LaSalle Completes First Korean Logistics Project Under $485M Fund

US-based real estate investment firm LaSalle Investment Management has wrapped up construction on its first project in South Korea, a modern logistics warehouse in Icheon City, south of Seoul.

The 467,207 square foot (43,405 square metre), multi-storey facility, called Logiport Icheon, is located within 40 miles of Seoul’s Gangnam district. LaSalle acquired the site for the project in February 2016 and has already signed lease agreements with a number of multinational firms. (Click here for a virtual reality tour of the project.)

The property was built for LaSalle Asia Opportunity Fund IV (LAOF IV), the fourth in a series of closed-end, opportunistic vehicles focussed on Asia Pacific. The firm, which currently has $2.6 billion of industrial assets under management in the region, including logistics properties in China and Japan, is targetting future projects in South Korea to capitalise on demand for high-quality warehousing, driven by the country’s burgeoning online retail sector.

LaSalle IM Taps Korean E-Commerce Demand

In an exchange with Mingtiandi, Mark Gabbay, CEO of Asia Pacific for LaSalle Investment Management, noted that South Korea has the third-largest e-commerce market in Asia Pacific in terms of sales and the seventh largest globally. The country also boasts the region’s highest penetration rate for online shopping at 72 percent of the population, as of year-end 2016.

“In Korea, LaSalle focuses on developing warehouses for B2C tenants in locations within the Gyeonggi province, given its proximity to Seoul’s population and the connectivity to South Korea’s primary expressways,” Gabbay commented. Gyeonggi-do, which surrounds the capital city Seoul, is the country’s most populous province.

The company’s first foray into Korea’s industrial sector was prompted by a shortage of high-quality space for both for tenants and institutional investors seeking core properties, commented Steve Hyung Kim, head of acquisitions and representative director for Korea in a statement.

“We plan to selectively target land acquisition opportunities in strategic locations in South Korea going-forward,” he added.

Unlike many other international investors in Asia’s warehouse sector, LaSalle opted to launch its own branded logistics platform for its properties in the region. The US group manages LaSalle Logiport REIT, a $1.5 billion real estate investment trust focussed on logistics assets in the Tokyo and Osaka areas in Japan.

Although the Logiport Icheon facility is being developed by LaSalle’s fund, the project shares the same brand name and is managed by the same group as LaSalle’s Logiport REIT. “The Logiport brand conveys a consistent experience that tenants can expect from assets on our platform; this name recognition allows LaSalle to build strong relationships with its tenant base across the region,” said Gabbay.

US Investment Manager Grows Its Asian Portfolio

LaSalle Investment Management, an independent subsidiary of Jones Lang LaSalle, has around $58 billion of investments under management globally as of the third quarter. The firm announced the final close of its LAOF IV in August 2014, having secured $485 million in total commitments, along with $100 million for China logistics deals.

Although the LAOF IV vehicle is focussed on building a diversified property portfolio in Australia, China, Japan and South Korea, Gabbay told Mingtiandi that Australia was off the table for the moment in terms of new logistics investments, “given the competitive and well-developed state of that market.”

“We are looking for development opportunities where the risk/return matches our clients’ expectations and therefore prefer to look at Singapore, China, Japan and Korea,” he said.

Following the successful deployment of the funds under LAOF IV, the company launched its LaSalle Asia Opportunity Fund V (LAOF V) in August of last year. A year later, LaSalle announced that it was boosting that vehicle’s fundraising target from $750 million to a full $1 billion in capital, after LAOF V secured $700 million including pending capital commitments, amid strong demand from institutional investors.

Last month, LaSalle said that it had closed its fourth Japanese logistics fund, JLF IV, after raising $350 million in new capital, paving the way for the company to invest over $1 billion for new warehouse developments and value-add opportunities in the country.