By Jacob Bourne
Denver based DCT Industrial marked its 10-year anniversary of becoming a publicly traded company on December 13. The company’s executive team and senior vice presidents from 12 satellite offices across the nation gathered in New York City for the New York Stock Exchange closing bell ringing to commemorate the date. DCT specializes in the ownership, acquisition, development, leasing and management of distribution and light-industrial properties with about 400 buildings totaling 73.5 million square feet in 20 U.S. markets. Since the IPO in 2006, DCT’s equity market capitalization has moved from $2.2 billion to $4.6 billion.
Of the company’s 12 focus markets, Seattle and Northern California both had physical offices opened in 2012 as part of a larger shift in the company towards decentralization. According to Phil Hawkins, president & CEO of DCT, the Southern California, Seattle and Northern California markets have been in the top five fastest growing regions for the past decade.
“With those markets our focus has been infill development close to urban cores,” Hawkins said. “Location matters in terms of growth through long term investments. This emphasis has been reinforced by the rapid emergence and expansion of e-commerce.”
Hawkins joined the company just before the IPO in 2006 and has led the significant growth by shifting the operational platform and fostering leadership capabilities for team members at the regional offices. Dave Haugen, senior vice president for Northern California based in Emeryville and Patrick Gemma, senior vice president for Seattle, both prioritize making strong local relationships in their respective communities as well as increasing value through acquisitions and leasing.
“In Seattle, what sets us apart from the competition is that there aren’t a lot of players that have local offices with development, construction and property management capabilities,” said Gemma. “We really wanted to grow our presence in Seattle. It’s significantly less expensive than the Bay Area, though still expensive in relation to other cities in the country. Seattle is a low cost alternative for companies compared to the Bay Area. Though they have some manufacturing from Tesla, we have a higher percentage of manufacturing overall because of Boeing.”
“Our portfolio has had 90-percent growth since opening the Northern California office,” offered Haugen. “The Emeryville office has proven to be a good move for DCT as we’ve established strong connections in the community. We are also at the epicenter of tech in the Bay Area and are blessed to be in the right spot.”
“There’s been a cultural shift at DCT since 2006 and it’s been significant,” Haugen continued. “Back then DCT was centrally run out of Denver, but today we’re decentralized and for me and Patrick it’s like running our own businesses. We’re working on development and doing a lot more across the spectrum. We went from owner-asset management to a diversified full-service company with strong satellite offices.”
E-commerce has played a substantial role in growth of new product for both markets, accounting for 40-percent new building absorption in Northern California and up to 30 percent in Seattle. Both are West Coast markets with access to ports. The tech-driven economies have led to strong job growth, which has in turn boosted the demand for warehouses. High-density population is also a major factor driving e-commerce given the close proximity of many wealthy consumers, but the density contributes to land constraints resulting in the “last mile problem” — a challenge experienced by industrial suppliers and users alike. Though Hawkins admitted that there’s no easy solution to the problem, he said that DCT leaders like Haugen and Gemma have effectively dealt with the issue by creatively modernizing, and sometimes reducing square footage, of industrial spaces to suit the specialized needs of customers.
“The two major trends affecting the country are the reorganization of America out of suburbs and into cities and the progressively higher and higher expectations for e-commerce delivery,” commented Hawkins. “People don’t want to wait. They want a specific product today or tomorrow, which translates into even more demand for infill locations and more demand for warehouse space to meet the inventory needs of consumers. These are nationwide trends. So many people want to be in cities and it’s a big deal. It’s what’s transformed our business.”