Apartment conditions in St. Louis will soften this year due to job losses and localized oversupply; however, some submarkets in the metro area will record a relatively strong performance. The local labor market is projected to be weighed down by the manufacturing sector and the trade, transportation and utilities segment, resulting in approximately 12,000 job cuts in 2009, which will ease apartment demand. Vacancy is projected to climb 100 basis points this year to 8.6 percent, the highest rate since early 2006. As a result, owners will reduce rents in an effort to maintain occupancy levels. The average asking rent is forecast to end the year at $722 per month, a contraction of 1 percent, following a 1.7 percent advance in 2008. In the near term, fundamentals will firm in the Airport/Interstate 70 and Clayton/Mid-County submarkets, as their proximity to arterial routes will continue to generate healthy tenant demand. As such, vacancy is forecast to retreat approximately 60 basis points to 9.5 percent this year in the Airport/I-70 submarket, while vacancy in the Clayton/Mid-County area is expected to fall roughly 30 basis points to 7 percent. Class A properties near interstates 270 and 170 are projected to outperform as a …
Midwest Market Reports
The struggles in the capital markets that began to take hold during the second half of 2008 have put the brakes on much of the investment sales activity across all asset classes, but multifamily sales in Indianapolis have weathered the financial storm better than any other sector. Investment sales of multifamily housing in Indianapolis fared reasonably well when compared to other major Midwest cities. Last year, 19 major properties were sold in the Indianapolis area for just less than $200 million and at an average cap rate of 7.98 percent, according to Real Capital Analytics and Colliers Turley Martin Tucker. While the average U.S. cap rate for multifamily sales stood at 6.2 percent during the first three quarters of 2008, Indianapolis posted an average cap rate of 7.4 percent. The 12-month average price per unit for higher quality assets in Indianapolis is $61,022, compared to $100,792 for similar sales throughout the United States. Sales of properties categorized as Class B to non-performing assets have pushed the average unit price down and cap rates up into the 8.5-to-10 percent range. Multifamily properties that needed a total repositioning were trading in the 10-to-12 percent range based on pro-forma. In 2007, two major …
What area is your expertise? West Michigan — Traverse City to Benton Harbor. What type of retail product is doing well in your area? Grocery and gas. What retailers are new to your area? Sonic and Johnny’s Lunch. Who are the active retail developers in your area? Several wish they were active, however, the lack of retailers coupled with the lack of financing has prevented several deals from moving forward. Please name one or two significant retail developments in your area. What impact will these projects have on the market? The Corner Shops, southeast corner of East Beltline and 28th Street SE, Jared’s and other inline retailers. Minimal impact on the market in general. Evergreen Properties proposed Lifestyle Center at the NE corner of Knapp and East Beltline avenues. They’ve secured D&W Grocery Store and have tentative agreements with several other retailers. It will be interesting to see what happens with the Aikens proposed development, which is less than one mile north of this site. Acquisition of the former Rogers Department store by Israel’s fine furniture on 28th Street SE will clearly have a dramatic impact on the southwest section of 28th Street. Where is the majority of development taking …
What area is your expertise? St. Louis County, Missouri — specifically the Chesterfield submarket. What trends do you see presently in office development in your area? In this submarket, vacancy is declining and new buildings are under construction with more being planned. Who are the active office developers in your area? MPD Development, Duke Realty, OPUS and Sachs Properties. Please name one or two significant office developments in your area. What impact will these projects have on the market? Valley Trails Center at 17401 North Outer 40 Drive, Chesterfield, MO 63005. Three 66,000-square-foot office/medical buildings (planned for near future). Located on Interstate 64/Highway 40 with great access from Boone’s Crossing interchange. Buildings will include balconies and have excellent visibility from the interstate. Adjoins a 26 mile trail system. Developer is MPD Development. Where is the majority of development taking place? Why is this area doing well? West St. Louis County due to access and strong demographics. What area do you expect to be the next big development market? Why? Development will continue in West St. Louis County/ Western Chesterfield area due to available land. What areas are doing well in terms of office leasing? Which areas are struggling with office …
What area is your expertise? For the purpose of this report I will be discussing the office market in and around Akron. What trends do you see presently in office development in your area? Akron has historically been a fairly conservative and stable office development market. Fortunately, this has meant that our area has not fallen in the trap of being over developed like a lot of cities experience in a market downturn. However, as we’ve experienced in the past down markets, those tenants that are making moves are expecting and getting rental concessions, increased tenant improvement allowances and very attractive rental rates. We’ve also experience a substantial increase in locally owned businesses opting to either build or buy their own office space which is due to the attractive mortgage rates and sale prices. Who are the active office developers in your area? In the 35-plus years that I’ve been in the office/industrial real estate business, I have not seen as many major expansion projects announced as I’ve seen in the past 18 months in our area. These projects will undoubtedly help bolster the Akron economy and help spur additional growth, or a trickledown effect as some would choose to …
