Ladies and gentlemen, thank you for standing by, and welcome to the Duke Realty Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll have a question-and-answer session. Instructions will be given at that time. If you should require assistance during today's call, please press star, then zero. As a reminder, today's call is being recorded. Now, to the conference viewer host, Ron Hubbard, Vice President of Investor Relations. Please go ahead. Thank you, Sean. Good afternoon, everyone, and welcome to our third quarter earnings call. Joining me today are Jim Connor, Chairman and CEO, Mark Denien, Chief Financial Officer, Steve Schnur, Chief Operating Officer, and Nick Anthony, Chief Investment Officer. Before we make our prepared remarks, let me remind you that certain statements made during this conference call may be forward-looking statements subject to certain risks and uncertainties that could cause actual results to differ materially from expectations. These risks and other factors could adversely affect our business and future results. For more information about those risk factors, we would refer you to our 10-K or 10-Q that we have on file with the SEC and the company's other SEC filings. All forward-looking statements speak only as of today, October 28, 2021, and we assume no obligation to update or revise any forward-looking statements. A reconciliation to GAAP of the non-GAAP financial measures that we provide on this call is included in our earnings release. Our earnings release and supplemental package were distributed last night after the market closed. If you did not receive a copy, these documents are available in the Investor Relations section of our website at dukerealty.com. You can also find our earnings release, supplemental package, SEC reports, and an audio webcast of this call in the Investor Relations section as well. Now, for our prepared statement, I will turn it over to Jim Connor. Thank you, Ron, and good afternoon, everybody. The fundamentals in our business continue to be the best we've ever seen. I'll share a few highlights for the quarter and then turn it over to the rest of the team. We now have had three successive quarters of demand at or near all-time records, and projected market-level rent growth has risen from the 10% range to the mid-teens% nationally and in submarkets as high as 35%. During the quarter, we began roughly $350 million of new developments with expected strong value creation and IRRs, and we raised our full-year guidance on starts once again. Cap rate compression and rent growth continue to outpace material cost increases, allowing us to drive improved margins. The margins on our development pipeline are now over 60%, and our core portfolio achieved record rent growth of 22% on a cash basis from second-generation leasing activity. These quarterly results and our improved outlook for the balance of the year resulted in our raising key components of our 2021 guidance, including year-over-year core FFO growth, now expected to be at 13.8%, and growth in AFFO per share of 11.6%. Based on these results and our optimism about the balance of the year, we have raised the dividend by almost 10%. Mark will go over these changes in detail momentarily. Now, let me turn it over to Steve to cover the real estate operations in more detail. Thanks, Jim. I'll first cover market fundamentals and then review our overall operational results. Industrial net absorption registered 121 million sq ft, which is only 1 million sq ft less than the all-time record. This was more than enough to offset the new supply as completions came in at about 79 million sq ft. This positive net absorption over deliveries for the quarter reduced vacancy down to 3.6%, setting yet another record low. The strong fundamentals increased nationwide asking rents during the third quarter by 10% compared to the previous year. CBRE now projects demand for the full year in the mid-300 million sq ft range and likely to break the all-time 2016 record of 327 million sq ft. Completions for the year are projected to be about 270 million sq ft. National asking rents for the full year are expected to be in the mid-teens, with some markets like Northern New Jersey and Southern California likely to see increases of 30%-35%. The reaction to supply chain bottlenecks continues to be in the early stages of a longer-term boom for our sector, with CBRE reaffirming roughly 1.2 billion sq ft of projected aggregate demand over the next five years. Increasing inventory levels, safety stock, consumer spending, and online shopping trends are driving much of this demand. Demand by occupier type remains broad-based, with e-commerce and logistics services companies continuing to make up roughly 60% of our activity, with the e-commerce contribution about 10% lower compared to 2020 and the 3PL contribution about 10% higher than this time last year. It is also noteworthy that Amazon's share of demand this year is about 10% of overall total demand, compared to 18% of demand in 2020. Turning to our own portfolio, we executed a very strong quarter by signing 9.5 million sq ft of leases. The strong lease activity for the quarter resulted in continued growth in rents within our portfolio, as we reported 35% on a GAAP basis and 22% cash. Notably, with only 25% of our transactions occurring in coastal Tier One markets. We now project our mark-to-market on a GAAP basis within our portfolio to be 28%. We started $349 million of new development, totaling 2 million sq ft that consisted of six speculative projects and two build-to-suits in the quarter. 