Self-Driving Trucks Start to Fuel Land Rush

"The prospect of self-driving trucks could further intensify a land grab near big cities, one that is fueled in part by the increase in long-haul trucking during the pandemic.

Alterra Property Group LLC, a real-estate investor in Philadelphia, said Monday that it launched a partnership with autonomous-truck company Embark Trucks Inc. to buy property across the U.S.

Embark, which went public in November in a $5 billion deal, plans to commercially launch the first trucks using its software in Sunbelt states such as California and Texas in 2024. The autonomous trucks would drive on highways, then pass on the trailers to human-driven trucks for the final stretch of city deliveries.

To do that, Embark needs many transfer hubs close to highways on the outskirts of cities to park and switch trucks. Under its partnership, the company plans to initially lease these sites from Alterra.

The emergence of self-driving trucks comes as Americans' demand for electronics, household wares and other goods during the pandemic is boosting the amount of truck traffic. Truck operators need land near big population centers to store their vehicles.

But that land is scarce. For one, developers have been buying up outdoor facilities for use as e-commerce warehouses. And strict zoning rules mean that few sites qualify for truck storage.

That "is creating a significant supply-and-demand imbalance," said Leslie Lanne, executive managing director at commercial-property firm JLL.

Investors are looking to profit by buying up these hard-to-find sites and renting them out to logistics or traditional trucking companies under five- or 10-year leases.

In December, property investor Zenith IOS launched a partnership with J.P. Morgan Global Alternatives to buy about $700 million of these industrial outdoor storage properties. The partners bought more than $150 million of properties to date, Zenith said. Atlanta-based Stonemont Financial Group last year set up a joint venture with Cerberus Capital Management to invest in the sector.

While big investors have been buying up e-commerce warehouses for years, they have so far mostly neglected industrial outdoor storage facilities. Most plots are small and owned by local landlords or small logistics businesses, making it hard to find real estate to buy and spend a lot of money. That is starting to change.

Benjamin Atkins, chief executive of Zenith IOS, said he expects outdoor industrial properties to follow a path similar to single-family rental homes and self-storage facilities, where the rise of big landlords has made it easier for pension funds and sovereign-wealth funds to buy properties in bulk, drawing in more money and pushing up prices." [1]

1. Self-Driving Trucks Start to Fuel Land Rush
Putzier, Konrad. Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 02 Mar 2022: B.6.