The Pittsburgh office market has experienced significant new development over the last five years, particularly in the urban and downtown fringe submarkets. This is expected to continue in the coming years, with several new developments that are currently in planning or under construction. Historically, urban office supply in Pittsburgh has been constrained due to the economic hurdles of new development. With limited sites for new projects, land costs at a premium and significant site work required, Pittsburgh’s nominal rent growth did not allow for economically viable projects. However, rent growth in recent years has led to a new wave of development, which has accommodated companies moving to Pittsburgh along with existing businesses growing and/or relocating within the market. Most of the new office development has taken place in urban submarkets surrounding downtown, including the Strip District, Oakland, East Liberty and the North Shore. These submarkets have attracted more development than the CBD due to greater availability of development sites, as well as lower construction costs. Development Pockets Total development costs of Class A office buildings on the fringe of the CBD are generally $250 to $300 per square foot. For this project cost, gross rents in the range of $30 …
Shifting consumer preferences for convenience and variety have become key drivers for brick-and-mortar retail. And when it comes to creating co-tenancies that drive traffic to retail properties, dining, personal services and fitness are among today’s most desirable categories. Fortunately, they also are among the sector’s most active space users in today’s market. Strong restaurant demand among brands new to, and expanding in, the regional market continues unabated, and year-to-date activity reflects a new level of diversity. From national brands to regional chains like café and bakery Dulce De Leche to expanding local mom-and-pop businesses, these tenants are serving as “internet-proof” placemakers for the retail properties they occupy. And many tenants are looking to step up the dining experience with outdoor seating, revolving menus and entertainment, among other offerings that spark return visits. The same holds true for personal services, where boutique concepts have become sought-after shopping center additions. Again, diversity is a common theme, with activity involving traditional salons as well as specialized concepts like Sport Clips, which caters to men and boys, and local businesses that offer makeup services, waxing and other niche beauty treatments. We also are watching with interest the emergence of brands offering coworking space for …
We all know that e-commerce has become a significant driver of the industrial market. It now fuels activity that moves beyond clothes and books to the food supply chain, and the associated complexities of meeting consumer demand for food preparation and delivery. Increasing numbers of consumers have shifted to buying prepackaged meals, shopping for organic foods or ordering groceries and meal kits online. This expansion is translating into significant demand for industrial warehouse and distribution space to accommodate the food industry. One sector of this robust market is facing challenges, however, as demand for cold storage warehouses has skyrocketed in recent years. These facilities are used to store fresh and organic produce and to create and distribute processed foods. Food businesses are typically looking for spaces near large population centers as they seek to tap into demand for last-mile delivery. The cold storage shortage is playing out in many markets across the country, but is particularly problematic in New Jersey due to a low vacancy rate and the construction challenges in this sector. Driving Location Decisions Food businesses are looking for spaces near their customer bases to reduce travel times, so they often choose infill locations. The scarcity of land …
As the second-largest city economy in the world, New York City continually retains its reputation as one of the most desirable locations for long-term real estate capital appreciation, both nationally and globally. In turn, increasing rent growth and decreasing vacancies have characterized the New York City multifamily market as the influx of supply in 2018 quickly gets absorbed. In the next 24 months, the city will see a dramatic reduction in the new supply of rentals, with current projections for 2019 to 2020 estimating 12,000 units to come on line. This figure represents a substantial decrease from the 20,680 units that were delivered in 2018. Of those 20,680 units, Queens and Brooklyn accounted for more than 50 percent of the new supply. Despite these deliveries, effective rent grew in 2018 by 2.9 percent in Manhattan, 2.2 percent in Brooklyn and 3 percent in Queens. Total multifamily sales volume in Manhattan for 2018 was $6.8 billion, an 83 percent increase from 2017’s total transaction volume of $3.7 billion. With 181 total transactions, properties that traded for more than $50 million made up 65 percent of the volume in 2018 across 22 trades. Similarly, sales in Brooklyn hit a record volume of …
Thus far in 2019, much of the growth and development in Rhode Island has been focused on downtown Providence. Much of this has to do with the colleges and hospitals, as well as the residential component in general. But Rhode Island continues to develop hotels, especially in downtown, due in part simply to having a vibrant, in-demand city. Officials want to create the ability for Providence to compete for and attract top-tier conventions. Hotel Development Wave With 1,000-plus hotel rooms coming on line over the next 18 to 24 months, along with another 1,000 residential units of new and redeveloped housing, the long sought-after downtown Providence residential market seems to be here. Examples of this hotel development include the following: • Procaccianti Group’s 176 room Marriott Residence Inn at the Convention Center, coming in the second half of 2019; • First Bristol & Paolino Properties’ 120-room Homewood Suites Extended Stay, which opened in April; • Hotel Beatrice, 28-32 Kennedy Plaza, 48 rooms, under construction; • Best Western Glo Hotel, 322 Washington Street, 76 rooms, commission/board review approved; • Aloft hotel, Innovation Complex, 170 rooms, commission/board review approved; • Holiday Inn, 371 Pine Street, 91 rooms, commission/board review approved; • Hotel …
