fourth quarter call.
Operator: Our next question comes from Vince Tibone with Green Street Advisors.
Vince Tibone: Could you discuss how 3PL tenants are performing in your portfolio? And do you have a sense of where their current volumes are relative to peak activity 12, 18 months ago? I’m just trying to understand how much kind of excess capacity there may be among 3PLs and how that dynamic could potentially impact near-term demand?
Peter Baccile: Peter, do you want to take that?
Peter Schultz: Sure. Vince, it’s Peter Schultz. First, I would say that our teams report high utilization of all of our spaces around the country. 3PLs continue to be the top most active prospect that we’re seeing for new buildings and existing availability. And in general, they’re all looking for more space, not less space. So I would simply tell you that we’re not seeing really any stress there. To Scott’s question, nobody on the watch list and no bad debt but they continue to be an important and an active component of demand. Jojo, anything you want to add to that?
Jojo Yap: Yes. The only thing is that definitely the 3PL — in our experience, 3PL business is not recession-proof but it is a business wherein — where things slow down with companies that are not in the fulfillment business, they go to 3PLs because 3PLs are more efficient and more cost-effective than doing fulfillment themselves.
Vince Tibone: That’s really helpful. And then 1 more industry kind of wide question for me. Could you just discuss trends among sublease space within your markets? Any notable changes there? That’s a pretty — that’s an intricate topic because not all sublease space is created equal. Peter and Jojo, do you want to come in with the…
Peter Schultz: Sure. So Peter Schultz. I would first say that sublet space at the headline is certainly up a little bit but I think you have to break it down and it’s a couple of different buckets. One is a corporate occupier saying a 700,000 square foot building gets an edict from their corporate to sublet 200,000 or 300,000 square feet. That’s a hard deal to make for tenants and generally doesn’t happen. We don’t really view that as competitive sublet space. Some of the sublet space has a time or term limit of only a couple of years and most tenants are not going to take advantage of that. We’ve also seen some sublet space come on the market and be pulled back by the prime tenant because they need the space again. So yes, there is some sublet space.
We don’t view it has a high concern today. And then I would just end with, as I said a couple of minutes ago, the space utilization in our portfolio is very high. We’re not really seeing any change in sublet space across our portfolio. Jojo?
Jojo Yap: Yes, I just want to just add to Peter, when we surveyed really our teams is that we haven’t really lost anything close to anything significant to subleased space, just like Peter said. And if we did, these are the subleases that are long-term sublease is very good for a long-term user. But the problem is that most of leases don’t fit that. Most of the leases are short term. And therefore, frankly speaking, would like to cope with sublease because a lot of times, the tenants that we’re pursuing can really operate out of a short-term lease. It’s like Peter Baccile said, it’s constantly moving.
