- Big and bulky warehouses have become the "hottest" component of commercial real estate, Black Creek Group's Raj Dhanda tells CNBC.
- Publicly traded real estate investment trusts are one way investors can get a piece of the action.
- Industrial REITs Prologis, DCT Industrial Trust and EastGroup Properties have all seen their stocks climb more than 20 percent in 2017.
It might sound counterintuitive, but brick-and-mortar store-killer Amazon may be boosting parts of the real estate market.
The e-commerce giant has "made the warehouse sexy," Raj Dhanda, president of private equity real-estate firm Black Creek Group, told CNBC's "Squawk Box" on Thursday. Big and bulky warehouses have rapidly become the "hottest" component of commercial real estate, Dhanda said.
During the first half of the year, investment sales in the industrial real estate sector totaled $23.8 billion, according to real estate investment firm Jones Lang LaSalle. That translated to growth of more than 20 percent.
JLL predicts that "another wave of large-scale industrial portfolio transactions will lead second-half activity." More than $12.5 billion in industrial deals are slated to close before the end of the year, the firm found.
Amazon isn't the only e-retailer that needs distribution centers — more and more are looking to scoop up spaces outside of metropolitan markets to plant their fulfillment facilities.
In turn, rents in the industrial sector have climbed around six to seven points, according to Dhanda. His team has noticed more activity in second-tier markets around Dallas, Denver and Nashville, Tennessee.
Publicly traded real estate investment trusts, or REITs, are one way investors can get a piece of the commercial action, particularly warehouses. Dhanda said he's noticed more investors turning to real estate in a search of assets that aren't tied to the typical ebb and flow of the stock and bond markets.
Share prices of industrial REITs Prologis, DCT Industrial Trust, EastGroup Properties are up more than 22 percent each this year. The price of another REIT, First Industrial Realty Trust, is up about 10 percent.
"As retailers reconfigure their supply chain to accommodate the shift in consumer behavior, the requirement for warehousing space will increase substantially," Stag Industrial CEO Ben Butcher told CNBC earlier this year. "This is true incremental demand, not a displacement of existing demand for warehouse square footage."
Butcher's industrial REIT has seen its stock climb over 17 percent in 2017.
Jefferies has added to the argument for industrial companies, estimating that purely e-commerce retailers will need three times as much warehouse space as brick-and-mortar retailers, presenting huge opportunity for warehouse landlords.
While mall and shopping center stocks have cast a shadow over REIT equities this year, dropping on talk of a so-called retail apocalypse, there are hardly enough warehouses to keep up with industry demand, Dhanda told CNBC.
"What we've seen in 18 months is outsized returns for these industrial warehouse logistics assets — up 20 percent this year," he said.