80% of this volume was in our coastal Tier One markets. Our team has continued to lease our speculative project successfully, as evidenced by stabilizing seven new developments during the quarter and increasing the development pipeline to 60% leased. To put our track record of leasing speculative projects in context, the $897 million of projects that we placed in service this year through September 30 increased from 39% leased when the construction started to 90% leased when they were placed in service. For all of our speculative developments we've started since the beginning of 2019, our average lease-up time is less than two months from the dates the projects were placed in service. Our team's continued ability to quickly lease up speculative development projects will be a key contributor to our future growth. Sticking with the development pipeline, at quarter end, we totaled $1.1 billion, with 86% of this allocated to Tier one markets and 60% pre-leased. We now expect value creation from this pipeline of over 60%, which is primarily due to rapid appreciation of rents and land. We are also very proud to remind everyone that we target only developing the LEED certified standards. We expect the LEED percent of our total NOI to trend towards 25% by the end of 2022. On the construction cost side of things, our teams have taken steps to mitigate schedule risk related to materials, such as contracting for steel nearly a year out, and we've only had minor delays in a few of our projects. The outlook for new starts is strong and is reflected in our revised guidance of our midpoint being up $175 million. On a longer-term basis, we either own or control land, primarily in coastal infill markets, that can support roughly $1 billion of annual starts over the next four years if the supply-demand picture remains robust, which we believe it will. It is also important to note the market value of the land we own is about 2x our book basis, and on average, we've only owned this land for about two years. Land we control and will be closing over the next few quarters is also well below market. The favorable land value will continue to support high development margins and very good IRRs long term. Overall, we believe we are very well positioned to continue to lead the sector in growth through new development. I'll now turn it over to Nick Anthony to cover the acquisition and disposition. Thanks, Steve. For the quarter, disposition proceeds totaled $738 million, including outright sales and contributions to joint ventures. The outright sales comprised our entire remaining portfolio in St. Louis, three buildings in Indianapolis, and one building in Chicago. The activity also included the first two tranches of the Amazon property contributions to our newly formed joint venture with CBRE Global Investors. The pricing in aggregate was at an in-place cap rate of 4.8%, which was inflated a bit by a 5% cap rate for the St. Louis portfolio, in which pricing was impacted by expected rent rolldowns on looming tax abatement expirations. We acquired one facility in the third quarter, totaling $24 million, a 63,000 sq ft facility in the San Gabriel Valley submarket of Southern California. This third quarter activity has further shifted the geographic position of our portfolio on an NOI basis to approximately 40% in the coastal Tier one market. Let me also note that just after quarter end, in very early October, we closed on the sale of a 517,000 sq ft Amazon facility in Columbus, Ohio. This sale represents our final property disposition for the year. I will now turn our call over to Mark to discuss our financial results and guidance update. Thanks, Nick. Core FFO for the quarter was $0.46 per share, which represents 15% growth over the $0.40 per share from the third quarter of 2020. AFFO totaled $151 million for the quarter, compared to $135 million in the third quarter of 2020. Same-property NOI growth on a cash basis for the three and nine months into 2021 compared to the same periods of 2020 was 3.8% and 5.3% respectively. The growth in same-property NOI for the third quarter of 2021 compared to the third quarter of 2020 was mainly due to rent growth, partially offset by an 80 basis point decrease in occupancy in our same-property portfolio due to an extremely high occupancy comp of 98.6 in 2020. Our balance sheet is in great shape, with plenty of dry powder to fund our growth. We had $273 million of sale proceeds in 1031 escrow accounts at the end of the quarter that will be used to fund near-term building and land acquisitions. We finished the quarter with reduced leverage as a result of the significant disposition activity during the quarter, but intend to return to recent leverage levels by the end of the year as we continue to grow through development. As a result of our continued strong operating results, we announced revised core FFO guidance for 2021 in a range of $1.71-$1.75 per share, compared to the previous range of $1.69-$1.73 cents per share. The $1.73 midpoint of our revised core FFO guidance represents a nearly 14% increase over 2020. For same-property NOI growth on a cash basis, we've increased our guidance to a range of 5.0%-5.4% from the previous range of 4.75%-5.25%. We continue to outperform our underwriting assumptions for speculative developments, both in the timing of lease-up and in the rental rates we're achieving, while we have maintained a solid list of build-to-suit prospects, as well as land sites in various stages of due diligence and entitlements. Based on these prospects, our revised guidance for development starts is between $1.3 billion and $1.45 billion, compared to the previous range of $1.1 billion-$1.3 billion. We've updated a couple other components of our guidance based on our more optimistic outlook, as detailed in our range of estimates exhibit, including our supplemental information on our website. I'll now turn it back to Jim for a few closing remarks. Thanks, Mark. In closing, I'm incredibly proud of our team's execution in leasing, capital deployment, and development starts. We started the year with very solid growth expectations and have exceeded every one of them, resulting in a nearly 14% growth in core FFO at the revised midpoint. Our shareholders should be very pleased with our dividend increase of $0.025 per share. This 9.8% increase marks our seventh straight year of annual dividend increases, representing a growth of over 65% over that period. Looking out to the next few years, our operating platform is perfectly positioned to take advantage of the numerous growth drivers benefiting the logistics sector. These drivers, combined with the undersupply of new available warehouse product, will allow us