The commercial real estate market in Wichita stabilized in the second half of 2010 and has started seeing slow, but steady, improvement during the first four months of 2011. The majority of the activity has been on the leasing side of the business, with limited sales activity. Market conditions still favor tenants but are starting to move back to a more balanced position, giving landlords more leverage in their negotiations. Development activity has been minimal the past two years, but the strengthening economy is starting to generate interest in bringing new projects into the market. Laham Development Company continues to be very active in the local market, particularly in the popular northeast area. Laham’s showcase Bradley Fair lifestyle center is at 98 percent occupancy after the opening of Sephora’s in April. The developer’s Regency Park project at 21st North and Greenwich got a major boost earlier in the year when Cabela’s announced plans to construct a new store there. This is Cabela’s first location in the area; it will be anchoring the center with Super Target and World Market. In addition to Cabela’s, other national retailers expanding into the market include Sephora’s, Five Guys Burgers & Fries and Menards. These …
Midwest Market Reports
It’s no secret that Cincinnati has a beautiful landscape, a world-class arts and culture scene, and a rich history, but it is little known for its vibrant business community. Cincinnati is truly located in the “heart of it all” and many people are indeed surprised by the economic influence that exudes from this market. Cincinnati is the 24th largest U.S. metro area with a population of just over 2 million. Cincinnati is home to ten Fortune 500 company headquarters, and, per capita, that places the city higher than New York, Boston, Chicago, or Los Angeles. Kroger Company, Procter & Gamble and Macy's Inc. are all headquartered in the city and it has recently been chosen as the North American headquarters for First Group and dunnhumby, both of which have tapped into the local labor pool. With the strength of the city’s business community, Cincinnati’s office market has been relatively stable over the last 15 years, with overall vacancy rates hovering around 15 percent. Unfortunately, it has not been immune to the economic woes of the last several years and many companies have made cuts or downsized. The Cincinnati office market is approximately 37 million square feet and around 13 million …
For a city that has at times been portrayed as emblematic of the kind of economic fallout left in the wake of the recent recessionary cycle, Detroit is actually responding quite well. The current state of the Detroit office market is just one data point — but it’s a promising one. In greater Detroit — and across Southeast Michigan — there are tentative signs that things are moving in the right direction for the first time in several years. Not everything is positive by any stretch of the imagination, but the progress, while tentative, looks genuine. Since the city’s office market bottomed out in the summer of 2010, it has been slowly and steadily recovering. There were a few low points in August and September of last year, but the market began absorbing some space toward the end of the year, and that trend has continued in the first part of 2011. As you might expect, however, the progress has been uneven. Consolidation areas like Southfield, where there is a lot more activity in the marketplace, have generally done slightly better than destination-focused markets like Dearborn and Livonia, which had taken a more significant initial blow and subsequently have not …
Although the Indianapolis retail market took a hit during the downturn, it never sunk as deeply into the doldrums as other U.S. cities, and has been relatively quick to rebound from its modest slide. Maintaining an unemployment rate well below the national average (8.7 percent at year-end 2010), with the prediction of 20,000 new jobs for 2011 ensures this market is headed in the right direction. Retail real estate brokers in this statistical region of more than 2 million were actually quite busy in 2008 and 2009 when most other regions were reeling from the economic crunch. Recognizing still-strong market fundamentals, retailers tried to seize on the doom and gloom of the times to lowball local landlords, who for the most part would not yield to unreasonable rent offers that they knew would tie them up for years to come. While retail vacancies remain low in the city’s most robust retail corridors, they are higher than they were before the downturn began in areas where demographics have shifted. We continue to see a flight to quality in this market with the most attractive, well-positioned shopping centers commanding surprisingly strong rents. For instance, Class A big box rents in highly desirable …
The St. Louis market, long known for its diverse economy, has been slow to extricate itself from the downturn. The retail real estate brokerage business has been mostly dormant for the past 2 years, particularly the tenant representation side, as scant few national retailers dared to brave the murky expansion waters. Rental rates in the market decreased slightly from third quarter 2010, ending at $12.51 per square foot. However, rates have held up better in some submarkets, including West St. Louis County, where they are $20-plus per square foot. Prime properties at hard corners are holding their own, but second-tier properties have taken a pretty hard hit with rents down into the mid- to high-single digits. When the recession started, many landlords granted rent reductions almost uniformly to tenants and will have to live with their decisions for a while, but other owners held fort and demanded to see sales reports as proof. This resilient region of nearly 3 million people is starting to show new signs of life heading into spring 2011. The market has seen slight improvements in retail vacancy rates, which dropped from 8.4 percent in third quarter 2010 to 8.1 percent in fourth quarter 2010, according …
