Midwest Market Reports

Surging Demand for Apartments in Downtown Detroit Is Testament to the City

by Kristin Harlow May 3, 2018

At a time when downtown Detroit is in the midst of a civic renaissance, the state of the city’s multifamily real estate market is both a reflection of larger trends and a sign of what might be in store for the Motor City in the years ahead. To keep a pulse on the market, Broder & Sachse Real Estate compiles a market study twice a year to evaluate the rental and occupancy rates of all multifamily properties downtown. Through this research, the continued strength of Detroit’s multifamily market is abundantly clear, with an average occupancy rate of 95.6 percent across downtown in winter 2018. This occupancy rate indicates demand is high, especially coupled by the findings in the Downtown Detroit Partnership’s third Greater Downtown Residential Market Study released in 2017. The study estimated that an additional 10,000 units will be needed over the next five years. The need for these additional 10,000 units means supply — or a relative lack thereof — is also part of the equation. While the number of residential units in Detroit has increased by a great deal on a percentage basis, in relative terms the volume of quality residential product is still somewhat limited. Today, …

May 3, 2018

Market Reports Midwest Midwest Market Reports Multifamily Nebraska

National, Regional Investors Are Drawn to Omaha’s Apartment Market

by Kristin Harlow April 26, 2018

With asking rental rates increasing, an average vacancy rate of 5.7 percent and a low average asking rent per unit of just $855 per month, Omaha’s apartment market is increasingly attractive to national and regional investors. According to apartment research firm Reis, Omaha’s average asking rental rate has increased in every quarter for the past seven years, and is expected to increase by another 2.2 percent in 2018. While not stellar growth, it continues a steady march upward that has benefited owners in Omaha for quite some time. Driving the growth in rents is the balanced nature of the Omaha market coupled with Omaha’s strong underlying economy. From a population growth perspective, census data shows that Omaha’s metropolitan statistical area (MSA) has grown 1.2 percent per year since 2010, and is now estimated at 939,000 people. That steady trend is expected to continue for the foreseeable future, as Omaha’s population is projected to grow another 1.1 percent per year through 2022. In terms of absorption, Omaha has averaged an annual addition of 4,000 households over the past 10 years, according to Reis. Renters account for 34.3 percent of Omaha MSA’s housing units, translating to roughly 1,372 new renter households each …

April 26, 2018

Market Reports Midwest Midwest Market Reports Nebraska Retail

How the Omaha Retail Market Is Adapting to Big Box Store Closures

by Kristin Harlow April 19, 2018

The pace of evolution in the retail sector is accelerating in a manner that few would have anticipated even five years ago. E-commerce has proven to be a very powerful disruptor, affecting both retailers and property owners alike. For some who have had the foresight and financial resources to adapt to this change, the disruption has brought opportunities for growth and increased market share. Clearly, not all have been able to adapt — some due to lack of execution and others seemingly caught in circumstances beyond their control. Despite the turbulence within the retail category, overall U.S. retail sales grew a very respectable 4.2 percent during 2017, according to the U.S. Department of Commerce. The growth is attributed to continuing gains in employment and a marked improvement in economic growth during the second half of the year. On the local level, the Omaha retail market exhibited moderate improvement during 2017, following a year of weak performance in 2016. The market absorbed just over 364,000 square feet during the year (see chart), slightly under the average annual rate of 378,000 square feet for the past five years. The overall vacancy rate decreased from 11.2 percent to 10.5 percent during the year as …