The U.S. industrial market has now recorded more than 240 million square feet of net absorption for four consecutive years, the strongest run on record, with an all-time high of 284.9 million square feet in 2018, according to Cushman & Wakefield. In New York City, the largest consumer market in the United States, the current industrial supply of approximately 170 million square feet remains heavily constrained, especially around the region’s transportation hubs. Nowhere is the demand for industrial product more apparent than in the area surrounding John F. Kennedy Airport in Queens, which handles more than 1.3 million tons of air freight every year, according to the Port Authority of New York and New Jersey. JFK is the second busiest air cargo airport on the East Coast behind Miami International Airport and just ahead of Newark International Airport. “There’s really not a lot of land near JFK,” says David Hercman, director of asset management at Long Island-based Milvado Property Group. “So, whatever supply is there is there.” Time-sensitive industrial users like freight forwarders, which organize shipments from manufacturers or producers overseas, need to be close to the airport in order to get products to the end user as quickly as …
Despite the heartache from losing the bid for Amazon’s second headquarters, New Jersey is undoubtedly in a more competitive position than it was before the selection process began. The exercise of responding to Amazon’s request for proposals showcased many of New Jersey’s strengths, such as its talented labor pool, access to higher education and vast transportation infrastructure. As we now know, these assets weren’t enough to secure the Amazon campus, leaving state officials and business leaders motivated to work on those areas identified as falling short. But that doesn’t take away from what the state offers both corporate occupiers and institutional investors. To start, building owners are increasingly investing significant capital to improve and expand New Jersey’s aging supply of office properties. This is music to a tenant’s ears and, as a result, the office market continued its streak of growing occupancy with 302,577 square feet of positive absorption in the fourth quarter, according to Transwestern. Where many of the new leases were signed, landlords committed to substantial capital improvement programs. For the past several years, the best lease-up success stories have come from owners that upgraded their properties to current standards and added amenities preferred by today’s dynamic workforce. …
Long Island represents one of the most sought-after suburban retail markets in the Northeast. It’s almost guaranteed that when a retailer opens on Long Island — especially concepts centered on fast-casual dining, boutique fitness experiences and specialized beauty services — it becomes a top performer in the chain’s overall portfolio. Service-oriented retailers are quickly replacing concepts cannibalized by online shopping and are proving to be wildly successful in this important market. With an average household income that trends higher than the national average, a dense population — 2.8 million people live in Nassau and Suffolk counties — and a highly educated consumer base, high-profile national chains recognize the value of having a presence on Long Island. The daytime population swells in areas around shopping centers, hospitals and medical districts, as well as office corridors, while new multifamily and mixed-use developments promise to bring increased foot traffic to retailers seeking a presence on Long Island. Additionally, suburban downtown areas are making resurgences thanks to relaxed zoning restrictions. As the areas around real estate hotbeds like the Route 110 office corridor in Farmingdale, New York, and the Roosevelt Field trade area continue to evolve, new retail centers and mixed-use campuses are emerging. …
New York City recently passed the Climate Mobilization Act, the first real action by any city to require buildings’ greenhouse gas emissions to meet global climate targets. The new law requires owners of large buildings to meet carbon footprint standards or face millions of dollars in annual fines. The emission limits will begin in 2024 and become increasingly stringent from there. The legislation primarily applies to commercial office and market-rate multifamily buildings over 25,000 square feet. According to Urban Green, these buildings account for about 60 percent of the total building area in New York City — those that make up the Manhattan skyline. While skyscrapers will be forced to act first, significant levels of investment will also be needed for public buildings, affordable housing and non-profits. The Real Estate Board of New York (REBNY) estimates the total cost of the upgrades needed to comply with the new law is about $4 billion. Building owners can calculate the performance targets they’ll need to meet and the associated fines if they fail to meet them. While it may be possible to buy renewable energy credits to offset emissions, it is unclear how many will be available. Some buildings will need to …
Strengthening office performance in the northern New Jersey marketplace signals good things to come as 2019 unfolds. The market yielded approximately 292,000 square feet of net occupancy gains in 2018. This was fueled by three straight quarters of more than 1 million square feet in new leasing activity, with annual demand finishing 15.4 percent ahead of 2017. This progress runs parallel to improving employment numbers. At year-end, the Garden State unemployment rate registered at 4 percent, its lowest point since mid-2001. This marks a 70-basis-point decline year-over-year, with private-sector employment increasing by almost 62,000 jobs. Within this context, the diversity of New Jersey’s tenant mix is making itself apparent. No one sector is predominantly making waves. We are seeing healthy Class A leasing activity among life sciences, technology, financial, professional services and a range of other space users that comprise the state’s balanced occupier base. Last year was proof that both urban and suburban submarkets continue to thrive. Where one company prefers the Hudson Waterfront with immediate access to mass transit and ability to draw talent from New York City, another may seek a suburban campus that draws upon a labor force of commuters driving from the state’s western counties …