06/14/2013 | By Mitch Irzinski
Denny Oklak, chairman and CEO of Duke Realty Corp. (NYSE: DRE), joined REIT.com for a CEO Spotlight video interview in Chicago at REITWeek 2013: NAREIT’s Investor Forum.
Duke Realty owns and operates 145 million rentable square feet of industrial and office assets, including medical offices, in 18 major U.S. cities. Oklak discussed the latest changes to the composition of the company’s portfolio.
“We’ve been working on this for a few years now, and we’re basically where we want to be,” he said. “When we started out this re-positioning, our target was to be 60 percent industrial, 25 percent suburban office and about 15 percent medical office, so we’re virtually there. We still have some things going on, mainly still selling a little bit of the suburban office portfolio.”
Oklak talked about how aggressive he plans to be in developing medical office and industrial assets.
“We’re really being very aggressive, I would say, on the pre-lease product today,” he said. “That’s the medical office business. A lot of that business is really the pre-lease to the major hospital systems, a lot of it on campus, some of it off campus, but all of it affiliated with the hospital system. On the industrial side today, we’re more focused on build-to-suits with our major customers on our land positions.”
Oklak described any potential risks in the industrial and medical office sectors.
“I think the biggest risk on the industrial side is probably typically what we have at this point in the cycle: I think it starts to be over-building,” he said. “So, too much speculative product going on. I don’t think we’re at that point now, but certainly in the last 12 months, the amount of speculative product out there has really picked up. So, I think it’s going to be interesting to see over the next six or nine months how the absorption of that space goes. On the medical side, everything is very solid there. I think the one risk is changes in our health care system.”