The nickname for Indianapolis, “Naptown,” is quickly fading in the rearview mirror as the city receives an increasing amount of recognition as one of the best places to live and work in America. Thanks to a unique combination of Hoosier hospitality, pro-business environment and amenities such as the Cultural Trail, Indianapolis has been named “One of the best new boom towns in the U.S.” by Forbes magazine and the “No. 3 Downtown in the U.S.” by Livability.com. With $1 billion in new projects on the horizon, it’s no surprise that downtown Indianapolis is making headlines. Indygo’s $37 million Downtown Transit Center, in close proximity to the Cultural Trail and Bike Hub, will serve pedestrians, cyclists and bus riders. A $26 million investment in a new Science and Engineering Lab at Indiana University-Purdue University Indianapolis will continue to encourage life sciences and technology careers. Plans also are in the works to revamp downtown’s iconic Monument Circle with space for events, an ice skating rink, sidewalk cafes and more. On the residential front, investments in excess of $400 million over the past five years have resulted in new housing for 4,000 additional residents. Downtown Residential Boom According to public/private partnership Downtown Indy, …
A blistering cold winter lingered into the late spring and left the commercial real estate market in the Grand Traverse region frozen. Businesses waited for the market and the temperatures to thaw, and a third-quarter surge has activity back on track. From Jan. 1 through Sept. 30, property sales totaled $10.3 million and 221,136 square feet, including 118,515 square feet of industrial/warehouse buildings, 79,463 square feet of professional/medical office space, and 23,158 square feet of retail/restaurant space. That‘s slightly ahead of last year’s pace. During the first three quarters of 2013, property sales totaled $9.9 million and 207,845 square feet, including 121,469 square feet of industrial/warehouse buildings, 44,160 square feet of professional/medical office space, and 42,216 square feet of retail/restaurant space. The office sector posted about a 9 percent increase in the average sales per square foot during the first three quarters of 2014, while the industrial warehouse market recorded an increase of approximately 5 percent. The retail/ restaurant sector saw a 9 percent drop in the average sales per square foot The reduction in the average sales price in the retail/restaurant market sector is mostly due to the lack of quality inventory. This lack of inventory in our market …
Historically low vacancy combined with pent-up demand in the Columbus industrial real estate market is driving new speculative construction for the first time since the Great Recession. In fact, we expect delivery of 1.8 million square feet of spec construction by the end of this year. After a six-year drought, several speculative and build-to-suit buildings, ranging from 300,000 square feet to 700,000 square feet, are in the works. More than 1 million square feet of space already has been absorbed this year — the highest amount since before the recession. The vacancy rate stands at 7.4 percent, 320 basis points lower than the historical average. Average asking rents for modern bulk buildings have risen 7 percent since last year. Cargo Air Service Advantage Rickenbacker International Airport, one of the only cargo-dedicated airports in the world, is a huge growth driver. As an important part of the global, multi-modal logistics hub, Rickenbacker Inland Port moves air cargo to, from and within the United States and has routes to Singapore, Shanghai, Hong Kong and Shannon, Ireland. FedEx Air, FedEx Ground and UPS regional hubs also are on-site. According to the U.S. Department of Commerce’s International Trade Administration (ITA), Columbus was among the …
Today’s Kansas City apartment fundamentals resemble the height of the 2007 market as jobs, deliveries, building permits, occupancy and rents are up. The availability of financing for developers and investors, along with the temperate economic recovery, portends further operational strength and investment activity in the near term. Job growth in the metro area this year has been positive. The end of the first quarter saw a full rebound of the job losses that occurred in late 2013. Through the first half of 2014, total payroll employment expanded by 5,200 jobs, an increase of 0.5 percent compared with the end of 2013. The local unemployment rate at the end of the second quarter of 2014 was 6.3 percent. Some 4,200 additional new jobs are projected for the second half of 2014, which would bring the area nonfarm job count to only 1,800 under its 2007 high of 1,018,300. Supply and Demand Apartment developers are expected to deliver new product in time to meet the demand created by the new jobs. By year’s end, construction is scheduled to be completed on 3,750 new apartments for multifamily properties of 100 or more units. New construction has been ramping up since the first quarter …
To say that 2014 has been filled with great excitement for Cleveland would be an understatement. In early July, the Republican National Committee selected Cleveland as the host city for its 2016 convention. That same month, NBA star LeBron James announced his intent to return to his hometown Cavaliers. Beyond those splashy headlines, during the first half of the year several real estate projects were announced. The planned projects combined with those already under construction or completed since 2010 represent $5.5 billion in public and private investment in downtown Cleveland. Apartment Building Boom One of the most significant stories in Cleveland is that the residential boom downtown continues to gain momentum. The overall occupancy rate in the apartment sector within the CBD rose from 94.5 percent in the first quarter of 2014 to just over 98 percent at mid-year, according to a recent study released by the Downtown Cleveland Alliance. As a result, new projects continue to pile up in an effort to meet the ever-increasing demand. In addition to the 1,000-plus rental units currently under construction, there are now more than 1,100 units in various planning stages. Projects announced since the first of the year include The Standard Building …
