Dotted with construction cranes, Minneapolis’ skyline tells the story of economic growth the likes of which hasn’t been seen in almost a decade. Record-shattering investments in office space and in employee satisfaction speak to the confidence companies have in the accelerating Twin Cities market. This renewed corporate confidence is buoyed by the lowest unemployment rate of any U.S. metro area with a population greater than 700,000, and is evident by the increasing number of long-term lease commitments (seven-plus years) to the Twin Cities market. The office sector began picking up — first with local investors and now with national investors — soon after the opening of a new baseball stadium for the Minnesota Twins in 2010, which kick-started a rash of high-end, urban multifamily developments. The current multifamily boom in the Twin Cities is expected to bring nearly 10,000 units to the residential market in the coming years. Increasingly, people want to live, work and play downtown. Multifamily, retail and office developers are ramping up the quantity and quality of supply. An additional sign of growth is the $1 billion currently being invested in a new football stadium for the Minnesota Vikings. Renovation Ramps Up Class C office buildings accounted …
Midwest Market Reports
The coming several quarters may be a great time to be a landlord in Omaha because the market continues to see a steady decline in the overall vacancy rate. As of the fourth quarter of 2013, the industrial vacancy rate registered 4.8 percent. Although the decline has not been rapid, tenant representation specialists and space users alike are starting to observe a scarcity in the market for available industrial space. What is most telling is that new construction is largely at a standstill. Since 2010, the Omaha industrial market has added 16 new buildings to the overall inventory. These new buildings account for slightly more than 387,000 square feet of the entire 67.8 million-square-foot market. In all, 11 of these 16 new buildings were either single-tenant, build-to-suit projects or owner-occupied properties. Speculative construction has totaled only 71,300 square feet since 2010. To put that figure into perspective, the 71,300 square feet accounts for a miniscule 0.1 percent of total inventory. The lack of new product is by far the largest driving force behind today’s tight vacancy rate in greater Omaha. Stringent design requirements, rising construction costs and a shortage of developable industrial land all play a role in the dearth …
The Omaha office market is poised for a significant increase in Class A inventory. Currently, there are planned developments in various stages that would add more than 3 million square feet to the marketplace. Slated for development is the Fountain West Office Park at 192nd Street and West Dodge Road. The developer, R&R Realty Group, has publicly committed to building the first of a group of speculative buildings. It will be a Class A, 75,000-square-foot building. Construction will likely begin in the second quarter of this year and be completed in about 18 months. The total inventory of the market today is just shy of 21 million square feet. This figure is comprised of non-owner occupied, non-medical office product. The 3 million square feet of planned development is unprecedented in Omaha, so why is the pipeline expanding now? (To view larger version of chart, click here.) A Historical Perspective For the past three years, the Omaha office market has recorded average annual absorption of 200,000 square feet. Prior to the recession, our pace was nearly 300,000 square feet yearly. While the pace of absorption has been healthy for a mid-market city like Omaha, new development has remained relatively slow. The …
It’s an incredible time to be in Lincoln, as the city’s new skyline conveys the momentum and energy Lincoln is experiencing. Four years ago, when many cities were paralyzed by the economic climate, Lincoln voters put the city on a new path by voting “yes” to move forward on the West Haymarket Redevelopment Project. In August 2013, the new 16,000-seat Pinnacle Bank Arena opened its doors. The $344 million West Haymarket project envisioned the redevelopment of 400 acres of blighted and underutilized property bordering the popular Haymarket Landmark District and downtown core. The area we call the “Haymarket” sits along the western edge of the central business district. It was a place for industrial and warehousing uses back in the early 19th and 20th centuries and served the adjacent Burlington and Missouri River Railroad yard. Nearly 100 years after the rise of the Haymarket, many buildings were vacated and boarded up as the last manufacturer, Russell Stover, pulled its operations from Lincoln. This eight-block district, however, was viewed as an important element to Lincoln’s history, and the city designated it as a Landmark District in 1982. A New Beginning In 1985, the Lincoln Haymarket Development Corp. was formed as a …
The vital signs of Cincinnati’s industrial market are collectively the healthiest they’ve been since 2007, including vacancy, absorption, lease rates, property values and investment sales activity. This uptick is particularly encouraging considering that the recovery in the Cincinnati industrial market lagged the top five markets in this property sector nationally coming out of the Great Recession. The historical 20-year average vacancy rate for Cincinnati’s industrial market has ranged between 3 and 5 percent, but rose as high as 10 percent in 2008. With overall industrial vacancy on the decline for the past seven quarters, vacancy now stands at 6.35 percent, a five-year low. Bulk Distribution Space Becomes Scarce Vacancy in the bulk distribution subsector — large warehouse buildings primarily used to accommodate e-commerce, apparel or consumer goods — has been declining for the past eight quarters and now stands at 7 percent. That’s a departure from the usual 10 to 13 percent range. In the 29 million-square-foot bulk warehouse submarket of Northern Kentucky, vacancy is less than 2 percent. Space is so limited that no Class A bulk spaces larger than 200,000 square feet are currently available in Northern Kentucky. VanTrust Real Estate LLC has begun construction on a 273,000-square-foot …