to maintain our high occupancy rates and rent growth while creating substantial profit margins on our $1 billion-plus development pipeline. The net result of these factors is our belief we can continue to grow earnings at approximately 10% pace for the foreseeable future. With that, I wanna thank you for your interest and your support of Duke Realty. We will now open it up for questions. We would ask that you limit your engagement to one or perhaps two short questions, and of course, you are always welcome to get back in the queue. Sean, we'll now open it up and take our first question. Thank you. We're gonna take our first question from the line of Dave Rodgers. Please go ahead. Yeah, good afternoon, everybody. Steve, I think you alluded in your comments to about $1 billion of potential development starts over the next four years on owned land, and that might've just been a nice average. Maybe the question for you or Jim is, you'd historically said you wanted to limit the size of the development pipeline in terms of kind of your internal capacity. Now it's, you know, pushing 50% above that. How do you feel about that? Have you added people? Is it just more dollars? Can you give us some more color on that, please? Yeah, Dave, it's Jim. I'll start out. You know, I would tell you that as prices have grown on these projects, there's some internal organic growth on the development pipeline. Given the success that we're having leasing up spec development virtually before it comes in service has allowed us to ramp up the spec development pipeline. That combined with the build-to-suit pipeline, which continues to remain healthy, is gonna allow us to operate at these elevated levels that we're seeing today. Steve, do you have more color on that? Yeah, Dave. You know, we've averaged over the last four years somewhere around $1 billion of starts. We see that pace continuing. We've got, you know, we've got land either owned on our books or under control or option or covered land plays to continue to do that as long as the market bears. As Jim said, our pre-leasing in that pipeline remains best in class. As long as we're achieving that, we grow through development. Yeah. I guess maybe just wanna make sure I understand the point is we're not necessarily expecting a slowdown. When you say $1 billion, that's just more an average over that period of time. Given where you sit today at 60% pre-leased, we should anticipate that this momentum is continuing for your 2022 kind of out- Yeah. Yeah. Yeah. I guess I didn't understand your question. We are not slowing down. We're given the market conditions and our teams and what we control out there, we like where we stand this year. Obviously, we raised our guidance and we don't see that changing in the foreseeable future. No. You know, Dave, I think just to finish that point, you know, without giving 2022 guidance, as Mark is kicking me under the table, you know, I think we like where our elevated development pipeline is, our ability to keep that pre-leasing percentage high. That's, you know, one of the key contributors to our being able to drive, you know, this high level of growth, 10%+, you know, for the foreseeable future. Great. I appreciate you clarifying that answer. Then maybe just a second was just other market exits now that St. Louis is gone. As I said, I heard you guys say no more asset sales this year after the most recent Amazon sale. I guess as you look to next year, do we kind of re-up that pipeline of disposition? Yeah, Dave, this is Nick. There's no specific other markets we plan to exit. We will continue to strategically prune assets to improve the overall portfolio, but I wouldn't expect us to see. In fact, I would actually expect disposition volume to level off after this year to be at more moderate levels going forward because we just don't have that many assets that we're looking to prune. Great. Thanks, everyone. Next, we'll go to the line of Blaine Heck. Please go ahead. Great. Thanks. Good afternoon, everyone. Mark, I wanted to ask about cash same-store NOI this quarter. Obviously, it dipped a little bit from what you guys have been used to. You know, number one, was that all due to tougher occupancy comps from last year? Number two, how should we think about the fourth quarter in that respect, as it looks like the occupancy comps could be tough again, but you also increased full-year guidance? Just trying to reconcile those two factors. Yep. Yep, sure, Blaine. Yeah, it's mainly just a tough occupancy comp. You know, I gotta be careful to make it sound like we lost a bunch of occupancy. We're 80 basis points lower this quarter than last quarter, but our occupancy is obviously very healthy, pushing 98%. You know, this time last year, we were at 98.6%. That 80 basis point change in occupancy cost us about 1.2%-1.3% of NOI. If you would've just had a level occupancy, we would've been closer to 5% this quarter. You're right, we did raise guidance on our occupancy. I think that we've got some momentum going into the rest of the year here, that you'll see a little bit of an increase overall, such that even though we do have that tough occupancy comp in the fourth quarter, again, I think, we won't lose the 80 basis points. We'll be closer to flat in the fourth quarter. You know, if you just average the quarters out, that would infer close to a 5% give or take growth rate in the fourth quarter to get to our 5.2% midpoint. Great. Very helpful. Jim, there's a recent article I read about Amazon kind of shifting from leasing buildings to purchasing properties themselves. Obviously, Amazon still leases way more than they own, and nothing's going to happen overnight. But do you see that as a trend that could become more of a risk to the demand side of the market in the future? Or, you know, is it a little sensationalized at this point? You know, Blaine, I would tell you, I think it's a little sensationalized because, you know, historically they've chosen not to own anything. You know, they're very good partners of ours. We're very active. Of the Amazon assets that we have sold outright or contributed to the joint venture, they have