Rising costs of homeownership and the lack of SALT deductions on federal income tax returns will help maintain the strong demand for apartments in Northern New Jersey. We are seeing an increase in construction activity as municipalities settle their affordable housing lawsuits with developers and long-awaited projects, especially those located along major public transportation hubs, are completed. In Jersey City and Hoboken, these new projects are placing upward pressure on Class A vacancy as they take time to lease. We see an increase in more concessions being offered, which will dampen the appreciation of monthly rates. This could impact the upgraded Class B buildings, which find themselves battling for renters with recent finished projects and more affordable options that can be found inland. In areas west of the Gold Coast, we see continued higher occupancy rates with many landlords reporting well under 30 day turnover rates, unless major renovations are needed. Outside of Hudson County, the overall vacancy factor trends between 2 and 3 percent allowing for increased revenue, according to research from Marcus & Millichap. Landlords in strict rent control markets are faced with the decision of either renovating to increase rents via capital improvement programs or take advantage …
The strength of the New Jersey industrial market continues to evidence itself through consistent demand, rising rental rates and record low vacancy rates across the region. Much of the recent success has been the result of e-commerce growth and expansion among distribution and light manufacturing businesses looking to tap into the market’s port, air cargo, and major transportation networks. While developers have been working to bring new inventory to the market, the new space is being absorbed quickly, leaving tenants with limited options for space. The New Jersey industrial market has seen significant demand for the past 20 quarters and a steady, often rapid, rate of absorption. The market saw 13.6 million square feet of absorption in 2018, according to research from Avison Young. The epitome of this market expansion trend and the most obvious to investors is the activity along the New Jersey Turnpike, from Exit 8A where the market was at a staggering 1 percent vacancy rate at the end of 2018 up to the Exit 10 Edison Market, where rents may soon reach $9 per square foot net. Notable Deals A little farther north into the Carteret /Avenel and Linden/Elizabeth markets much of the activity is focused …
The greater Boston retail market experienced a substantial rise in the vacancy rate to 9.5 percent through June 2018, reflecting an 11.3 percent increase in unoccupied space, compared to a level of 8.6 percent in 2017. At the same time, total inventory ended the year at 196 million square feet, a gain of 1 percent, nearly the same square footage as the increase in vacant space. This resulted in a nominal negative absorption rate of only 21,900 square feet. A considerable number of large format store closings and chain liquidations were responsible for the disappointing outcome, which could have been even worse without a significant number of retail conversions to non-retail space cushioning the impact. The retailer gaining the most retail space in the region was Wegmans, adding a two-level store at Natick Mall and a second unit at the redeveloped Meadow Glen in Medford. In second place was 7-Eleven, completing its brand conversion from Tedeschi Food Shops, which it acquired in 2015. Market Basket rounded out the top three, adding new stores in Lynn and Fall River. By number of new units, 7-Eleven added 68, the most of any retailer. Metro PCS was a distant second, adding 16 stores …
The combined greater Philadelphia industrial markets closed 2018 with 718,266 square feet of positive absorption, according to research from NKF. Year-over-year, overall vacancy declined 20 basis points to 5.5 percent, while warehouse vacancy increased 140 basis points to 6.3 percent. 3.4 million square feet delivered over the past twelve months with 2.3 million square feet designated as warehouse space. The Southeastern Pennsylvania industrial market closed the year with a total of 264,511 square feet in negative absorption. Year-over-year, total vacancy for all property types increased 70 basis points to 6.2 percent. Philadelphia County accounted for a majority of Southeastern Pennsylvania’s occupancy gains, closing the year with 854,488 square feet of positive absorption. This was largely due to significant gains in occupancy that occurred in the first quarter. During the first three months of the year, Dependable Distribution moved into 332,640 square feet at 9801 Blue Grass Road and 185,000 square feet at 11200 Roosevelt Boulevard. In addition, Rainbow moved into 365,000 square feet at 2951 Grant Avenue, also in the first quarter. The negative absorption in the Southeastern Pennsylvania suburban market is not a sign that demand has slowed, quite the opposite. Ecommerce and distribution companies are aggressively seeking high-bay …
While other U.S. cities have demonstrated volatile economic markets, Boston has sustained a strong, healthy economy for more than 40 years. This economic health coupled with the city’s diversity of industries has had a lasting, positive impact and increased demand for commercial space in the greater Boston market. The snapshot of the Class A and B, lab and office market is strong but shows some signs of regression. Today, overall vacancy for lab and office including sublet space is 12.8 percent, according to research from Colliers International. When you break down the numbers by region, the current downtown Boston office market has 71 million square feet, with a 9.2 percent vacancy rate. Cambridge has 23.6 million square feet of space and 3.8 percent vacancy and the suburbs total 123.5 million square feet with 16.6 percent vacancy. The entire Boston area absorption for lab and office space is 5.2 million square feet. While those stats are favorable compared to the last two years, (2017 with 1.8 million square feet and 2016 with 1 million square feet), they are dwarfed by 2015 which had absorption of 5.8 million square feet. It is also the first time that Class B rents have topped …
