Unlike many other major U.S. hotel markets in 2008 and 2009, Kansas City did not experience devastating decreases in occupancy and average daily rate (ADR). The severe drop in revenue that stung markets such as Detroit, Cincinnati, Chicago, Phoenix, San Diego as well as Dallas did not occur in Kansas City. In some instances, these other markets experienced decreases in revenue per available room (RevPAR) of 30 to 35 percent, while Kansas City experienced a decline of 15 to18 percent. The Kansas City hotel market recorded increases in ADR, occupancy and RevPAR throughout 2011 and the trailing 12-month period ending in March 2012. During this period, occupancy increased 3.4 percent to 57.3 percent, average daily rate increased 2.3 percent to $82.61 and RevPAR increased 5.7 percent to $47.37. According to Smith Travel Research, the data was based on 285 reporting hotels with a total of 31,927 rooms. The biggest improvement in real estate fundamentals occurred in the Overland Park-Lenexa market and the Country Club Plaza area. Both areas posted overall RevPAR growth of an impressive 10 percent, while the Kansas City North Airport market experienced growth of only 3.8 percent. Occupancies in the downtown hotel market are projected to remain …
Midwest Market Reports
After posting slightly positive net absorption for three consecutive quarters, the industrial market in Cincinnati bucked that trend in the second quarter by recording negative absorption of 836,000 square feet, according to Xceligent. This setback can partially be attributed to a falloff in demand, but was largely the result of several large owner-occupants moving out of their buildings. As a result, the overall vacancy rate climbed 20 basis points in the second quarter to 10.2 percent. Still, that’s below the peak vacancy rate of 10.7 percent reached in the second quarter of 2011. Significant new vacancies in the second quarter included Avon (750,000 square feet), Hamilton Fixture (330,000 square feet), and Sonoco Corrflex (319,000 square feet). This wiped out the positive absorption recorded in the first quarter. Through the first half of 2012, the market has posted 395,000 square feet of negative net absorption. Underlying Trends Similar to what we experienced in 2011, tenants are taking advantage of discounted rental rates in Class A product. There has been marginal activity involving Class B or C product. The good news is that there are growth opportunities with some space requirements of more than 100,000 square feet. That demand is driven by …
The Chicago downtown office market is on a roll. Vacancies have fallen for more than 12 months straight as corporations pull the trigger on new or rehabbed office space in marquee locations to accommodate consolidation and growth. One of the big stories is that the market is far more geographically diverse today. We are seeing the suburban sprawl in reverse as corporations leave far-flung business parks to seek out trendier 24-hour neighborhoods such as River North (Chicago’s tightest submarket), the West Loop and the Millennium Park/East Loop-area. Where you work is also increasingly where you live. Chicago’s 136.7 million-square-foot office CBD market reported a 14.9 percent vacancy rate at the end of the first quarter, a welcome decline from the 15.4 percent reported during the fourth quarter of 2011. According to CBRE Group, downtown vacancy has fallen in every quarter since the end of 2010, when the rate was 17 percent. It peaked at 17.3 percent midway through 2010. Overall vacancy numbers include sublease space. Direct vacancy was 13.6 percent in the first quarter of 2012, down from 14 percent in the prior period. Compare that to the suburbs, where the first-quarter vacancy rates rose to 24.6 percent after consecutive …
There is substantial industrial development occurring in the Cincinnati market on a non-speculative basis, with three projects in various stages of completion. Foreign capital and the need for a French firm and a Japanese company to have a significant American manufacturing and distribution presence have spurred two of the developments. Usui International Corp., a Japanese automotive/engine components maker of fuel injection systems for Ford, Honda and Toyota, has nearly completed a 90,000-square-foot, heavy industrial facility in the Cincinnati suburb of Sharonville, just north of downtown. Usui toured the region for nearly a year before selecting the Sharonville site and purchased approximately 12 acres. Cincinnati Commercial Contracting is the developer of the build-to-suit project, which Usui will own. The project is scheduled for completion in the second quarter of this year. The Usui deal reflects a trend among Japanese auto companies of building facilities in North America for several reasons: Japan’s energy infrastructure is aging and its production capacity is limited, particularly with the closure of its nuclear generators; the high value of the yen versus the U.S. dollar has increased the price of Japanese-made products; a need to minimize logistics and shipping time and costs by switching much of Japan’s …
Milwaukee ended 2011 with its sixth consecutive quarter of positive net absorption and more than 3 million square feet of absorption for the year. Xceligent Inc. reported that the Milwaukee industrial market ended 2011 with a vacancy rate of 7.6 percent, down from 8.6 percent at the end of 2010. The national industrial vacancy rate by comparison ended 2011 at 9.9 percent, according to CoStar Group. Hungry for space Of the 67 national industrial markets tracked by Cassidy Turley, 59 recorded positive demand for warehouse space. Milwaukee was among the top 10 performers along with Dallas, Indianapolis, Atlanta, Houston and Chicago, the latter of which only surpassed Milwaukee by 200,000 square feet in 2011. Milwaukee and Southeast Wisconsin continue to attract food industry manufacturers, distributors and packagers. Most recently, Seda International Packaging Co., an Italian firm, opened its North American headquarters in Pleasant Prairie. It joined other food retailers like Gordon Food Services and Affiliated Foods Midwest, which have opened distribution centers in the last 2 years. ALDI and Roundy’s Foods also both have distribution centers greater than 1 million square feet in Southeast Wisconsin. Janesville, Wisconsin also attracted Melster Candy, which relocated its manufacturing operations to a 100,000-square-foot plant, …