not exercised any of their rights to acquire those. I don't think it's gonna be nearly as big a trend as some people might like to make it out to be. You know, the other thing I'll just comment is, you know, as Amazon continues to mature in the markets, I think this is probably just a natural progression where they'll start to, you know, control some of their larger key facilities. From our perspective, you know, we've really slowed down doing the, you know, the big build-to-suits for them out in, you know, in a lot of the secondary markets. Most of our Amazon activity today is infill, and it's really spec leasing or pre-leasing of land we have controlled and under entitlement that we're not willing to sell to Amazon or to investors. I don't think it's gonna impact our business with Amazon at all. Great. Very helpful. Thanks, guys. Next, we'll go to the line of John Kim. Please go ahead. Thank you. The cash leasing spreads you had were a historic high. It sounds like you're not really favoring pushing rents too hard to get occupancy down necessarily. Just wondering if that commentary you made on occupancy is gonna hold through till next year. The second part of that is there a big difference between the new and renewal cash rent spreads that you had this quarter? Yeah. John, this is Steve. Thanks for your question. You know, I think it's something we deal with on a daily basis with our teams and our tenants, our clients. You know, the rent dynamic going up is happening rapidly, and it's something we keep you know we keep pushing on and trying to push the market on. You know, I feel optimistic about where we're headed, but it's a balance, right, to losing occupancy versus retaining tenants. You know, we go markets go up 30-35%. We'll keep swinging and pushing rents where we can. Yeah. John, you know, your question on the difference between new and renewal, we're really not seeing much of a difference. You know, it's not like our tenants that are in the space coming up for renewal are getting any kind of bargains at all. The spreads are pretty consistent, whether it's a new or renewal. Okay. You mentioned having success on leasing spec developments. I imagine some of your competitors are having a similar amount of success. Are there any markets where you're concerned that there's too much spec development that's being started today? Yeah. I mean, I think the supply picture is getting some headlines about, you know, how much under construction projects are out there. You know, 65% of the, you know, whatever you wanna call it, 450 million in the under construction pipeline, 65% of that is in markets that we don't own property in. You know, so you look at, you know, Phoenix is getting a lot of headlines. We're not in Phoenix. You know, some of the markets around Fort Worth, we're not in Fort Worth. You know, I'd say the supply picture in the markets we're in remains very much in balance, as evidenced by the vacancy rates and the rent growth numbers. But... It's very helpful. Thank you. Next time, we're gonna go to the line of Caitlin Burrows. Please go ahead. Hi, everyone. Good afternoon. You mentioned that you've been outperforming your underwriting assumptions for speculative developments. I was wondering, given increasing costs, maybe land, materials, labor, do you think your development yields can stay in the mid- to high-6% range? Yeah. Caitlin, this is Steve. Thanks for your question. I do. I think, you know, a couple to add to that. One, as I've mentioned, our land that we have on our books today is well below fair market value. Our teams are doing a nice job of replenishing that land and being in the markets, they're able to find good deals that help us prop up some of those margins with our land bases. Rent growth has been through the roof in the markets we're in. It's more than offset it. I think as we look out into our pipeline, I think you'll see margins probably more importantly. I think margins have been expanding for the last, you know, number of quarters, for us as we got 62% margins right now in our development pipeline. Great. Also, I mean, it seems like speculative development is a great opportunity right now, but could you just talk a little bit about build-to-suit activity? Are potential partners there just more impatient and the activity is going to speculative, or is the build-to-suit activity also going strong? Yeah. You know, the build-to-suit activity for us is still good. I think, you know, to your point, this construction material issue that we're dealing with when you think about the lead times for steel and for precast, you know, steel's out almost a year right now. Tapering effect on, you know, what traditional build-to-suit has been. I think what we're starting to see with some of our clients is them adjusting their specs to take more things that are ready to go, you know, and I think so you'll probably see that trend, I think, until some of these timing issues on materials begin to level out. Got it. Great. Thanks. Next up, we'll go to the line of Emmanuel Korchman. Please go ahead. Hey, guys. Jim, I think in your remarks, you broke down the demand from e-commerce and 3PLs. It was just interesting to hear that 3PLs have increased their business so much when, you know, their inventories are probably the hardest for them to get, especially quickly, and that's in the business that a lot of them are in. Are they taking space hoping that the supply chain for their own inventories ramps? Is it just not affecting their business, or am I just misthinking what their business is today? Thanks. No, you gotta remember, you know, the 3PLs are only taking space when they've got contracts for customers, and the material is their customer's material. Whether they're doing 3PL work for, you know, a pure Amazon, who does use 3PLs, outside of their own supply chain or a traditional retailer. You know, they're fighting much the same struggles. They've got labor issues. They've got the flow of product that's been somewhat disrupted. They're like everybody else. They're managing through as best they can. Thanks. One for Mark. Maybe Mark, if we go back to the