In Pittsburgh’s industrial market, the fourth quarter of 2013 finished in much the same way it began and maintained throughout the year; solid if unspectacular growth. The vacancy rate fell from 7.9 percent in the third quarter to 7.7 percent in the fourth quarter and dropped three basis points in total over the course of the year. The lack of quality Class A warehouse space continues to be a factor with vacancy levels dropping to an astounding 2.97 percent. The greater Pittsburgh’s industrial market is approximately 172 million square feet spread out over the six-county region that includes Allegheny, Butler, Beaver, Westmoreland, Washington, and Armstrong counties. The Class A portion is approximately 17.5 million square feet. With a vacancy rate of 2.97 percent, we only have a total availability across our total market of 519,750 square feet of Class A product. This is below equilibrium for a healthy market. Furthermore, the definition of Class A product in the Pittsburgh region would not necessarily hold up in markets with more speculative developments such as Columbus or Lehigh Valley. Although Pittsburgh has hit the radar of the national real estate community for the opportunity on the investment side, we are still very …
Northeast Market Reports
Rhode Island’s economy continues to struggle with unemployment that is above the national average. As a result, it has been difficult to get new ground-up development projects started with only a few exceptions. In Johnston, Saletin Real Estate Group has completed construction on the first phase of Johnston Towne Center on Hartford Avenue. The 95,000-square-foot shopping center is anchored by a 40,000-square-foot Price-Rite grocery store. BankRI has also opened a new free-standing facility on the site. In order to make the development a reality, the mayor and town council worked with the developer and issued tax increment bond financing. The project is considered a major redevelopment victory for the town of Johnston, as the construction of Johnston Towne Center required the demolition of the former Stuart’s Plaza shopping center — which had been 100 percent vacant for many years, and had become an eyesore along Hartford Avenue, one of Johnston’s busiest streets. Johnston Towne Center serves as the second victory for the rejuvenation of Hartford Avenue. The former Shaw’s grocery store, which had been vacant for several years and shares the same traffic signal as Johnston Towne Center, is now fully leased to Ocean State Job Lot and Planet Fitness. …
In Providence, the Class A office market has stabilized, thanks to a number of large lease renewals last year as well as new activity in the market. The current vacancy rate for Class A office product is now under 9 percent in the Capital City with an overall office vacancy rate of 14 percent, which represents a decrease of 100 basis points compared to this same point last year. Consequently, this activity has pushed rental rates for Class A space back over $30 per square foot on new deals. Recently, Nortek completed a lease for 24,000 square feet at the Blue Cross Blue Shield building located in the Capital Center district of Providence. Tech startup Swipely has completed its move into more than 25,000 square feet at 10 Dorrance Street. But for the Swipely expansion, the downtown Providence Class B office market remains stagnant. There has been some activity on the capital markets front as well in Providence. The Foundry Associates recently completed its purchase of the former American Locomotive Works (ALCO) site, which totals more than 200,000 square feet of redeveloped office space, for $19.05 million. In addition, Providence-based Paolino Properties recently completed the acquisition of 100 Westminster (300,000 …
According to the Allegheny Conference on Economic Development, in 2013 there were more people working in Pittsburgh than ever before. The region has seen five consecutive years of continuous expansion and a current capital investment of $3.2 billion. Pittsburgh ranks among the top 15 metropolitan areas for five-year private sector job growth according to On Numbers Economic Index. Possibly more impressive than the jobs themselves, the earnings growth in the region over the same five-year period was 24.3 percent — the highest increase in the U.S. Pittsburgh’s unemployment rate fell to 6 percent in February, with the seven-county region posting an increase of 2,400 jobs in the same period. Among the companies expanding in Pittsburgh is Cigna Health. The company, which currently employs more than 1,400 in the region, plans to grow by 10 percent in 2014, adding approximately 150 new management, training and customer service positions to its regional post in Pittsburgh’s Parkway West submarket. This is great news for retailers in the area, which is also known as the Airport Corridor and which has been a mecca for retail for several decades. In recent years, retailers have struggled to survive here, as the submarket suffered from over-development and …
New Jersey’s industrial market took a positive turn in the past 18 months, and now the lack of new development during the downturn has market conditions comparable with any boom period. Occupiers are paying record rents as high as $8 per square foot for new, Class A product, while submarkets such as Port/Airport and Exits 10 and 12 report vacancy below 5 percent. Investor demand for industrial property with credit tenants and decent lease term remaining is literally insatiable. Central New Jersey closed 2013 with 1.2 million square feet of fourth quarter net absorption and a vacancy rate of 6.6 percent, which is a 170–basis-point decrease compared to the end of 2012. Northern New Jersey’s largest -submarket, Meadowlands, has 78.2 million square feet and the submarket posted 1.7 million square feet of net absorption to finish the year with 6.2 percent vacancy. To the south, where average asking rents are $4.87 NNN per square foot, several Central New Jersey submarkets are at sub-6-percent vacancy, including Exit 8A, the region’s largest industrial submarket, which ended 2013 at 5.1 percent vacancy. Mom & Pop, Meet Amazon New Jersey’s traditionally strong base of small- to medium-sized, mom-and-pop end users certainly plays a role …