April 19, 2018

Market Reports Midwest Midwest Market Reports Multifamily Ohio

Strong Fundamentals Are in Place for Cincinnati’s Multifamily Market

by Kristin Harlow April 12, 2018

The strength of the national multifamily market has been driven by a number of factors, especially job and wage growth. Nationally, annual job growth has been 1.5 percent and annual wage growth has been 2.9 percent, according to the U.S. Bureau of Labor Statistics. Another factor affecting the multifamily market is homeownership. In the United States, homeownership reached 65 percent in 2008, dropped to 60 percent in 2015 and rebounded to 65 percent at the end of 2017, according to the U.S. Census Bureau. Strong demand, low vacancies, good rental growth and a vibrant sales market have characterized the market. During the last 10 years, the millennial population has primarily rented housing and baby boomers have been downsizing to apartments or condos. These trends have contributed to the multifamily market’s strength. We see the millennial sector housing choices changing with much of the generation getting married and starting families. Last year represented the third-best year in history for multifamily property sales volume, according to Dave Lockard, senior vice president in the multifamily brokerage division of CBRE. Another factor affecting multifamily markets is a slowdown in new construction. Higher construction costs and more conservative commercial bank construction financing have led to …

April 12, 2018

Market Reports Midwest Midwest Market Reports Office Ohio

Cincinnati’s Over-the-Rhine District Makes Way for Larger Office Developments

by Kristin Harlow April 5, 2018

Cincinnati’s Over-the-Rhine (OTR) neighborhood has come a long way since it served as the location for gritty scenes in movie director Steven Soderbergh’s 2000 film Traffic. Gone are the 500 vacant buildings and 700 vacant lots. The disadvantage of having the highest crime rate in the city is no more. Thanks to efforts by prominent Cincinnati companies such as Kroger Co. and Procter & Gamble, as well as the Cincinnati Center City Development Corp. (3CDC), efforts to revive the historic neighborhood have exceeded expectations. Located just north of downtown Cincinnati, OTR is one of the largest urban historic districts in the United States and is known for its abundance of architecturally significant buildings and homes. The area has a rich cultural scene due to its proximity to the Art Academy of Cincinnati, the Cincinnati Symphony Orchestra, the Cincinnati Opera, the School for Creative and Performing Arts, Memorial Hall and other artistic points of interest. OTR was named one of the top 15 “cool streets” in Cushman & Wakefield’s Cool Streets of North America report. A new breed of urban, experiential and independent mid-market retailers catering to millennial consumers has led to the rise of 100 Cool Streets across the United …

April 5, 2018

Market Reports Midwest Midwest Market Reports Minnesota Multifamily Seniors Housing

Future Is Bright for Senior Living Development in the Twin Cities

by Kristin Harlow March 29, 2018

Exciting times are in store for the senior living industry. A massive generation of baby boomers is entering the golden years of retirement and beyond, driving a wave of demand for seniors housing. The U.S. Census Bureau estimates 78 million baby boomers were born between 1946 and 1964. The youngest boomers are 54 this year and the oldest are 72, so we are just eclipsing the front end of the wave. In 2029, just 11 years from now, all baby boomers will be at least 65 years old, with the vast majority beyond age 65. This group will represent 20 percent of the U.S. population, and that is when the wave may start to resemble a tsunami. Strength in numbers Demographers agree that circumstances are favorable for growth in the seniors housing market, and the real estate industry is responding. In the Twin Cities, market conditions are balanced with an adequate supply of seniors housing to handle the first groups of seniors moving in. At this time, we observe that the greatest demand is for independent living versus assisted living, memory care or skilled nursing. Overbuilding has not been an issue in the Twin Cities and most of the Midwest …

March 29, 2018

Market Reports Midwest Midwest Market Reports Minnesota Retail

From Pop-Up Shops to Escape Rooms, Minneapolis Embraces Experiential Retail

by Kristin Harlow March 22, 2018

The retail sector in metro Minneapolis continues to adapt to changing consumer preferences, fast-moving economic opportunities and new state laws. Over the course of 2017, the retail real estate market showed positive growth in every category. Absorption of 1.4 million square feet surpassed the 1.3 million square feet of deliveries, according to CoStar Group. The rising cost of construction, low vacancy rate (3.1 percent) and increasing rental rates are creating new barriers to entry for retail businesses. The aforementioned factors, along with a newfound confidence in the rising economy, are causing landlords of all magnitude to become more selective with the quality of tenants they accept. Landlords will continue to become more reserved with regard to the tenant allowances they provide for new tenants. We have seen retail giants such as Walmart and Target add new services that emphasize both value and convenience and bring shoppers back for quick fill-in trips. Minneapolis-based Target Corp. announced the public rollout of its Target Restock program, a next-day delivery service for household essentials that is designed to compete with Amazon’s Prime Pantry. After being beta-tested by its employees, the program is currently only available in about nine markets, but plans are to slowly …

