Features

IRVINE AND SILICON VALLEY, CALIF. — Four of the top five office markets for investments are located on the West Coast, according to a new report by Auction.com. The top markets for buying offices, from first to fifth, are located in San Jose, Calif.; San Francisco; Seattle; Orange County, Calif.; and New York. The top office acquisition markets as determined by Auction.com are based on projected net operating income growth, vacancy improvement, rent growth and valuations. Much of the strength of West Coast office growth is abetted by the recent tech surge, the report says, which is also a key factor for growth in New York and Boston. In San Jose, payrolls stand at an all-time high due to 15.3 percent year-over-year growth. REIS data shows that more than 450,000 square feet were added in the first quarter of 2015, but robust demand has absorbed it. According to Auction.com’s 2015-2018 U.S. Office Projections, San Jose will see a 22 percent increase in rents in the next three years, as well as a decreased vacancy of 440 basis points (bps). Rent growth from July 2014 to July 2015 in San Jose was 7.2 percent, and as supply evens out, Auction.com expects …

Texas has the two most active development markets in the country in San Antonio and Austin, but other metros aren’t far behind, according to senior living consulting firm Plante Moran and the National Investment Center for Seniors Housing and Care (NIC). During the first quarter of 2014, there were 5,349 assisted living, independent or memory care units under construction in Austin, Dallas, El Paso, Houston and San Antonio, NIC data shows. By the first quarter of 2015, that number had risen to 6,525 total units, a 22 percent increase. In San Antonio, there were 1,781 seniors housing units under construction in the first quarter of this year, representing 23.5 percent of existing inventory. Austin’s 920 units under construction accounted for 15.4 percent of that market’s existing inventory. Those were the highest two percentages of any major market in the United States. Seniors housing construction in Knoxville, Tenn., represents 14.9 percent of that metro area’s existing inventory, according to Plante Moran. That puts Knoxville in third place behind Austin. Columbus, Ohio, follows close behind at 14.5 percent, after which there’s a drop to approximately 12 percent in Houston, Texas, and Sarasota, Fla. “Knoxville has shown an increase in occupancy from last …

WASHINGTON, D.C. — Riding on the strength of Fannie Mae and Freddie Mac, new mortgage originations for commercial real estate properties increased 29 percent in the second quarter compared with the same period a year ago, according to the Mortgage Bankers Association (MBA). What’s more, new mortgage originations in the second quarter were up 16 percent from the first quarter of 2015 The MBA’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations shows year-over-year increases in mortgage originations every year since 2009. Government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac led the commercial real estate lending market with a 113 percent increase in deal volume from second-quarter 2014 to second-quarter 2015. “Driven by increasing property values, improving property fundamentals and still-low interest rates, commercial and multifamily lending and borrowing continued its strong pace in the second quarter,” says Jamie Woodwell, MBA’s vice president of commercial real estate research. “Mortgage bankers’ originations for Fannie Mae and Freddie Mac are near record quarterly levels.” Of all property sectors, multifamily posted the strongest increase at 58 percent, followed by industrial properties at 32 percent. Office, retail and hotel properties saw more modest increases of 22 percent, 17 percent and 16 percent, respectively. The only …

SANTA BARBARA, CALIF. — Apartment rents in the United States rose 6.5 percent year-over-year in July to a record $1,155, according to the July 2015 edition of Matrix Monthly, a report on U.S. multifamily market trends from real estate software developer Yardi. Technology-fueled markets in the Western U.S. continued to spearhead rent growth, led by Portland (14.6 percent), Denver (13 percent) and San Francisco (9.8 percent). Growth is strong across the board in all 30 of the markets featured in the Matrix Monthly, with only five metros experiencing less than a 4 percent increase year-over-year and three below the national long-term average of 2.8 percent. San Diego (fifth with 9.1 percent rent growth year-over-year), Orlando (seventh at 8.4 percent) and Tampa (eighth at 8.1 percent) jumped into the report’s top 10 in year-over-year growth, replacing Dallas, Phoenix and Jacksonville. The report has tracked a strong correlation between rent growth and employment gains. Metros with job growth above the national average tend to be among the leaders in rent growth, even if supply growth is above-trend. San Francisco (3.9 percent job growth year-over-year on a six-month moving average), Atlanta (4.1 percent), Inland Empire (4.1 percent), Denver (3.5 percent) and Seattle (3.4 …

CHICAGO — The number of new construction projects increased in several markets across the country in the second quarter, according to Chicago-based BidClerk, which tracks construction activity in the United States and Canada. The BidClerk Construction Index (BCI), which is compiled quarterly, reported more than 75,000 new projects valued at over $188 billion nationally in the second quarter, an increase of 15,000 projects and $40 billion compared with the same period a year ago. (The BCI data represents projects that actively bid in 2015 and is not a full representation of BidClerk’s full project database.) Particularly hot markets and regions for construction — showing growth rates above 15 percent compared with the second quarter of 2014 — were Washington, D.C., Ohio, Texas, the greater Atlanta region and major metros in the Southwest. Washington, D.C., and the surrounding region recorded a 17 percent uptick in construction projects out for bid in the second quarter. Over 500 of the 1,600 projects charted were valued at more than $1 million, including the $70 million Banner Hill Apartments in Baltimore and the $35 million Archer Park Apartment Building designed by SK+I Architectural Design Group. In the second quarter, Ohio recorded an 18 percent increase …

NEW YORK CITY — The U.S. office sector is poised for continued growth in the second half of 2015, though stagnant vacancy has slightly tempered previously high expectations, according to the latest Reis analysis based on second-quarter data. “Occupied stock rose by 8.4 million square feet, outpacing new completions of 8.3 million square feet in the second quarter,” reports Victor Calanog, chief economist and senior vice president at New York-based Reis. “While this was not sufficient to nudge vacancies downward, it still does provide evidence of a slow simmer in terms of leasing activity. Employers are hiring, albeit slowly, and are leasing up space at the same plodding pace.” Vacancy rates in the office sector, which remained at 16.6 percent in the first and second quarters of 2015, vary by location. In central business districts (CBDs), the vacancy rate stood at 13.3 percent in the second quarter as opposed to 18.3 percent in suburban areas. The report notes that this is a reversal from the 1990s, when CBD vacancy rates were higher than those in suburbs as employers sought lower crime rates and better school systems. Another struggle for suburban areas is large inventory. From 1990 to 2010, more than …

The industrial sector is booming nationally and on pace to show even stronger absorption and lower vacancy numbers than 2014’s banner year, according to commercial real estate services firm DTZ, which released its U.S. Industrial Trends Report at the halfway mark of 2015. “Midway through 2015, demand for industrial space is poised to set another record,” according to the report. Absorption in the 60 major metros tracked by DTZ was 46.1 million square feet in the second quarter for a total of 86.5 million square feet through the first half of the year. That’s a 22 percent increase from the first half of 2014, and has driven industrial vacancy to a cyclical low of 7.3 percent. “The industrial boom is occurring in nearly every region in the U.S.,” according to the report. “In fact, only 17 percent of the national market did not absorb industrial space in the second quarter.” The boom isn’t just occurring among large industrial buildings in the sector either. The report notes that smaller industrial buildings between 10,000 and 50,000 square feet “are seeing rental appreciation exceed that of larger buildings in all of the top markets — sometimes by more than double.” With high absorption …