The New Jersey retail marketplace is finally showing signs of modest recovery for the first time since the recession. Retail is on somewhat stable ground, but not as solid as we would hope. We expect continued bumps caused by the harsh winter we have experienced, the closing of stores by some major national and regional retailers nationwide, and the fact that consumer confidence is still not in a fully stable position. Retail closings and bankruptcy filings continue to remind us that nothing is certain. For example, RadioShack recently announced it will close 1,100 stores nationwide; Pathmark and A&P supermarkets continue to close underperforming stores; and some other retailers such as Loehmann’s, and more recently, Dots women’s apparel chain have filed Chapter 11. But all is not so bleak. There are some new trends in retail that show how the sector continues to reinvent itself in an effort to thrive in this new economy. We saw the economy start to come out its doldrums, especially this past year, with many furniture and home furnishing stores opening in New Jersey for the first time. Paramus — which is one of the strongest retail markets in the U.S. — had several out-of-state furniture …
The Manhattan office leasing market witnessed a substantial amount of activity in 2013. Surprising moves were made as tenants relocated out of traditional submarkets into emerging submarkets throughout the city. Many well-known companies, such as Condé Nast and Jones Day, made big commitments to move from traditional office space in Midtown to Downtown. The low vacancy rate in the Midtown South market forced tenants to look for outside options. Companies such as Nielsen, Shazam Media Services, and Alloy Digital have moved out of the Midtown South market over the past 12 to 18 months. This movement is expected to continue in 2014. This year started off well. However, anecdotal evidence suggests that many early 2014 transactions were carried over from the end of 2013. From January through end of February, a total of 301 lease transactions were signed amounting to 4.4 million square feet of leased space, as compared to 600 transactions closed in the first quarter of 2013. The average Class A vacancy rate throughout Manhattan remained between 9 and 10 percent, while Downtown experienced vacancy in the lower double digits mainly due to new construction. Pockets within the Midtown submarket showed diverging dynamics. For example, the Midtown submarket …
If 2013 was considered a year of great health in New England retail real estate, we’ll likely need to craft stronger superlatives to describe 2014. Exciting new projects circling metro Boston, rising retailer demand, and a flood of capital chasing retail centers were consistent stories throughout 2013 and will only amplify in 2014. Surprisingly quiet during the prior decade, grocers are now driving much of the activity and creating the lion’s share of the retail headlines. With Whole Foods inhaling five Food-master stores, opening in Lynnfield and exploring any other site that comes available and with Wegmans committed in the Fenway, set to open in Burlington and Chestnut Hill and construction finally underway in Westwood, stories of supermarket growth were ubiquitous throughout 2013. The recent announcement of a new Star Market at North Station provides evidence that the new entity behind the Shaw’s chain may have quickly turned around the grocery operator’s downward spiral while the team at Roche Bros. surprised many in the industry with a small store in Medfield and an urban store to join the Millennium Tower project at Downtown Crossing. And Market Basket? Here’s to hoping that 2014 provides a clearer path for the powerhouse local …
The biggest news about Delaware retail is the expansion of Christiana Mall in Newark, Del., and an equally ambitious redevelopment of The Colonnade at Christiana, which is adjacent to the mall. Everyone in the Mid-Atlantic knows that Delaware does not have retail sales tax, thus the driver of Christiana’s expansion and the new projects is simply shopping demand and a geographically dense population base that draws from more than 20 million people in nearby states including Pennsylvania, Maryland, New Jersey and even New York. It’s one thing to save $4 when you spend $50 but the money gets real when you can save $80 on a $1,000 shopping tab. (This example is based on 8 percent sales tax that you’d pay in Philadelphia, which is about 30 minutes from Wilmington and has more than 4 million people in its MSA). Christiana’s expansion to 1.1 million square feet and the adjacent 915,000-square-foot The Colonnade is made possible by construction improvements to the I-95 and Route 1 interchange that will give drivers and shoppers better access to the existing and refurbished retail centers. The Colonnade was previously called the Christiana Fashion Center and it is being redeveloped by Frank Acierno and his …
At the end of 2013, the Federal Reserve Bank of Philadelphia reported that year-to-date building permits rose by 17 percent in Pennsylvania, 36 percent in New Jersey, and 21 percent in Delaware as compared to the same 11 month period in 2012. Much of that increase was due to multifamily development. While not yet back to pre-recession levels, multifamily permitting has steadily increased since the third quarter of 2010 in the Philadelphia metro area. As of August, there were a total of 3,485 units approved for the previous 12 months, high enough to rank 25th in the nation for multifamily permit authorizations. In 2013, there were 1,183 multifamily units delivered in eight new development projects. Currently, there are nearly 4,800 units in 27 separate projects in various stages of construction and some 70 projects in the planning stages for a total of 12,740 additional units in the pipeline. Then there are proposed new developments that have been announced, but are not yet in the permitting process. These represent an additional 3,280 potential units scattered throughout the tri-state area in 15 projects. It is unlikely that all of these proposed projects will be constructed, but it is indicative of the optimism …