Features

By staff reports NEW YORK — With vacancy rates and speculative construction back to pre-recession levels, the U.S. industrial sector at mid-year 2014 continues to lead the country’s commercial real estate recovery, according to Cushman & Wakefield. The commercial real estate services firm released its second-quarter industrial market analysis, which also shows strong occupancy gains and rising rental rates in the face of diminishing big-box supply. “With demand for goods from consumers and businesses rising at a healthy pace, e-commerce sales rising by 15 percent a quarter, and manufacturing production and shipments increasing, the national industrial market has, indeed, entered a time of significant growth and progress,” says John Morris, leader of industrial services for the Americas at Cushman & Wakefield. The U.S. industrial vacancy rate continued to compress during the second quarter to 7.2 percent, 80 basis points lower than one year ago and the lowest level since the first quarter of 2008. This is a significant departure from the recent high of 10.8 percent posted during the first quarter of 2010. Two California markets currently have the lowest industrial vacancies in the nation: the San Francisco Peninsula (3.7 percent) and Orange County (3.9 percent). Net demand remained strong …

By Nellie Day FAIRFIELD, CALIF. — The City of Fairfield’s industrial supply has been feeling a little crushed lately as wine-related companies snatch up space at a record pace, thanks to its close proximity to Napa Valley’s wine region. More than 2.5 million square feet of this 37.6 square-mile town is occupied by wine-related businesses, 1 million of which was absorbed during the past year alone. “Fairfield's real estate prices are significantly less expensive and its building fees are one of the lowest in the San Francisco Bay Area,” explains Charles Ching, the city’s economic development specialist. “The city has excellent transportation access to ports, rail and airports. It is bisected by Interstates 80, 680, and Highway 12, making it a good trucking zone and allowing companies to daily move their products on north-south and east-west corridors.” The city’s infrastructure, location and reasonably priced rents have given many wine-related companies reason to celebrate. Fairfield has become so attractive to this industry, in fact, that many companies have chosen to relocate from nearby cities. Encore Glass, a wine bottle supplier, moved its operations from Benicia, 20 miles south of Fairfield, to a 318,000-square-foot building that was just opened by Buzz Oates …

By Trip Stephens, CIO of ZOM In the aftermath of the housing bubble a few years back, many Americans have changed their views on homeownership. Homeownership rates have dropped from a peak of 69.4 percent in 2004, to just 64.8 percent today — the lowest level the U.S. Census Bureau has reported in 15 years. Demographic shifts are also influencing tenure choice. People in the expanding 25-34 year age group want to live closer to work, be more socially engaged with their peers and prefer the freedom and flexibility of renting instead of owning. Many are also less inclined to own a car. A growing segment of these younger renters are also drawn to top-tier U.S. cities, which offer higher paying jobs, more attractive public spaces and cultural venues and 24-hour lifestyle environments. These trends are driving a surge in demand for higher density, urban apartments, many of which will be developed in mid- and high-rise formats due to land scarcity in the best urban locations. Check Your 'Walk Score' How are developer’s capitalizing on this notable shift in demand? It’s all about location. When developers decide to build a high-rise, they are looking for an extremely attractive location, because …

By Scott Reid Private sector employees in June added 262,000 jobs and government agencies added 26,000 positions, for a net gain of 288,000 new jobs that will potentially have a substantial impact on commercial real estate, according to a Marcus & Millichap report. During June, the unemployment rate fell to 6.1 percent from 6.3 percent in May, reaching its lowest level since September 2008. According to the commercial real estate services provider, these new jobs will create demand for rental housing, strengthening the 20 basis-point rise expected this year that will bring the national vacancy rate to 5.2 percent. Marcus & Millichap predicts that growth in degreed professional and business service fields, as well as those in the financial services, will fill vacant office space and generate demand in the remaining quarters of this year. An increase in office property operations will result in a 120 basis-point drop in U.S. vacancy to 14.8 percent this year. Robert Bach, director of research for the Americas with Newmark Grubb Knight Frank, says the growth was “robust.” He also believes the increase in jobs in the sectors most important to commercial real estate will support net operating incomes as space is filled and …

LOS ANGELES — The 2014 Green Building Adoption Index, a joint project between CBRE Group Inc. (NYSE: CBG) and Maastricht University, has named Minneapolis as the greenest city in the nation, with 77 percent of the city’s commercial real estate certified as green. The term green is in reference to buildings that are either certified by the EPA’s Energy Star rating or the U.S. Green Building Council’s LEED program. Rounding out the top 10 green cities are: 2. San Francisco (67.2 percent) 3. Chicago (62.1 percent) 4. Houston (54.8 percent) 5. Atlanta (54.1 percent) 6. Los Angeles (49.7 percent) 7. Denver (49.3 percent) 8. Seattle (46.6 percent) 9. Miami (46 percent) 10. Washington, D.C. (42.4 percent) The study also emphasizes the dramatic increase in the number of green commercial real estate properties in the United States since 2005. During that time frame, the amount of Energy Star-labeled buildings has increased 600 percent, and the proportion of buildings that are LEED certified has jumped up 1,000 percent. LEED-certified space now totals 19.4 percent of the total building stock in the 30 office markets reviewed in the study when measured by floor area. The study is the first project in CBRE’s Real …

By John Nelson WASHINGTON, D.C. — Following a negative posting in both March and April, the Architecture Billings Index (ABI) posted a score of 52.6, a three-point jump from April’s 49.6 score. The score reflects an increase in design activity, with any score above 50 indicating an increase in billings. A barometer of future non-residential construction activity, the ABI reflects the roughly nine- to 12-month lead time between architecture billings and construction spending. The index is produced by The American Institute of Architects (AIA) Economics & Market Research Group. The score is tabulated based on a monthly survey sent to a panel of AIA member-owned architecture firms. “Volatility continues to be the watchword in the design and construction markets, with firms in some regions of the country reporting strong growth, while others are indicating continued weakness,” says Kermit Baker, AIA’s chief economist. “However, overall, it appears that activity has recovered from the winter slump, and design professions should see more positive than negative numbers in the coming months.” The South region posted the highest three-month average ABI score (58.1) nationally, followed by the Midwest (51.3), Northeast (47.6) and West (46.9). Among property types, multifamily posted the highest three-month ABI score …

ARLINGTON, VA. — Total construction spending rose modestly for the third straight month in April as a mix of increases and declines in public and private categories showed the sector’s recovery remains fragile and fragmented, according to an analysis of new Census Bureau data by the Associated General Contractors of America (AGC). Association officials say the industry could benefit from new federal investments in infrastructure to offset declining public sector demand. “Residential, private nonresidential and public construction spending all have areas of strength but also pockets of weakness,” said Ken Simonson, chief economist for the association based in Arlington, Va. “While the overall trend remains more positive than last year, growth is likely to be spotty for the foreseeable future.” Construction put in place totaled $954 billion in April, 0.2 percent above the revised February total and 8.6 percent higher than in April 2013. The year-over-year growth so far in 2014 has exceeded the full-year increase of 5 percent recorded from 2012 to 2013. Private residential construction spending inched up 0.1 percent in April to a six-year high. The latest total exceeded the year-ago level by 17 percent. Single-family construction rose 1.3 percent in April and 14 percent year-over-year. Multifamily …