discussion on future growth, any change in the way you plan to fund that, especially with development seemingly becoming a bigger piece of that growth? Manny, you cut out. Could you repeat that, please? I said, is there any? Are you thinking about future funding in any different way to sort of match that bigger growth profile that you're now talking about? No. I think that what I tried to point out is if you look at our balance sheet at the end of the quarter, our leverage levels were really low. You know, we've been running right around, call it 5.0 on debt to EBITDA, and we're down more like 4.4. I was just trying to point out that's more of a just a short-term timing blip sitting on a lot of 1031 escrow money that'll get redeployed here in the fourth quarter. You'll see that leverage level by the end of the year probably get back up to 5.0 on debt to EBITDA and then just kind of stay at that level going forward. You know, we'll fund our business the way we've been funding it all along. You know, first and foremost, free cash flow, which we're up to over $200 million a year now in free cash flow. Any additional beyond that'll be a combination of debt, equity and sale proceeds. You know, always maintaining that kind of 5.0 longer term run rate on debt to EBITDA. Thank you. Next, we'll go to the line of Vince Tibone. Please go ahead. Hi. Good afternoon. You mentioned only 25% of third quarter leasing was in the Tier One coastal markets. Was that an outlier versus other quarters this year? Then if you could provide some color on the 2022 lease roll as well in terms of the mix of the Tier One coastal markets, that'd be really helpful. Yeah, Vince. Actually, the 25% is really not much of an outlier this year. We've been doing 20%-25% of our roll in the coastal Tier One markets, for really the last year and a half or so. What we're really just trying to point out, it is an outlier versus our total portfolio that's closer to 40%. You know, we're newer in those coastal markets, so we haven't experienced the level of roll in those markets commensurate with our exposure in those markets, if that makes sense. Looking out beyond this year, next year will probably look a lot like this year, kind of in that 20%-25% range rolling in the coastal markets. You gotta get out to about 2023, 2024. That's when we'll start really seeing an uplift in our rollover coming in those coastal markets. You know, I think we're still very bullish about our ability to keep putting up rent growth numbers, you know, right around what we've been doing. Looking out past next, that's when you can really see an uplift and get even better based on those, the coastal market rollover getting higher. Thank you. That's really helpful. One more for me. I mean, you mentioned that Southern California and New Jersey are the leading markets in terms of rent growth, which is no surprise. In what non-coastal markets are you seeing the best rent growth today? You know, how much lower is that growth compared to, you know, some of the best coastal markets? Vince, this is Steve. I would tell you know, you really need to dive into submarkets. When I look at the airport market in Dallas, that's been a great market for us. Chicago, around the airport has had some really strong rent growth as well as the corridor. There's some markets in Cincinnati where we've had huge rent growth in our portfolio. You really need to dive into the weeds some to look at those. But obviously, it seems to be good in most places. It's just levels of how far you can push it in different submarkets. Oh, that makes sense and helpful. Just, is it, you know, are you seeing north of 20% rent growth in some of the submarkets you just mentioned? Yes. Wow, thank you. Next, we go to the line of Nick Yulico. Please go ahead. Thanks. I just wanted to talk about cap rates a little bit. You know, you did reduce the cap rate on your development page this quarter, I think it was about 20 basis points. Can you just talk about, you know, what you're seeing in terms of cap rate compression in your markets? As well, how we should sort of think about, you know, the numbers you cite on that page, which are specific to your, you know, development pipeline, versus, you know, the rest of the portfolio where you have some below-market rents, and presumably, you know, cap rates could be even lower in some cases. Yeah. Nick, I'll start and then, others can jump in. Yes, we continue to see cap rates compress. It's a little tough to sort of draw broad conclusions because we've seen so much volatility in rents. It has such a large impact on the cap rates. The assets, depending on, you know, when the leases have been signed or when they're being signed and so forth, and when we originally underwrote them, they can change quite a bit. Yes, we continue to see the cap rate compression. It's really in all the markets. In fact, we've seen the other major markets, the gap between them and the coastal Tier Ones to actually decline to more narrow levels than what they had been historically. It's been pretty broad-based. Yeah. Nick, the only thing I would add to that, and I think you were alluding to this, is that 3.62% cap rate that's disclosed on our development portfolio, you know, you gotta keep in mind that's based on market rents because it's still under development, so the rents will be or are at market. I think if you took and looked at our operating portfolio, we would expect a even lower cap rate because they're way below market. You're gonna get a lower cap rate because you got below-market rents in our operating portfolio. Right. That makes sense. Second question is just going back to, you know, I guess, somewhat related, but in terms of the acquisitions. I mean, last earnings call, you did talk about a sort of bigger acquisition pipeline. I think you were saying it was almost $1 billion deep, but you didn't get much done in the third quarter. How should we just think about, I mean, acquisitions or have they now become more tougher? Have they become tougher because of the decline in cap rates? I mean, how should we think about that aspect of the business? You know, the acquisitions