Pandemic-Fueled E-Commerce Growth Created A Need For Warehouse Space: Box Equities Is Answering The Call


Box Equities is taking an unusual approach to warehouse property as the industry shifts in reaction to the health crisis. The company is capitalizing on the growing need for warehouse and industrial space and the post-pandemic reality of e-commerce’s ascent and brick-and-mortar’s decline.

“The Covid-19 pandemic irrevocably altered the retail landscape with a flight to digital unlike anything we’ve seen,” said Haim Dabah, cofounder of Box Equities. “It’s estimated that the Covid-19 pandemic accelerated online sales by four to six years.”

CBRE recently reported that for every $1 billion in e-commerce sales, an additional 1.25 million square feet of distribution space is needed to support the growth.

Cash-poor brick-and-mortar retailers are looking improve their cash flow by leasing back unused or little used warehouse space, Dabah said. At the same time, e-commerce retailers are facing disruption in the logistics area, which includes everything from supply chain challenges to space and labor shortages.

Box Equities is turning pandemic-stricken real estate to its advantage.


“We’re focused on industrial real estate in secondary and tertiary markets that are often overlooked by major investment funds,” Dabah said. “We’ve found that these markets have more loyal and reliable labor forces, unlike the chronic labor shortage issues of primary markets.

“Our deep connections through our commercial real estate network enables us to work with economic development authorities whose mandate is to create jobs,” Dabah added. “Our deep retail relationships give us an advantage that more traditional real estate investment firms lack. We have an innate understanding of retailers’ businesses, potential tenants, and logistics operations.”

Dabah cofounded Box Equities eight months ago to address these issues, and has closed some significant deals in the short time that the company has been operating. Box Equities has 1.8 million square feet of industrial space under management as of this writing.

Dabah attributed Box Equities success to its knowledge of retailer’s needs and close relationships with industry leaders, including Doug McMillon, CEO of Walmart Inc., who earlier in his career was a blouse buyer at the retail behemoth. Dabah, who sold blouses to McMillon, successfully built and sold multiple fashion brands, including Regatta, which in 2007 was acquired by sourcing giant Li & Fung. Dabah also worked extensively with Macy’s executives.

As cofounder and managing partner of HDS Capital, Dabah has invested in early to mid-stage technology start-ups including KidBox, Stylitics and Talk Space.

“Most people are focusing on industrial locations in primary markets such as Edison, N.J. and the West Coast,” Dabah said. “We’re focused on secondary markets, great buildings with great locations next to highways.”

The demand for industrial space was growing prior to the health crisis, led by Amazon’s need for warehouse square footage, which was growing even as a glut of available retail space was accumulating in key shopping corridors across the country.

Average asking rents for industrial space grew between 6% and 8% for several years and in 2019 advanced 6.4%, two percentage points above the annual average growth rate since 2012, according to a CBRE report at the time. The sector was poised to grow, and the Covid-19 pandemic only hastened e-commerce’s popularity.

Box Equities is targeting retail decision makers who are users of warehouse space or want to monetize the excess space they have; brokers and real estate professionals who are aware of opportunities; private equity investors, and economic development authorities that need to create jobs and want to optimize, update and lease unused or out-of-date warehouse sites.

Dabah launched Box Equities in partnership with his son Mac, who has been leading brand acquisition for HDS. Another son, Mike, an attorney specializing in real estate transactions, is also part of the team. “In working with my brother Mike’s firm, it’s become a big strength of ours with brokers,” said Mac Dabah. “It’s like having a legal team at you fingertips. People want to know if you’re the real deal.”

“Mike started his own law firm,” Dabah said. “Mike’s partners, Mac and I said, ‘Why don’t we start investing in this space.’ What’s been happening, is we’re investing family money and private equity money. Private equity has had buckets dedicated to retail.”

Dabah said Box invests 20% to 25% of its own capital in every deal. In addition to private equity, the company has partnered with high net worth investors and family offices.

Mac Dabah has been working with local development authorities to help get workers into buildings they own. For example, in April, a Georgia Economic Development Authority had a difficult choice to make, A tenant-occupied building in 2019 had fallen into disrepair and the authority couldn’t maintain the upkeep of the building.

“The economic development authority could have invested in bringing the building up to code or invested in a new industrial park. We said, ‘Let us take this building off your hands so you can focus on the industrial park and job growth,’” Mac Dabah said.

Box Equities doesn’t shy away from Opportunity Zones. “Job creation is part of our overall objective, especially in secondary and tertiary markets in underserved areas,” Dabah said. “Two months ago, we launched an opportunity zone fund to acquire the building in Georgia, and are working closely with the development authority to help bring jobs.

“Our primary focus is on unlocking value for retailers, including both users and sellers, to help them maximize their bottom line,” Dabah said. “That said, we’re always open to investing in vacant and distressed properties. In fact, Box Equities was the stalking horse bidder for a Pier 1 distribution center in the Dallas Fort Worth area.”

Dabah believes the shift to e-commerce will continue to place stress on logistics systems in the U.S., which will continue to create opportunities for investment. “All indicators point to a stickiness in e-commerce adoption,” he said. “National vacancy rates for industrial are under 5%, with net absorption hitting record highs in the recent quarters.”