As consumer shopping habits continue to evolve and shoppers get younger, retailers are trying to strike the right balance between their online and physical presence. Those that find this omnichannel harmony are thriving in cities across the United States. Philadelphia’s Center City, in particular, is capitalizing on its booming millennial population and attracting retail concepts that cater to this group. According to Center City District’s 2018 State of Center City Philadelphia report, millennials make up 40 percent of Philadelphia’s downtown population, one of the highest percentages in all U.S. cities. With millennials moving into the peak spending years of their lives, Philadelphia is experiencing a multitude of development with most of the focus being on mixed-use. Mixed-use development, which combines retail and residential, and sometimes office, is attractive to the millennial generation who are driven by convenience and want the ease of living, working, dining, and shopping all in one place. The largest retail development projects Center City is seeing right now are happening in the Midtown Village neighborhood, which had been largely neglected until recently when it comes to large mixed-use developments. A few notable projects here are The Collins, a residential community that features 90,000 square feet of retail …
When the Philadelphia Eagles were headed to the Super Bowl in 2018, they were the underdogs. The odds — and subsequently media headlines — were against them. But the team proved those predictions wrong, and went on to clinch its first championship. The retail market in Philadelphia, and nationwide, tackled similar challenges last year. As mature department stores shuttered and retailers filed for bankruptcy, the industry faced ongoing uncertainty. However, the rapidly changing dynamics represent vital opportunities for retail real estate owners to reimagine the mall experience. In Philadelphia, the high density of residents, workers, college students and visitors create a more than $1 billion retail demand annually, according to the Philadelphia Retail Report 2018 compiled by the Central Philadelphia Development Corp. In order to capture consumer interest, industry leaders need to evolve alongside the community’s changing needs and landlords and brands today have been transforming the conventional retail real estate model, carving a new path to success. Looking ahead, the future looks bright. Here’s a look at key trends driving the next level of retail real estate in Philadelphia. Innovative Concepts As habits of shoppers continue to evolve, brick-and-mortar space today can offer opportunities beyond traditional retail whereby real …
Boston’s metro west office market continued to move along at a steady clip in 2018. Many of the trends seen in the west market have been consistent over the past few years. One of the most prominent trends is that tenants continue to prefer high-quality properties. Class A product has benefited from the demand, resulting in a limited supply of Class A large blocks. In contrast, commodity space is still lagging from a demand standpoint. Additionally, many landlords have been performing gut renovations on older properties and have been reaping the rewards of their investments. The west market has also benefited from tenants migrating from Cambridge and life science demand, which are two closely related trends. Cambridge, particularly Kendall Square, is well known as the national hub of the life science industry. With that pedigree, pricing there has grown tremendously, and available space is scarce. As such, many life science occupiers are looking west to fulfill their needs, and the Cambridge market conditions have pushed other non-life science occupiers west as well. A proximity to the inner urban core makes towns like Watertown and Waltham particularly attractive. The above trends are not new, but one is. New economy tenants, who …
Fueled by low interest rates, an abundance of available debt capital, and superb fundamentals, the demand for multifamily assets in the U.S. has exploded over the past few years. This increased demand has led to fierce competition between capital in the multifamily sector, and consequently, a dramatic compression of going-in cash yields. With rents in “top-tier” cities at peak levels, these markets look prohibitively expensive. As a result, foreign capital is beginning to explore new markets to find more attractive yields. Long considered a second-tier U.S. city by global capital, Philadelphia has historically been overlooked in favor of cities such as New York City, Washington D.C., Boston, Chicago, San Francisco, and Los Angeles. When evaluating Philadelphia in comparison to other major metropolitan regions, the slow and steady growth of the Philadelphia MSA did not differentiate it enough to attract the foreign investor. Instead, those capital sources targeted cities with higher population growth, job growth, and rent growth. In good times, that calculation paid off with higher yields and greater appreciation. However, today most investors conclude that we are in the late stages of this real estate bull market. Yet, they still have capital which needs to be deployed. Those divergent factors …
A highly educated workforce is driving corporate growth throughout Boston, particularly in the finance, technology and medical sectors. PNC Financial Services and JPMorgan Chase have announced considerable expansions and some international companies, including LogPoint, are setting up North American operations in the Boston metro. As a result, approximately 47,100 positions were created since October 2017, building on the 39,400 jobs added in the prior 12-month period. The pace of hiring has kept the unemployment rate in the low 3 percent band, making it difficult for employers to find quality workers. Overall, healthy employment growth continues to draw more residents and underpins household formation, fueling the need for quality housing. High home prices, however, are putting homeownership out of reach for many, boding well for apartment demand. As a result, vacancy rates remain considerably tight, resting below 4 percent in the third quarter. The still tight vacancy rate is creating a shortage of housing throughout Boston, particularly for lower income households. Consequently, vacancy in Class C apartments has held below 3 percent during the past two annual periods ending in September. Effective rent in these spaces is roughly between $700 and $1,800 per month less than Class A and B spaces, …