It’s a trend that’s happening across the country. Millennials are fleeing the suburbs of their childhood and choosing to work and live in the urban areas of every major American city. But there’s a unique twist to this story in Kansas City. While Millennials are moving downtown in droves, many have a reverse commute. Most Fortune 500 companies have remained in the suburbs after their flight from downtown beginning in the 1970s. In addition, several large companies have jumped the state line due to favorable tax incentives. In the second quarter, the downtown office vacancy rate stood at an unhealthy 29.9 percent. Only one office submarket posted a higher vacancy rate. Meanwhile, the leading submarket, South Johnson County, recorded a 12.8 percent vacancy rate. It’s been difficult for older office buildings with smaller floor plates of 10,000 to 15,000 square feet to compete as companies look for larger floor plates of 25,000 to 30,000 square feet. Companies are also finding that surface parking in the suburbs is more economical. Building Conversion Wave The good news is that a slow reversal in both the multifamily and office markets is occurring as older and historic office buildings are adapting to the demands …
It’s been a remarkable 18-month run in the Kansas City industrial market. Developers are being rewarded for their patience and long-term land positions, and larger tenants finally have several options from which to choose among Class-A distribution facilities. In January 2013, the vacancy rate in the Kansas City industrial market was a tight 6 percent, with barely any product available for users searching for modern distribution space of 200,000 square feet or more. At that time, I made some predictions about new construction, vacancy and absorption. Let’s review what happened. Market Drivers Kansas City recorded more than 3.5 million square feet of positive absorption in 2013 alone, adding another 800,000 square feet during the first two quarters of 2014. This demand was driven in large part by the automobile suppliers, online retailers and by governmental agencies. At mid-year, the vacancy rate for Kansas City warehouse product had fallen to 5.6 percent, well below the national average of 7.3 percent. Average lease rates have moved up to pre-recession levels, as regional distributors and third-party logistics companies attempt to secure large blocks of space for their national footprints. In 2013, the market delivered 2.4 million square feet of new industrial product, with …
Before the Great Recession of 2008 and 2009, many developers believed they could continue to build commercial product and demand would follow. But as the economy came to a screeching halt, reality kicked in and many owners and developers were stuck with product that couldn’t be sold or leased. Fast forward to 2014, and that stagnant product has slowly been absorbed as the economy has gradually recovered. From 2008 to 2014, construction of commercial real estate fizzled, resulting in lower vacancy rates and increased net absorption. Now, construction activity is beginning to increase and speculative construction is back in action. This uptick in construction and speculative development is especially apparent in the industrial real estate market. In Ohio, the industrial vacancy rate sits at an average of 6.8 percent for 962 million square feet of industrial space that Colliers|Ohio tracks in Cincinnati, Cleveland, Columbus and Dayton. Colliers|Ohio recorded more than 10 million square feet of positive absorption in 2013, and 6.9 million square feet during the first half of this year. Colliers has tracked an uptick in absorption in the industrial market for several years, and the supply of quality Class A bulk product has diminished significantly. Developers have taken …
Momentum continues to build in the St. Louis commercial real estate investment market across all major product sectors. As private and institutional investors search for higher yields, they are drawn to secondary markets like St. Louis. Investors are seeing a yield premium of 100 to 150 basis points as measured by the initial cap rate. Office Market Grows Hotter The suburban office sector has generated the most momentum, building on a strong 2013. Suburban office investment sales activity could exceed $450 million in 2014, which would be a 90 percent increase over 2013. The largest office deal is the sale of Cityplace, an 884,000-square-foot Class A office complex in Creve Coeur that is under contract and expected to close for approximately $141 million. New Boston Fund and the Koman Group are the sellers. The buyer is undisclosed. While the search for higher yields is certainly a factor driving increased suburban office investment activity, another big part of the story is the continued occupancy growth supported by job gains. The St. Louis unemployment rate, which in May 2014 stood at 6.96 percent, is rapidly approaching the pre-recession level of 5.7 percent set in November 2007. Growth in industries such as technology, …
Stand in the center of Des Moines, take a look in all directions and one will discern that retail growth is not discriminating. It’s occurring in all areas of the marketplace.That’s not surprising for a metro area of 600,000 that was recently named “America’s Wealthiest City” by NBC’s Today show as part of a special series titled “Healthy, Wealthy, Wise.” In 2013, Forbes magazine ranked Des Moines tops on its 15th annual list of “Best Places for Business And Careers.” Market statistics provide plenty of evidence. Occupancy in neighborhood retail centers has increased for three straight years, rising to 81.9 percent at the close of 2013. Leasing activity has been robust with more than 300,000 square feet of positive absorption during the past 12 months. Only a few big-box retail spaces are now available with occupancy rising to 97.5 percent in December 2013. Although growth is occurring in all areas, the Jordan Creek Town Center corridor continues to grab headlines. Hurd Real Estate continues construction on the 328,597-square-foot Plaza at Jordan Creek. In addition to Lowe’s and the recently opened Dick’s Sporting Goods, both HomeGoods and Nordstrom Rack are nearing completion. The Nordstrom lease is a significant milestone for Iowa …