March 22, 2018

Indiana Market Reports Midwest Midwest Market Reports Multifamily

Multifamily Urban Infill Development Spreads Into the Suburbs of Indianapolis

by Kristin Harlow March 15, 2018

If you happen to read or listen to Freddie Mac officials, the key economic factor driving housing demand is the labor market. In 2017, the Indiana Economic Development Corp. (IEDC) secured 293 commitments from companies across the country to locate or grow in Indiana. Collectively, this will make for more than $7 billion in new investments and 30,158 new jobs in the coming years, marking the highest annual commitment in IEDC history. Companies currently expanding and adding thousands of jobs throughout the region have been contributing greatly to the growth of the multihousing market in central Indiana. More than 2,380 market-rate apartment units were completed in 2017. Construction doesn’t appear to be slowing down either, as over 2,200 units were under construction at the beginning of 2018. Apartment deliveries soar Central Indiana has experienced a marked increase in overall multifamily deliveries. Between 2014 and 2017, developers delivered approximately 15,000 new units, compared with 13,500 units over the previous 14 years combined. A large majority of the projects are greater than 100 units, particularly the market-rate developments. Lately, most of these projects have contained pockets of amenities or are located near amenities. Downtown Indianapolis was home to one of the more …

March 15, 2018

Indiana Industrial Market Reports Midwest Midwest Market Reports

Driven by E-Commerce, Indy’s Industrial Bulk Market Continues Growth Spurt

by Kristin Harlow March 15, 2018

In 2017, newly signed bulk space deals in the greater Indianapolis industrial market totaled 10.2 million square feet. Of that total, over 50 percent had some affiliation with e-commerce. With 26 new buildings and another 5.7 million square feet under construction, the Indianapolis industrial market will clearly become increasingly linked to the performance of e-commerce as the total share of online retail sales remains in a significant growth mode. Projections by Cushman & Wakefield show that by 2020 nearly 12 percent of all retail sales will be associated with e-commerce — three times what it was 10 years ago. Stronger growth will be driven by the onset of e-grocery and e-pharma. Additionally, e-commerce will continue to be a driving force in these industrial deals because the online industry is getting better at what it does. Coming off the strongest holiday season since the Great Recession, companies are now focused on the cost of package returns and are re-examining the value of brick-and-mortar stores. When it comes to package returns, not only is the processing time significantly slower, but it is six times costlier to return a package using regular shipping methods. Returning items to physical store locations is the cheapest …

March 15, 2018

Illinois Market Reports Midwest Midwest Market Reports Office

For Some Office Tenants in Chicago, Being Out of the Loop Is In

by Kristin Harlow March 8, 2018

Office developers in Chicago are thinking outside the box — and outside the central business district — in order to cater to tenants in search of creative office space. While there will always be companies that want the cachet that a business address in the Loop offers, others realize the strategic advantages of urban, non-CBD locations as a recruiting tool. Live/work/play neighborhoods like River North and the West Loop are growing because high-profile employers want to attract a younger workforce that is drawn to the loft-style offices these neighborhoods can provide. This can be achieved either through ground-up development projects like McDonald’s soon-to-open headquarters at 1035 W. Randolph St., or adaptive reuse projects such as 1K Fulton, a former cold-storage facility that now counts Google among its tenants. Yet as rents in these submarkets continue to climb, office users are starting to ask whether they can get the same space for less money in equally desirable locations. For many, the answer is a resounding “yes.” New opportunities While neighborhoods near the CBD such as River West and Pilsen have benefitted from this office “ripple effect,” Chicago’s recently rezoned North Branch Industrial Corridor is perhaps the most alluring and uncharted territory …

March 8, 2018

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