Midwest Market Reports

Chicago’s Suburban Commercial Real Estate Sector Proves Its Mettle Once Again

by Danielle Everson February 4, 2015

Here’s the Chicago commercial real estate market’s big secret: the suburbs never went away. While it’s true that office vacancy rates hit the high 20s in 2008, the truth is that suburban absorption never faltered. In early 2014, Savills Studley reviewed all office leasing transactions from 2010 to 2013, a recessionary period for the sector. The analysis revealed that of the nearly 7.4 million square feet of deals tracked, nearly three-quarters of the moves (5 million square feet) involved tenants moving from one suburb to another. Compare that trend to the relocations from the suburbs to the city, which totaled approximately 1.8 million square feet during the same period. The exodus of companies like Hillshire Brands and Motorola Mobility from the suburbs made it seem like the city was the only place to be for high-growth firms. The analysis also showed that firms moving from out of town to the area went to the suburbs rather than the city by a factor of more than 2 to 1: 385,000 square feet versus 160,000 square feet. So, it’s no surprise that the suburban Chicago office market ended 2014 with the lowest vacancy rate since 2008. The 22.6 percent vacancy rate in …

February 4, 2015

Market Reports Midwest Midwest Market Reports Nebraska Office

Expanding Omaha Businesses Fuel Construction of Class A Office Space

by Danielle Everson January 21, 2015

Omaha’s office market finds itself in a favorable position at the start of 2015. Local economic indicators are solid, absorption has been positive year over year, and vacancies across the board are declining. One big reason is that Omaha businesses are growing. The low vacancy rate of Class A space is driving an appropriate amount of new construction, and Omaha’s abundant supply of quality Class B office space is expected to accommodate demand. Class A Advantage As businesses compete for the best and brightest employees, office space becomes an important hiring tool, causing businesses to look for inviting buildings and spaces in locations with enhanced amenities. This trend has increased activity in Omaha’s Class A office market, driving down the vacancy rate and spurring new construction. Omaha’s Class A vacancy rate stood at 5 percent at the end of the third quarter of 2014. The average asking rent was $24.95 per square foot on a gross basis, up 4 percent since the start of 2014. The uptick in Class A rents is likely to continue Corporate headquarters and speculative buildings are spurring the Class A construction boom. Local businesses such as Millard Refrigerated Services, Tenaska, Gavilon, TD Ameritrade, NorthStar Financial …

January 21, 2015

Industrial Market Reports Midwest Midwest Market Reports Missouri Uncategorized

E-Commerce, Auto Industries Drive Speculative Development in Kansas City

by Danielle Everson January 7, 2015

The Kansas City industrial market continues to be an incredibly strong performer. At the end of the third quarter of 2014, the industrial vacancy rate stood at a tight 6.1 percent. Absorption totaled more than 2.5 million square feet during the first nine months of the year, while new deliveries were slightly over 2.6 million square feet in the same period. Let’s examine some contributing factors that are encouraging new deliveries while still driving vacancy rates down and absorption up. Spec Is King The biggest story in the Kansas City industrial real estate market during the first three quarters of 2014 was the delivery of over 2.5 million square feet of Class A distribution facilities on a speculative basis. It can be argued that, in the past, many prospective tenants considered locating a distribution center in Kansas City, but they ultimately selected a different market based on a lack of available inventory and the inability of some companies to wait on the extended timetable for a build-to-suit project. Developers that took notice of this trend and reacted by delivering space to the local market are currently being rewarded for their actions. Much of the speculative development in 2014 centered around …

January 7, 2015

Industrial Market Reports Midwest Midwest Market Reports Minnesota

Increasing User Demand Spurs New Round of Industrial Development in Twin Cities

by Danielle Everson December 17, 2014

Buoyed by a healthy economy, the Twin Cities industrial market has experienced strong demand for functional, 24- to 32-foot clear height space, with more companies expanding during the first three quarters of the year, according to Cushman & Wakefield | NorthMarq. The market posted nearly 1.3 million square feet of absorption in the first three quarters of 2014, a solid number. The overall vacancy rate for multi-tenant properties 20,000 square feet and above stood at 10.1 percent at the end of the third quarter, down from a high of 16.4 percent in 2010. The bulk/warehouse segment has posted the most leasing activity with 451,097 square feet of net absorption year-to-date, including 140,514 square feet in the third quarter, and a tight 9.2 percent vacancy rate. Office/warehouse absorption totaled 476,032 square feet year-to-date through the third quarter, and 391,676 square feet in the third quarter alone, lowering the vacancy rate in that segment to 9.6 percent. Office/showroom absorption totaled 359,687 square feet during the first three quarters of 2014, lowering the vacancy rate in that segment to 12.8 percent, the lowest since 2006 when it stood at 11.7 percent. The Northeast submarket posted 222,267 square feet of net absorption in the …

December 17, 2014

Indiana Market Reports Midwest Midwest Market Reports Multifamily Office

Resurgent Downtown Indianapolis Attracts Employers, Residents Alike

by Danielle Everson December 10, 2014

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, …

December 10, 2014

Industrial Market Reports Michigan Midwest Midwest Market Reports Office Restaurant Retail

Lack of Quality Inventory Spurs New Round of Development in Traverse City

by Danielle Everson November 20, 2014

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 …

November 20, 2014

Industrial Market Reports Midwest Market Reports

Strong Absorption Spurs Speculative Industrial Construction in Columbus

by Danielle Everson October 16, 2014

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 …

October 16, 2014

Market Reports Midwest Midwest Market Reports Missouri Multifamily

Shades of 2007? Kansas City Apartment Vital Signs are Remarkably Strong

by Danielle Everson October 8, 2014

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 …

October 8, 2014

Market Reports Midwest Midwest Market Reports Multifamily Ohio

Give An Assist to Apartment Renters for Helping Revitalize Cleveland’s CBD

by Danielle Everson October 2, 2014

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 …

October 2, 2014

Market Reports Midwest Midwest Market Reports Missouri

A Rebirth of Kansas City’s Downtown Multifamily, Office Market

by admin September 24, 2014

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 …

September 24, 2014

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