South Jersey has room to grow, with several proposed ground-up centers taking center stage in the seven-county region as developers capitalize on residential growth tied to the market’s relative affordability. Meanwhile, “redevelopment” is the operative word for the 14 counties in the state’s more densely populated north and central regions, where industrial sites are being converted into mixed-use centers. Fueled by big-box absorption, the vacancy rate for open-air and freestanding retail in the northern counties inched down to 8.1 percent in mid-2013 from 8.2 percent a year ago. Central Jersey’s vacancies rose to 9.8 percent from 9.1 percent a year earlier, driven by small-shop closures. In the south, the average is 9 percent. Rents in the north crept up 0.1 percent in the first three quarters of 2013, with a median of $20 to $26 per square foot in top markets; central counties crept up 0.3 percent to a median of $15.50 to $16. South Jersey rents increased just 0.1 percent in the first two quarters of 2013, with a median of $13. For regional malls, one continuing trend is the move by owners to take interior spaces and turn them outward for more of a lifestyle feel. This began …
Northeast Market Reports
If only the economy would cooperate, there are signs of improvement in the downtown and suburban Hartford office market. Modest expansion and non-traditional absorption of office buildings is beginning to create shortages of large blocks of office space in certain areas. Places like West Hartford Center, Glastonbury’s Somerset Square area, Corporate Ridge in Rocky Hill, downtown Middletown and downtown Hartford have all seen their best Class A buildings’ occupancy levels grow. Vacancy is being concentrated in buildings that suffer from either age-related challenges, capital issues or buildings that are in an ownership transition. Unfortunately, although the governor and legislature have taken some positive steps to create economic activity, the state is still mired in a high-tax, high-cost model that is eroding or tempering growth from many of our largest employers and keeping new businesses from entering the market. In spite of that self-inflicted condition, here are the trends that are currently shaping the current office market in Hartford County: Non-traditional absorption: real estate demand for educational, multi-family residential, medical and government facilities is booming compared to corporate office needs. Offices buildings are being taken out of inventory for conversions to schools, apartments, medical offices and state offices. While some of …
The retail industry has piggybacked onto the high tech world by recognizing the impact that the high tech industry is having on the demographics and income levels of the entire Upstate New York region. Recent announcements of the return of Lord & Taylor to Crossgates Mall in Albany, and the positioning of UNIQLO at the Palisades Mall in Nyack, N.Y., are proving that the impact of the high-tech industry is now being felt throughout the entire upstate region. The addition of both of these retailers to the mix in the Tech Valley corridor of Upstate New York (from Nyack to Saratoga Springs, N.Y.) bodes well for the region, and shows the world that the growth rate of young, tech-savvy professionals will become one of the strong foundations for retailers well into the future. The recent addition of these two dynamic retailers into the Hudson Valley/Tech Valley regions is evidence of their understanding of the impact of the high technology industries located here. The higher paying, clean-tech employment base, focused on a younger work force, points directly to these two retailers’ “sweet spot.” UNIQLO’s format is very fashion forward with a very high level of quality at their specific price point. …
Performance prospects for the Philadelphia apartment sector remain positive. At mid-year, vacancy was in the low five percent range despite only modest job growth in the first two quarters. Since then, a steady flow of residents moving into apartments has enabled owners to reduce or maintain vacancy and improve asset values. By the end of the year, rental property completions will have risen after several years of limited construction. The current upswing in development will minimally affect market-wide vacancy and rents, and the impact of the new units will be contained to local areas. In Center City, for example, minor vacancy swings and more frequent concession use will occur as new projects are leased up. Generally, strong conditions in the market are encouraging developers and building will progress at a steady pace in the next two years. Nonetheless, the new construction cycle hardly looks forbidding, as the units permitted over the past year would expand multifamily stock only 1.1 percent if all those projects were built. Year to date, 879 new rental units have been placed in service in Philadelphia and it looks like developers will complete 2,600 apartments in 2013, which is up 1,238 units over last year, but …
While much of the suburbs, as well as pockets in Boston and Cambridge, continue to have a high inventory of office space, rents keep rising as vacancy is dropping in the area’s hottest submarkets — Boston’s Back Bay and East and Mid-Cambridge. Class A vacancy in the Back Bay now averages 6 percent while it’s even lower for Class A space in Mid-Cambridge and East Cambridge (1 percent in Kendall Square and 1.5 percent in Central Square). Average rents for Class A office space in the Back Bay are over $57 per square foot and almost $78 per square foot for high-rise space. In Cambridge, average Class A office and lab space rents are in the high $50s. Other Boston Trends • With demand increasing in the Seaport and even the low-rise tower space, many tenants from Cambridge are looking in other submarkets. In fact, Downtown Crossing has become the new Seaport, and North Station is seeing an uptick of activity as well. Average Class A rents in the Seaport are up to $52 per square foot, with much better value available in Downtown Crossing and North Station, where rents are in the mid-$30 range per square foot. • Demand …