What area is your expertise? Summit County, Ohio What trends do you see presently in retail development in your area? Change of use and or contraction of older areas due to demographic and economic changes. Example: Rolling Acres Mall – redevelopment into light industrial. What type of retail product is doing well in your area? Essentially high-end and discount retail stores. Williams-Sonoma, Coach, Build-A-Bear Workshop, Wal-Mart, Marc’s Discount Stores, Gabriel Brother’s and Big Lot’s. What retailers are new to your area? Aldo, Coach, Ann Taylor Loft, Coldwater Creek, Bravo Italian Bistro and P.F. Chang’s China Bistro and Five Guys Burgers. Who are the active retail developers in your area? Stark, Simon, Marchetta, Deville, Altman, and Developer’s Diversified. Please name one or two significant retail developments in your area. What impact will these projects have on the market? Summit Mall expansion, Fairlawn, Ohio — Developed by Simon: Bravo Cucina Restaurant, Ann Taylor Loft, Coldwater Creek and others. Wadsworth Crossing, Wadsworth, Ohio — Developed by Forest City: Anchored by Kohl’s, The Home Depot, Target, Bed Bath & Beyond, as well as a few specialty retailers. Arlington Ridge Market Place, Green, Ohio — Developer Deville: Anchored by Target and specialty retail: Alltel Wireless, …
What area is your expertise? For the purposes of this report we are discussing the Industrial Market in Akron, Ohio and the five counties surrounding it (Summit, Stark, Wayne, Portage and Medina counties). What trends do you see presently in industrial development in your area? We are in a stable market with softness in the industrial sector, primarily due to the credit crisis and overall skepticism in the marketplace beginning in 2008 to present. The greater Akron marketplace is made up of many older industrial buildings that were built by the rubber companies and other industrial giants such as the Hoover Company located in North Canton. Local and regional rehab developers have come into the marketplace and purchased these million-square-foot facilities and rehabbed them into multitenant, mixed-use type facilities. The attractiveness of these facilities is generally low-lease rates and the infrastructure that is already in place, making total occupancy cost lower than new construction. What type of industrial product is doing well in your area? Smaller industrial, newer buildings with land for expansion available on a purchase basis as a second or third opportunity from an ownership basis. Who are the active industrial developers in your area? Richfield, Ohio-based Realty …
What area is your expertise? Greater Grand Rapids, Michigan. What trends do you see presently in multifamily development in your area? From 2002 to 2007, we had a tremendous amount of condo construction. Those projects are finishing up and a few new projects are being announced. Several condo projects that were announced have been pulled due to insufficient sales. Apartment construction has been moderate over the past few years. A few new projects have broken ground this year. Student driven markets like Allendale (Grand Valley University) have seen consistent deliveries of new units the past several years — and more units will be added to the market in 2008. Condo conversion projects started in 2006 are still selling out. Who are the active multifamily developers in your area? Condos: Second Story Properties, Parkland Properties, McKay Tower Partners LLC, Moch International, Kegle Construction, Robert Grooters Development, Eastbrook Homes, Redstone, and Epcon Communities. Apartments: Miller Valentine Group, Hof Investment Group, IPA, Copper Beech, and Fusion Properties. Please name one or two significant multifamily developments in your area. What impact will these projects have on the market? River House Condominiums — Robert Grooters Development: 207 units, Downtown. Under construction, estimated completion date 4/2009. …
What area is your expertise? Industrial property in the Kansas City metropolitan area. What trends do you see presently in industrial development in your area? The emergence of large, big-box distribution centers (greater than 250,000 square feet) as well as the emergence of inland ports, which are logistic parks in close proximity to intermodal centers. Kansas City has traditionally been a market for users of smaller blocks of space, but this has changed over the past 5 years. Transactions greater than 250,000 square feet new to our market include companies such as Case New Holland, Pac Son, Kimberly Clark, and Musician’s Friend. Additionally, large industrial logistics parks are planned for the property adjacent to a new intermodal facility, which has opened in Southern Kansas City at M-150 and 71 Highway at the old Richards-Gebaur Airport, which is operated by Kansas City Southern Railroad. CenterPoint is the developer of this park. Additionally, other intermodal projects are underway in both Gardner, Kansas, and at the Kansas City Airport. What type of industrial product is doing well in your area? Class A distribution space greater than 50,000 square feet. Who are the active industrial developers in your area? Multiple local developers Please name …
What area is your expertise? Mid-Michigan, primarily the greater Lansing area. What trends do you see presently in industrial development in your area? Very soft. Some activity from small businesses and companies doing defense work for U.S. government. What type of industrial product is doing well in your area? 10,000 square feet and smaller Who are the active industrial developers in your area? Wieland-Davco and Dart Where is the majority of development taking place? Why is this area doing well? Delta Township due to the newer General Motors plant. What area do you expect to be the next big industrial development market? Why? Expansion of newer Delta Plant. If present car models sell well, they have plans to expand. Please describe the industrial leasing activity in your area. Some smaller and short-term leases. Please describe the industrial sales activity in your area. Very little and what there is, are prices below market. What impact do current interest rates have on the industrial market? What predictions do you have for interest rates and their effect on the industrial market in the next year? Lower interest rates help, but that alone will not be enough. What industries do you expect to expand …