First Industrial Realty Trust Surges into Q1 2025 with Strong Leasing, Development Momentum
First Industrial Realty Trust, Inc., a leading industrial real estate company, has kicked off its fiscal year 2025 with an impressive start. According to the company's latest conference call transcript on April 17, 2025, First Industrial reported solid progress in leasing and development objectives during the first quarter of this year.
Addressing the quarterly results, Peter Baccile, President and Chief Executive Officer, highlighted the company's commitment to advancing its leasing goals. He noted that the firm has successfully renewed its line of credit and a $200 million term loan, further extending their maturities. This strategic move is expected to provide First Industrial with increased flexibility and stability in an uncertain economic environment.
Meanwhile, Scott Musil, Chief Financial Officer, underscored the company's strong cash rental rate growth, which stands at 30% for the full year. Notably, excluding a large fixed-rate renewal in Central Pennsylvania, First Industrial has achieved a remarkable 36% increase in cash rental rates. This upward trend is expected to continue, with projected annual growth ranging from 35% to 45%, excluding the mentioned fixed rate renewal.
First Industrial's development leasing strategy has also shown promise. The company has successfully expanded one of its tenants at its First 76 project in Denver by a significant 99,000 square feet. Furthermore, construction is set to begin on a new 176,000 square foot facility at the firm's First Park 121 in Northwest Dallas. This development boasts a prime location with vacancy rates between 4% and 5% since year-end 2022. The estimated investment of $23 million is anticipated to yield a target cash return of approximately 8%.
In an attempt to mitigate any potential negative impacts from the evolving landscape surrounding tariffs, First Industrial continues to monitor developments closely. As Peter Baccile pointed out, it's essential for businesses like theirs to stay informed about these changes and their effects on the leasing market and overall operating environment.
Despite this external uncertainty, First Industrial has maintained its solid performance during Q1 2025. The company's in-service occupancy remains high at 95.3%, aligning with expectations. It is also noteworthy that First Industrial has progressed further on its 2025 rollovers, taking care of 73% by square footage since the last earnings call.
The industrial market as a whole exhibits an overall vacancy rate of 5.9% in Tier 1 U.S. markets at the end of Q1 2025, unchanged from year-end levels. Additionally, net absorption reached 56 million square feet, with 24 million square feet in First Industrial's target markets contributing to this total. New construction start volume has decreased significantly compared to the peak in Q3 '22, indicating a more stable market.
The company's management team remains optimistic about future prospects and is committed to navigating any challenges that may arise. As Peter Baccile noted, it is essential for businesses like First Industrial Realty Trust to stay adaptable while maintaining its focus on providing top-notch service and value to clients.