have been tough for a while. The deals that we're pursuing are not the fully marketed assets. Typically, we're trying to find lightly marketed or off-market transactions. I would say I wouldn't read too much into just the low activity in the third quarter. We still have a pretty good pipeline. We're working on diligence on several transactions. In fact, we raised our midpoint guidance and acquisition about $50 million-$500 million this quarter. We continue to find deals, but it's difficult. Okay, great. Thanks, everyone. Our next question will come from the line of Rich Anderson. Please go ahead. Hey, good afternoon, everyone. Turning back to the supply chain disruptions, you know, we all know what's going on. Everything's costing more, containers, vessels, and rents for warehouses. I'm curious on, you know, what, where the rubber meets the road for you in warehouses. How impactful is that to your rent growth? I don't know if you can quantify this at all. We obviously have great demand from e-commerce and 3PLs going on. Is there another layer of growth that's actually more than just a rounding error that's coming from the disruptions? Yeah. Rich, it's Jim. Let me start, and then Steve can jump in. You know, the supply chain has got a lot of a lot of ink lately, a lot of airtime. I would tell you that's a separate and distinct issue from the growth drivers that we're seeing. You know, we've talked in investor meetings and in our material about, you know, the five main drivers of our business today, and that has nothing to do with supply chain. That's growth in e-commerce sales, reverse logistics, nearshoring and onshoring, you know, safety stock. That's what's driving our customers' need for more space. If you go back and look at the I/S ratio today, which has historically been between 1.4 and 1.5, sits at 1.1. What that means effectively is our customers need to bring in another $1 trillion of inventory into the U.S. You know, occupancies are at historic highs in the portfolios. Utilization rates within ours and our peers' portfolios are at historic highs. That's what's driving this projected demand over the next five years of, you know, a huge amounts of space. It really doesn't have a whole lot to do with the supply chain disruption. It really is driven by, you know, growth in sales, need for, you know, a lot of new facilities and a lot different facilities than the traditional. We've talked in the past about, you know, the need for modern buildings for fulfillment centers, for infill development, for last mile facilities. You know, our customers need a lot more of that. Obviously a lot of those incremental costs, sorry, sticking with the supply chain theme though, are being passed on to consumers these days, and we'll see the longevity of inflation. We get a GDP print of 2% growth for the third quarter, you know, and perhaps there's some risk that the Fed could start to think about tightening to restore some order, you know, between the balance of consumer demand and the, you know, just the supply of goods. Is this at all worrisome to you? In other words, you know, everything is great, but do you have your finger on the pulse of all those factors? Because if the consumer breaks down, you know, you can argue that something, you know, is given back in terms of your business. Yeah. Rich, you know, I would love to tell you I have my pulse on all of those things. I don't know how close I am. You know, the reality is I think we all expect prices to go up. I think we expect to see some inflation, the level of which we'll see, you know, when we get to the end of the year. I think the Fed has indicated that they're comfortable with some slightly elevated levels for a few quarters before they really react. So I think we can expect what we're experiencing to be with us for the foreseeable future. You know, we'll have to see. You know, as you look at consumer spending today out there, it's driving a great deal of business for us. Yep. Okay. Thanks. Next we'll go to the line of Michael Carroll. Please go ahead. Yep. Thanks. Nick, can you provide an update on the CBRE joint venture? Is the third tranche still on track to close in early 2022? Is there a desire both from you and/or CBRE to add to this joint venture in the near term? Is that something that could be announced as we go into 2022 also? Yeah, Michael. The first two tranches have closed, and then we've got a third tranche that consists of three assets that will close in January of next year. We push it there for tax reasons. There are no existing assets that are definitely going into the joint venture right now, but we are talking about a couple of them. I would expect that to happen over time. As far as the relationship, you know, we've got a long-term relationship with CBRE Global. We've had other joint ventures with them in the past, and the relationship's still very good. They are looking for assets, and we're looking to identify assets that fit the profile that we wanna put in this joint venture. Okay, great. Obviously, industrial cap rates have compressed fairly meaningfully. I mean, is there a risk, especially for the properties that have long leases with these investment-grade tenants that those cap rates could rise if interest rates or inflation rise, if that ever happens? Or do you just not see that given the demand for industrial just overall? I would tell you that obviously interest rates matter, but also rental rate increases matter too. That's been a large piece of the driving down these cap rates. Yes, that could happen. I would tell you that we've priced some stuff recently, and I know rates really haven't moved that much, but they have moved a little bit. We've continued to see compression despite that. We haven't seen anything happen yet. Just real quick on, what about the properties that have 10-year type leases? Obviously, you're not gonna be able to reprice those for the next 10 years. I mean, are cap rates still pretty sticky and potentially compressing even for those types of properties? They're still very good. We just priced a 15-year deal recently and exceeded expectations. In fact, I would