It's been quite a turbulent ride; however, recovery is underway. Although retail inventory in Eastern Massachusetts/Greater Boston showed only slight gains, the decline in vacancy more than made up for it. At year-end 2012, total retail inventory totaled 189.5 million square feet. The amount of retail space in the region has increased 13.1 percent during the past 10 years. However, the recession took a toll on new development, and we’ve seen only a slight gain of 0.1 percent in the past 24 months. This slowdown has benefited the retail environment by increasing the demand for existing space. Approximately 2 million square feet of unoccupied space was filled during the year, which brought the vacancy rate to 7.8 percent from 8.9 percent a year ago — the largest drop in more than a decade. As a result, the year ended with net absorption totaling 2.05 million square feet. There wasn’t much movement among the ten largest communities in terms of retail space, although Braintree replaced Leominster at number 10. Boston has the largest amount of retail space, of course, followed by Cambridge. Natick, Brockton, and Danvers complete the list of the top five communities in terms of total retail square footage. …
Boston's waterfront redevelopment is generating thousands of jobs and facilitating growth across several employment sectors. The construction industry, in particular, has benefited as workers build thousands of residential units along the waterfront. Pier 4, a mixed-use project located in the Seaport District, is underway and will consist of three buildings to contain apartments, ground-level retail, condos, and a hotel or office space. Additionally, developers are moving forward with plans to build two 22-story towers in the Seaport Square mixed-use development, adding 800 apartments and 300,000 square feet of retail and entertainment space. This would be the first major project at the 23-acre site, considered the key to connecting the surrounding Fort Point, Fan Pier, Pier 4 and Waterside Place developments into a 24/7 urban environment. The developments are successfully transforming the area from sizable parking lots to a center that will draw employers and young professionals seeking a live-work-play lifestyle. In addition, many builders are acquiring older assets in prime areas of Boston and deploying capital in order to increase rents or convert to condos as empty-nesters and young adults seek more affordable ownership opportunities in affluent neighborhoods. Developers in search of conversion opportunities are targeting larger units with nice …
Anecdotally, by activity and by the numbers, the suburban Boston industrial market has definitely strengthened. If positive net absorption trends continue through the balance of the year, 2013 could end in territory that we have not seen since before the Great Recession. The momentum in the market has changed significantly in two years. For example, two years ago our firm was hired to sell a 53,000-square-foot single-story industrial building in Woburn for a third-generation plastics manufacturing company that was growing and wanted to buy a larger facility in the region. The company concurrently asked us to look for a larger building for them to buy. However, before putting an alternative building under contract, they would need to sell their Woburn property. In 2011, we did not have much activity from prospective buyers interested in our client’s property yet there were a number of viable purchase options available to them. Fast forward to the present, and we have multiple, highly qualified companies interested in buying their Woburn building — but now there is nothing to buy that meets our client’s criteria for size, quality and location. As a result, we have been forced to switch our acquisition strategy to buying land …
New York City continues to make economic progress. The city’s workforce grew by 78,900 jobs over the 12 months ending April 2013. As a consequence, the unemployment rate declined to 7.7 percent in April compared to 8.8 percent a year ago. Reflecting continued employment growth, the office market was quite active across Manhattan, as a wide range of tenants signed leases during the first quarter. Tenant volume exceeded the previous quarter activity by 38 percent and was more than twice that of a year ago. Availability rates, however, remained relatively unchanged in Midtown North and Downtown and increased in Midtown South. Overall asking rents declined in Midtown North, but rose in Midtown South and Downtown. A number of tenants are viewing their space needs differently than in the past. Collaborative working spaces and “green” are de rigueur; oversized workspaces are not. The recent slow absorption is the result of a combination of tenants frequently relocating or renewing at the same or reduced size and the return of numerous large blocks of space to the market. Manhattan is blessed with the ability to continually reinvent itself. A wide range of exciting changes are in various stages of development that will alter …
As a global player, New York City enjoys top-shelf retail advantages that continue to support the market as they always have — by keeping one foot on the gas pedal and one eye on the rearview mirror, as the recessionary cycle fades further out of view. From an economic perspective, New York City is recovering by leaps and bounds, posting 1.5 percent year-over-year growth between February 2012 and February 2013, and a liberal 4.3 percent rise in the professional and businesses services sector that includes 35,000 new jobs. Add to that the overall uptick in the global economy (read: consumer confidence) and the market’s inherent strength as an international tourist destination, and all bets are on New York to remain one of the tightest retail markets in the country for the next few years. New York City boasted an enviable 2.2 percent vacancy rate for all types of retail at the end of first quarter 2013 — an impressive figure when compared to the average U.S. first quarter vacancy rate of 6.8 percent. Quoted rents in New York’s five boroughs also rebounded 12.7 percent year-over-year to $50.90 per square foot on average. This is about three times higher than the …