Q&A: Marcus Daniels Discusses Greater DC’s Industrial Market

Among his notable deals are the $7.2 million sale of a site at 925 Fifth Street Northwest in downtown Washington, D.C., for development of a 49-unit luxury condominium project; the $5.4 million acquisition of a 55,000-square-foot flex building at 9301 Peppercorn Place in Largo, Md., for Ironworkers Union Local 5 headquarters; and the $3 million sale of the iconic La Fontaine Bleue  in Glen Burnie, Md.

Over the past six years, Daniels has sold and leased all types of industrial real estate including warehouses, distribution facilities and flex properties for clients in the D.C. region.

Daniels also is active in a variety of industry associations including the Real Estate Executive Council, the  Urban Land Institute ,and the local chapter of the National Black MBA Association, to name a few

He recently spoke to Commercial Observer about trends in the industrial industry, a sector he sees as being the most active at the end of 2021.

Commercial Observer: What have you seen in the D.C. market since taking the position?

Marcus Daniels: I have had a pretty busy year, as there’s been a tremendous amount of sales and leasing activity throughout the Washington, D.C., area, particularly in the industrial and retail side of the business. There is a lot of new developments that are coming in Washington, D.C., as well as Prince George’s County, and because of that, it’s created even more activity in the market where we’re seeing investors, firms and operators who’ve been sitting on the sidelines for the past year are now starting to place capital and make acquisitions in Class B and Class C industrial assets with value-add potential.

With interest rates low and banks being willing to lend money, I believe we’re going to see even more activity, because I am seeing more of my clients seeking to diversify their portfolio with industrial and multifamily assets as the retail and office market recovers due to the pandemic. 

You mentioned the industrial market. Why is it so hot right now?

Honestly, COVID has had a tremendous impact on rising rates in the industrial market, and I think the need for cold storage and distribution facilities, plus the fact that most contractors and companies that utilize industrial real estate have pretty much continued to work through this entire pandemic, it’s been a good time for most of those businesses. 

The scarcity of industrial land and space in the market has caused rates to go up, and we’ve seen even more activity on the development side of larger industrial parks, whether you’re talking about the Hargrove Industrial Campus or National Capital Business Park in Prince George’s County, Maryland, or other large-scale developments across the region that are going to have millions of square feet of industrial space available. 

As these projects deliver, it’s going to be interesting to see how they lease up and what the results will look like over the next three to five years. 

What attracts industrial companies to the area? 

In the D.C. area, we have the benefit of having some of the best transportation systems in the country. Whether you’re talking about having access to BWI Airport, Ronald Reagan Airport or Dulles, being able to utilize three different airports to distribute products across the world is something that has been a huge driver of industrial growth in this market. Having Metro stations across the region has been really helpful for those larger industrial users as well.

In addition, in terms of logistics and last-mile delivery, the Washington, D.C., region has historically performed well with e-commerce deliveries, having the ability to be shipped from local markets including Baltimore, Richmond or Central Pennsylvania. The increase in industrial lease rates and sales activity in the D.C. region will bode well for our commercial real estate market and will continue to drive demand in 2022 and beyond.

How did the pandemic impact the industrial market?

Obviously, when the pandemic first started, a lot of people spent weeks trying to figure out what the future was going to look like. Because of the fact that a majority of people were working from home for an extended amount of time, it caused these distribution companies and logistics companies to beef up on their real estate if they were already bucking at the seams. They needed to expand into some of these suburban and tertiary markets where they didn’t have a large presence. There were all these people now ordering groceries online or using Amazon or eBay to buy more products for their homes. That created a situation that blew up an already large demand for space.

How do you foresee the industrial market looking in 2022 in the D.C. region?

I’m very bullish and optimistic about the industrial market in 2022 in the D.C region as more institutional firms enter into the market and as more large-scale industrial projects deliver, adding more square footage in the markets when we have seen pent-up demand for the past several years.

Tell me about your work with helping to increase diversity in the industry?

The Real Estate Executive Council is the leading professional trade association for African Americans in the commercial real estate industry, and some of the top CEOs and senior executives are part of it. It’s a membership-only group, and I was selected to join that group this year. 

I was also named the chair of the Diversity, Equity and Inclusion Council at my company. NAI Global has over 350 offices across the world, and I see this as an opportunity to be able to get more diversity in the industry — more women and other underrepresented groups. We’ve had a number of panel discussions and events about recruiting, attracting and retaining more people in this business. 

We are also in the process of building an intern program and a CRE 101 program for high school students and college students so they can learn more about opportunities in the real estate business. 

Keith Loria can be reached at Kloria@commercialobserver.com.