Minimal construction and large lease signings are expected to bring the retail vacancy rate in Columbus to a 5-year low this year. At the same time, investment activity should increase through year’s end, particularly in the multi-tenant retail segment, as investors take advantage of historically low interest rates. Many of the leases in the Columbus metro area will be executed in areas with healthy population growth and established foot traffic, including Polaris, Easton, and Westerville. The lease inked by Menard Inc. for 240,000 square feet at the old Northland Mall last year will help revitalize the Morse Road corridor. Slightly north, elevated household incomes will bode well for Westerville, where Walmart will open by mid-year. Both moves will increase traffic within the area, while attracting smaller tenants to vacated inline space nearby. Elsewhere, Earth Fare Inc. will move into 30,000 square feet at the Gemini Place Towne Center in Polaris, further solidifying the neighborhood as a top retail corridor in Columbus. As leasing activity picks up and development activity remains slack, most submarkets will post an improvement in vacancy in 2012. Economic Vital Signs The Columbus retail market is one of the strongest outside of the Upper Midwest, according to …
The Milwaukee apartment market continues to enjoy higher occupancies, less concessions and yes, some actual rent growth. The market saw less available units in recent years. As the old law of supply and demand dictates, that drop in the number of available units has led to a significant reduction in concessions, thereby increasing effective rents. In some cases, not only was there an increase in effective rents, but in actual rents at some properties and within certain markets. What are the driving factors and what can we expect going forward? There are a few components at work — more jobs and virtually no new developments. Another important, but less quantifiable factor, is the desire of some potential homeowners to remain renters. When we talk about job growth, we are certainly not talking about a dramatic increase. Still, an increase is always better than a loss. After hemorrhaging jobs in the late 2000s, as the recession gripped the area and the rest of the country, Milwaukee began to rebound in 2010. In fact, according to Manpower International, the area was one of the top job growth areas in the country, ranking sixth in fastest employment growth of the top 100 metropolitan …
Gloom and doom. Doom and gloom. Those words were interchangeable and prevalent during the last few years in both economic and office real estate market analysis. But in the words of 1960s legendary rock group The Buffalo Springfield, ”Something’s happening here.” That something is very good. While there will be setbacks, and it may take a year, it will be something very good. And that something is without the freewheeling lending market of the 1980s, without the sometimes illogical boom of the 1990s, and without the volatility of the past decade. The Milwaukee office market is absorbing space, creating excitement with a vibrant downtown (especially in housing and dining) and ready for a positive rebirth. Now let me tell you what didn’t happen in 2011, and what won’t happen in 2012. And then allow me to tell you why 2013 will be spectacular. The total inventory of the Milwaukee office market is nearly 28.2 million square feet. With approximately 6.4 million square feet available and nearly 5.8 million square feet vacant, the direct vacancy rate for the market as a whole is 19.7 percent. But in the financial area east of the River downtown market, the vacancy rate is only …
Despite the slow economic recovery nationwide, there is life in the commercial real estate investment market in Indianapolis, especially in the office sector. Nearly 900,000 square feet of office properties traded hands in Indianapolis in 2011, for a total of $119 million, which is a 70 percent increase over office sales in 2010, and four times the sales volume in 2009. Major property sales such as Intech I/II/III, 9225 Priority Way Dr. in the Precedent Office Park and Heather Glen II marked a return of stabilized office building sales in Indy last year. The increase in sales velocity is expected to continue with several major office properties currently on the market, including the Capital Center downtown, Pennwood Office Park in Carmel and the Ascension Health Ministry Service Center in the northwest submarket. Cassidy Turley is tracking an additional 3 million square feet of office properties expected to come to market this year, or in 2013. Continued improvement in office fundamentals is an encouraging sign for investors. With 237,000 square feet of positive net absorption in the fourth quarter of 2011, the overall vacancy rate for Indianapolis now stands at 20.3 percent. No new speculative construction, three consecutive quarters of positive …
It was a little less than two decades ago that local business leaders could see what was unfolding in West Michigan. The industrial sector was steadily declining, and companies were either going out of business or moving away. It was evident that something had to be done. That’s when two hometown heroes, Amway founders Richard DeVos and Jay Van Andel, proposed their vision to turn Grand Rapids into one of the top medical services cities in the world. Their leadership and philanthropic efforts spurred a series of events, forever changing the landscape, mentality and image of Grand Rapids. One of the city’s first streets, Michigan Street, running parallel to I-196, was the initial site of their vision. In 1996, Jay and Betty Van Andel founded the Van Andel Institute. They broke ground in 1998, and the Van Andel Institute opened its doors in 2000. The institute is now home to scientific research that is focused primarily on cancer and Parkinson’s disease and has received more than $1 billion in research funding. The original development was a $60 million facility. In 2010, the institute opened a second phase with an additional 242,000 square feet at a cost of $175 million. Butterworth …