The U.S. apartment sector staged a strong recovery in 2010 well ahead of expectations, despite modest job creation and stubbornly high unemployment. Net absorption surged, with occupied stock rising by nearly 200,000 units, double the number of apartments constructed and the highest level on record since 2000. Several factors contributed to high levels of absorption, including the release of pent-up renter demand as households de-bundled in the wake of the recession. In addition, apartments benefited from private-sector job growth in the critical 20- to 34-year-old cohort, expiration of the homebuyer tax credit, displaced foreclosed homeowners entering the renter pool, immigration and lower unit turnover. Renting also became a lifestyle and economic choice for many households as the effects of the housing collapse and recession persisted. Continued recovery in 2011 depends more heavily on improvements in the job market, which should gain momentum as the year progresses. Building on that momentum, operating conditions in the suburban Chicago apartment market will strengthen considerably this year, building on improvements in vacancy and rents recorded in 2010. Apartment construction will sink to one of the lowest levels in the past decade, minimizing competition for tenants at a time when renewed job growth will accelerate …
Like virtually every major metropolitan area, the Kansas City market has suffered in the economic malaise of the past few years. However, it hasn’t experienced the irrational highs and devastating lows that have beset markets in Arizona, Nevada and Florida. In fact, the submarkets that are struggling the most are the few that got ahead of themselves in anticipation of housing construction and leasing that never materialized. In many ways, this scenario has enhanced the position of well-located, established centers in fully developed submarkets. Many developers are renovating and, in some cases, re-tenanting their shopping centers situated in more established Kansas City neighborhoods. While demand is certainly not as robust as it was in the heyday of 2006-2007, we are still seeing more-than-respectable leasing of small tenant spaces of 1,200 to 1,500 square feet and of “mid-box” spaces ranging from 5,000 to 10,000 square feet throughout the market. Service firms such as cleaners and hair stylists, plus small eateries including breakfast/lunch-only restaurants such as Big Biscuit, as well as Starbucks, are taking smaller spaces. Dollar Tree, Dollar General and other value merchandisers are mostly taking the mid-box vacancies. Traditional lifestyle centers, however, seem to be the exception. They continue to …
Southeastern Wisconsin, which consists of a seven-county region, is experiencing slight growth in the industrial markets. We have seen positive absorption throughout the area with rumblings of future deals on the very near horizon. The region is experiencing flat to declining leasing rates due to hungry landlords and excess available space. Day-to-day activity is busy, but many of the current tenants that are touring are typically attempting to procure a better deal in their current location. Tenants in the market are still in a wait-and-see mode. The southeastern region of Wisconsin has seen very little new development. Wispark LLC purchased a 185,000-square-foot building in Racine County for CalStar Products, a green brick manufacturer that will manufacture bricks and pavers from fly ash obtained from the nearby We Energies Oak Creek power plant. Wispark is also planning a new 170-acre business park in the southern Milwaukee county community of Oak Creek. The business park is shovel-ready and part of a TIF district. “There is not a lot of new development going on in Southeastern Wisconsin, but I would say there is uptick in the market,” says Todd Rizzo, vice president of Milwaukee-based Wispark LLC. CenterPoint Properties has landed a build-to-suit project …
The St. Louis office market continues to see a relatively slow pace of activity. As the economic downturn hit the market slightly later than the rest of the country, the recovery is also delayed, and companies continue to be cautious, with renewals dominating the leasing market. As of the end of the third quarter, the market-wide vacancy rate was 16.3 percent, slightly lower than second-quarter figures. The vacancy rate has stayed steady between 15.5 and 16.5 percent for the past 5 quarters. Firms continue to employ the blend-and-extend strategy of extending leases before the expiration date and locking in a lower lease rate at the same time. While asking rates have remained relatively steady, effective rates are lower than 2 or 3 years ago, and concessions, including free rent, are still being used by landlords to entice potential tenants in most submarkets. Much of the activity within the marketplace is being seen at smaller sizes, between 3,000 and 5,000 square feet, with a dearth of large tenants in the market. Exceptions to this include Panera Bread, which recently leased 71,130 square feet at 3630 South Geyer Road. Recently, the St. Louis office market was dominated by the moves of several …
The Twin Cities area, a region of more than 3 million people, is still trying to extricate itself from the base of this pesky commercial real estate cycle. While the retail real estate deal volume is starting to pick up here, it remains more of a trickle than a flow, with value-priced merchants spurring much of the activity. In the first half of 2010, the Twin Cities retail vacancy rate stood at 10.4 percent, meaning nearly 7 million square feet of retail space remains vacant, according to Minneapolis-based NorthMarq, a commercial real estate services firm. On the national tenant side, several retailers are repositioning themselves, either by upgrading existing stores or relocating to more advantageous spaces as leases expire. There are also rumblings of several national tenants eyeing vacancies in the 10,000- to 25,000-square-foot range. Not surprisingly, value merchandisers such as Dollar General, Big Lots and Dollar Tree have increased their footprints in this environment as well. We are also seeing a slight resurgence in demand from mom-and-pop tenants. As in past downturns, there’s a growing roster of talented people who were displaced by corporate America that are opening their own retail businesses. At the commodities level, the grocery trade …