The Twin Cities retail market continued to improve in the second half of 2013 due to robust leasing activity at neighborhood centers. The vacancy rate registered 7.2 percent at the end of 2013, down from 8.6 percent a year earlier, according to Cushman & Wakefield/NorthMarq. That is the lowest vacancy rate since the fourth quarter of 2008. The market saw healthy absorption of 439,000 square feet during the second half of 2013. With retail spaces filling, rental rates declined modestly, dropping from an average of $27.73 per square foot during the second quarter of 2013 to $27.60 per square foot in the fourth quarter. The rental rate decrease was primarily due to the decline in rates at community centers, as discount retailers negotiated lower rents. Many of these discount retailers filled big-box and junior-box spaces that had been vacant for a long time. (To view larger version of chart, click here.) The Franchise Factor The majority of retailers that entered the Twin Cities in 2013, or expanded their operations locally, were focused on food and services such as hair care, massage, cellular and fitness. Five Guys Burgers & Fries and Yogurt Lab, relative newcomers to the market, now operate multiple …
The outlook for the West Michigan industrial real estate market remains optimistic due to consistent levels of sales and leasing activity, according to Colliers International. The industrial market has recorded six successive quarters of positive absorption despite the market seeing a major shortage of high-quality inventory. Some 522,717 square feet was absorbed during the fourth quarter alone, lowering the vacancy rate to 6.57 percent. With options for space becoming more limited every day, new construction is an important consideration for many companies. That option, however, requires vacant land on which to build. Consequently, vacant land sales have emerged as the focus of many industrial real estate transactions. Construction of industrial space has reached its highest level in eight years — 419,000 square feet completed in 2013 and 792,000 square feet underway and projected for 2014. We’ve experienced more land sales in the last six months than we’ve seen in the last six years. Our industrial team has recently closed or put under contract more than 150 acres of vacant land, and much of that acreage is slated for new construction. Ambitious Plans Several projects have already begun, including the 110,000-square-foot expansion that Undercar Products Group began occupying in November 2013, …
Slowly but surely, the missing pieces of the puzzle critical to the long-term vitality of the city of Detroit are starting to fill in, say real estate experts and business leaders. While the city is working through a painful bankruptcy to get its financial house in order, the public and private sector are moving forward with a sense of urgency to make sure that revitalization efforts in Downtown and Midtown don’t lose momentum. The success stories in the office, retail and apartment sector often come in fits and starts, but collectively they show measurable progress. A planned 3.3-mile streetcar line, known as the M-1 Rail project, is the infrastructure piece of the puzzle. Utility relocation work is underway on Woodward Avenue, the first step toward full-fledged construction of the planned light rail line that will connect 11 stops between Larned Street in Detroit’s central business district up to West Grand Boulevard in the New Center area at the north end. Funding for the $140 million streetcar project, which is expected to be complete in 2016, has come from a variety of sources including corporations, foundations, nonprofit agencies and government sources. “We’ll have more of a pedestrian connection between Downtown, Midtown …
Optimism abounds in the Twin Cities apartment market, and for good reason. It’s a top performer in the Midwest, and ranks high in the nation overall. The key indicators are compelling: low vacancies with rental rates rising; steady apartment sales; robust new development, especially in core urban and first-tier markets; and flowing pipelines. Among 52 metropolitan areas showing the most economic momentum heading into 2014, Minneapolis/St. Paul ranked No. 14, according to the Praxis Strategy Group. Criteria included GDP growth, job growth, real median household income growth and current unemployment. Property owners, buyers, developers and funding sources are all benefiting from a strengthening apartment market, a trend that began in 2009. Although statistics vary by source, there is consensus on future apartment trends in the seven-county metro area. For apartment owners, a tight rental market means growing revenues, a far cry from the glut of vacant units that existed a few years ago. Last year, vacancy rates averaged 2.8 percent, compared to 7.9 percent in 2009, according to real estate research firm Reis. A boon for landlords, rising rents are forcing many lower-income renters out of the cities into the suburbs. Statistics show the average rent in the Twin Cities …
Indianapolis is experiencing explosive growth in the mid- and big-box grocery store sector. Capitalizing on the consumer trend of active and healthy lifestyles, the metro area has attracted new concepts to the market. Fresh Thyme Farmers Markets will soon join the already healthy and organic offerings of Whole Foods, The Fresh Market and Earth Fare. Although these brands have a smaller footprint than traditional grocers, these specialty gourmet grocers account for seven new stores consuming more than 160,000 square feet of retail space throughout Indianapolis and the suburban markets. This growth in the organic and health food concepts complements the well-care businesses that expanded their presence in the Indianapolis area last year, including Vision Works, Med Express, ATI Physical Therapy and Accelerated Physical Therapy. Consumer demand for convenient access to personal well-care services, such as medical spas, massage therapy, cosmetic dentistry and personal fitness is on the rise. These types of businesses account for a significant amount of absorption within several neighborhood shopping centers throughout the market. In that vein, consumers also are choosing healthier dining options such as grab-and-go prepared foods at their local grocer rather than hitting the fast food drive-thru or dining at a restaurant. This preference …