tell you, over the last 12 months, our dispositions have exceeded the midpoint broker guides by more than 10%, which is kind of unusual because they're usually very aggressive trying to win the business, obviously. Okay, great. Thank you. Next we'll go to the line of Brent Dilts. Please go ahead. Hi, good afternoon. This is Upal Rana in for Brent Dilts. Could you walk us through your expectation on recapturing your mark-to-market lease spread closer to historical averages over the next year or two? Is this something you can keep up with, or do you expect that 28% spread to widen further? Thanks. Yeah. I'll take that one. The 28% mark-to-market that we quoted, I would tell you gotta keep in mind that that includes every lease in our portfolio. It includes the leases we just signed that are at or close to market. If you know, I would tell you that what's coming at us over the next few years, we expect it to be quite a bit better than 28%. You know, just look at this year. We're posting 35% GAAP growth this year and kinda high teens% on a cash basis. I would tell you that's what we would expect looking forward over the next couple years on our portfolio. We do expect, you know, if market rents continue to move in the direction they've been moving, even if they're not moving as fast as they have last year, that 28% will grow, that our overall mark-to-market will do nothing but get higher. You know, we'll gradually, as those leases churn, we'll get very good FFO and cash growth from those. Okay, great. Thank you. Next we'll go to the line of Jamie Feldman. Please go ahead. Thanks. I'm just wondering your latest thoughts on getting at some of your early expirations early next year. Beyond kind of what's scheduled to expire, how much of the 2023, 2024 leases you think you can get early renewals on? Yeah, Jamie. I think a good way to think about it is if you look at what we did this year. If you would've looked at our supplemental at the end of 2020, I think it said we had 7% of our leases rolling in 2021. We're gonna do about 11% in 2021. You know, that's a combination of, and I'm not talking way early pull forwards. You know, we disclose in our supplemental any early renewals we do beyond a year out. I think that, you know, as we sit here today looking at 2022, we have 7% rolling in 2022. I would expect that this time next year, that we're gonna be sitting here talking that we rolled 10%-11% in 2022, not 7%. Hey, Jamie, this is Steve. I'll add that I think we're starting to see more customers approach us on as well, with the tightness of the market and supply chain issues. I think brokers are advising their clients to get in front of landlords earlier. Given what's happened in the, you know, in the markets for rent growth, these are good conversations to have. Okay. You'd say, you think that trend's accelerating? Yes. Do you agree with the 10-11, or you think you could actually do more? Well, you know, sitting here today, I'd tell you, I think it's. We'll see, right? You know, as we look at what's happening to the markets and how tight the markets are and what's going on with rents, you know, we don't wanna leave money on the table either. It would not materially differ from what Mark laid out. Okay. Just thinking about the types of product you'll be building, you know, when you think about that, whether it's the $1.2 billion over the next five years of total demand. I mean, what are you guys thinking now in terms of, you know, the right building size? I assume what you're trying to go as infill as you can, but I'm just curious how you think that might change. I'll start. You know, Jamie, I think we look for the right opportunities in the market. You know, I know obviously people think of us as a larger box company. We've got buildings under construction as small as 40,000 sq ft. So it really depends on the opportunities we can find in the marketplace. For us, I will tell you that, you know, the sweet spot is a larger building in an infill market. Those are really hard to find and get through entitlements and produce. So we build everything from 30,000-40,000 sq ft up to over 1 million sq ft, if we can put it in the right place. Okay. Thank you. Next time, we'll go to Ronald Kamdem. Please go ahead. Hey, just two quick ones from me. Just the first is just on the leasing. You know, 9.5 million sq ft in the quarter, and you talked about sort of the new development that's leasing up in two months. Obviously, a lot of that's reflected in the rents you're getting. Is there anything different about the lease structure, the higher bumps or anything to call out, maybe over the last two to three years as this demand is just accelerating? Yeah. I'll jump in here. I would tell you, I think the biggest change we've seen outside of the headline rent growth that our sector is experiencing, you know, escalations of, with what you're seeing going on in inflation, and I think all of us at high occupancy levels, there's definitely a push in taking what was traditionally probably a 2%-3% escalation and pushing that north of 3%. So call it 3%-4% escalations are becoming standard in the marketplace. Got it. That's helpful. Then I just wanted to dig into the comments, the opening comments about sort of mitigating, I guess, schedule risk, and so forth. When you're thinking about construction, obviously owning the land, having control of the land over the next four-five years is really helpful. But any more color in terms of. You're buying materials a year out early, but what are you doing maybe different over the next three-five years in terms of, labor, for example? And are you gonna continue to sort of, buy sort of deliveries a year ahead of time as you're building out this pipeline? Just more color on mitigating that scheduling risk on the material and the labor. Yeah, Ron, I would tell you a couple of things. I think with the elevated levels of development going on across the country, I think we'd all like to believe that material supply will get caught up, and this is not a challenge that we're gonna be dealing with for the next five years. If it is, I think, you know, we're one of the better ones positioned. First of all, we have the balance sheet. We have the ability to commit the dollars to these projects on land that we control so that we can secure the development, you know, in the time period that we wanna put the project into production. You know, we have the expertise with our construction and development teams to get these projects designed earlier and allow us to secure the construction materials in advance and keep our development pipeline at the high level it is. You know, we've talked in the past couple of months about having everything in the 2020 pipeline secured. Steve's teams moved into the first half of 2022. We've now got all of that secured, and we're working on securing the second half of 2022. You know, it's an ongoing battle for us, one that we'd like to believe that we'll get back to some level of normalization. You know, in the foreseeable future, it's gonna stay, you know, high pricing and extended delivery times, and we're managing our way through it. Helpful. Thanks. Congrats on a great quarter. Next, we'll go to Ki Bin Kim. Please go ahead. Thanks, Sean. Just wanted to clarify something you said earlier. I think you mentioned that you can do $1 billion of development per year for the next four years. Did you mean off of the land that you own and control, or was that just like longer term appetite? That would be off of the land that we own and control. You know, I think it's important to keep in mind looking back over the last four years, Ki Bin. You know, we've acquired about $300 million a year, and we've monetized about $300 million a year. You know, I think our assumptions would be on a go-forward basis that whatever that dollar amount is, we're gonna continue to be able to do that. I think, Kim, the other color I would add is the difference is you see what's on our books, the land that's on our books, which is, you know, being in the high $200 millions to mid $300 millions. You know, we've got land under contract, we've got land under options that's not on the books yet. In a perfect world, we're entitling that and putting that into production in the same quarter, so it actually never hits the books. That's what Steve's guys have gotten really good at, is efficiently managing that land portfolio. As we look out over the next few years, we look at what we've got under control, entitled and option, plus what we have, and we're comfortable we can maintain that level of development. Got it. In your supplemental, in the land bank section, I mean, you guys control about 300 acres owned, and then there's about 575 acres that are under option, but I think all in Columbus, Ohio. I mean, obviously, you're not gonna do, you know, all Columbus, Ohio, construction going forward. You know, how does that configure into. Right. You'll be the king of Ohio. How does that configure into your development thoughts, especially given that, you know, a lot of the acreage is in Columbus? I think that's just, you know, that's a residual joint venture agreement that we have with the airport authority, where we control an enormous amount of land. Most of the land that I'm referring to are covered land plays, both short and long term, and land that we have under contract that we're working through the entitlement zoning design process. Okay. Got it. Thank you. Thank you. That's predominantly coastal markets, Ki Bin, that other land that Jim just mentioned. Okay. Thank you. Next, go to the line of Mike Mueller. Please go ahead. Yeah, just have a quick one at this point. Looks like in the quarter you had a small restructuring charge. I'm just curious what that related to. Yeah, Mike. We basically moved some folks around to better align our construction group, construction and development group, with where we're doing development now. You know, our development now is predominantly, you know, in those coastal markets and then some of the other, you know, Tier One markets. We had a lot of people that weren't sitting in the right place, quite honestly. That's what those charges were. Got it. Okay. That was it. Thanks. Yep. As a reminder, ladies and gentlemen, if you do wish to ask a question, please press one then zero on your touch tone phone. We're gonna go to the line of Bill Crow. Please go ahead. Hey. Good afternoon. Thanks. It's pretty clear the tenants are price takers at this point. What are the tenant reps asking for besides from base rents and bumps? Is there anything that they're looking for as a win for the tenants? Are they trying to negotiate anything that's non-monetary that they can go back and tell the tenant they won something? Mercy. That's what they're asking for. Mercy. I'm kidding, Bill. You know, look, good brokers are our best friend because they educate their clients on what the state of the market is. You know, when Steve talks about engaging customers 12-24 months in advance, they come to the table with a very good understanding what the landscape is. You know, how little opportunities there are in the market in terms of other vacant space, what the cost of new construction is, what the cost of relocation is. You know, as you've seen from us and I'm sure from some of our peers, you've seen, you know, rents continue to climb, concessions are at very, very low levels. You know, obviously we're still paying commissions. In new construction, we've got what I would call very normal amounts of TI to build out space. The days of free rent, the days of outsized tenant finish as an enticement for above standard improvements, amortization of tenant improvements of material handling equipment, racking and things like that's all gone by the wayside. Yeah. Okay. All right. I appreciate it. Thank you. At this time, I have no further questions in queue. Thanks, Sean. We'd like to thank everyone for joining the call today. We look forward to engaging with many of you at the NAREIT conference in a few weeks and into the early part of next year. Operator, you may disconnect the line. Thank you. Ladies and gentlemen, that will conclude our conference for today. Thank you for your participation for using AT&T Event Services. You may now disconnect.