In Providence, R.I., the the Class A office market has stabilized. GTECH Center has been successful in leasing up just about all of its available space to four or five tenants. Consequently, The GTECH Building sold for more than $50 million prior to the end of 2012. In addition, the new Blue Cross tower was successful in leasing 10,000 square feet of available space with plenty of continued interest for additional floors from prospects. Also, Bank of America’s move from its former headquarters at 111 Westminster into space located in 100 Westminster and One Financial Plaza has further helped push vacancy rates down for Class A office space. The current vacancy rate for this product is less than 9 percent in the Capital City. Consequently, this activity has pushed rental rates for Class A space back over the $30 per square foot mark on new deals. High Rock Development, which owns 111 Westminster (the former Bank of America building), is currently lobbying the state for tax credits to redevelop the building into apartments. It will be interesting to see, since the 38 Studios collapse, how far the state and city are willing to get involved — or if the building …
Northeast Market Reports
Improvement in the city's employment picture is adding fuel to the fire of an already heated multifamily market. As we enter the summer, the vital signs of continued improvement in apartment operations — rising market rents and lower vacancy — are in place. Investors’ attraction to the relative stability of this market is growing. This is evident as overseas capital and a greater number of private investors join apartment REITs and private equity players, increasing the competition for market listings and compressing cap rates in their wake. On the employment side, the financial sector has yet to rebuild headcounts to the pre-recession level. The loss of this traditional payroll leader during economic expansion has been replaced with the technology and business services’ broad job growth throughout the metro. These sectors have emerged as the new employment leaders, and the expansions of Google, Microsoft, Facebook and others are having a positive impact not only for the apartment market but also for allied employment sectors generating additional renter demand. Additionally, New York City’s emergence as a venture capital powerhouse, closely trailing Silicon Valley and now ahead of Boston, supports additional demand throughout the market. With sound apartment operations in place, investor competition …
Positive demographic trends, low interest rates and Boston’s stable economy inspired a surge of investments in the New England multifamily market. Last year, multifamily transaction volume neared $1.2 billion across the region, roughly 70 percent of the $1.6 billion peak we experienced in 2007. Transaction volume has increased every year since 2008, fueling competition for product and driving down cap rates. Investors pursuing deals in Greater Boston’s inner ring are accustomed to cap rates in the low 4s and sometimes below. While low cap rates have been great for sellers, they are causing some investors to widen their investment parameters. Many groups are finding Boston’s economic momentum resonates beyond the 128 beltway, allowing for rental increases and limited vacancies previously unrealized. ARA has tracked sales from Rhode Island to New Hampshire and has seen an influx of foreign equity, mainly from Asia, the Middle East and Australia. This trend represents a change from the last cycle when Europeans, mostly Germany and Ireland, were the largest foreign capital source in the region. In recent years, the majority of investments targeted by these foreign players have been in the city of Boston and the immediate suburbs; however, ARA has tracked recent sales …
The last quarter of 2012 indicated signs of overall market improvement including increased activity in the office sector, according to most New Castle County owners and leasing brokers. Most professionals anticipated a good start to 2013 based on this performance. Although there are a few bright spots, early reports for 2013 are not yet meeting the expectations that stemmed from the continuing improvement seen last year. It seems most activity so far this year represents smaller deals, which are not resulting in positive absorption. Most tenants are moving to take advantage of the opportunity to upgrade or resize their space. One favorable aspect of the market has been demand for medical office space. A new four-building medical office project that was started last year at Becks Woods on Route 40 in Bear, Del., is nearly fully leased or sold with the last building coming out of ground a few weeks ago. Additional medical projects are planned on Churchman’s Road near Christiana Hospital and on Lancaster Pike at Little Falls although groundbreaking has not yet occurred on either site. Christiana Hospital is nearing completion of its new Emergency Center at Route 1 in Middletown, Del., and we expect there will be …
From a macro perspective, the Northern New Jersey office market has remained stagnant and continues to tread water. In 2012, corporations with capital stayed on the sidelines. The overall availability rate hovered around 21 percent with an average asking rent of $24.29 per square foot at the close of the fourth quarter, and those numbers were not expected to change much in the first quarter of this year. The few recent significant leasing transactions were not enough to move the occupancy needle. The biggest deals were Biomet Bone & Spine Healing Technologies’ lease of 102,224 square feet at 399 Jefferson Road in Parsippany; EMC Corp.’s lease of 81,700 square feet at 184 Liberty Corner Road in Warren; and Tower Insurance Co.’s 76,892-square-foot lease at Harborside Financial Center II in the Jersey City Hudson Waterfront project. The Tower Insurance lease was a boost to the Hudson Waterfront market. For a long time, the waterfront was one of the few bright spots in the state with even a brief period of rent growth. However, in 2012 a large amount of shadow space came on the market and led to roughly 500,000 square feet of negative absorption. With the election year over, it …
In the words of Benjamin Franklin, New Jersey’s multifamily housing investment market is “a barrel tapped at both ends,” with fluid trading activity extending from the Hudson River’s Gold Coast to the shores of the Delaware River. Statewide, multifamily properties continue their reign as one of the healthiest investments. Low vacancy rates, convenience to mass transit and a high concentration of properties, particularly in Central and Northern New Jersey, continue to feed the appetite of investors who are hungry for virtually any building class. Thanks to the state’s choice location along the Boston/New York City/Philadelphia/Washington, D.C., corridor, New Jersey has historically been, and continues to be, one of the strongest and most desirable markets for multifamily investments. From urban walk-up buildings to suburban garden-style apartment complexes, the Garden State boasts some of the best multifamily housing stock in the nation. This is further bolstered by a strong average occupancy rate of more than 95 percent and durable rent growth. Both of these conditions are fueled by the enduring effects of the residential housing crisis as well as people “priced out” of cities like Philadelphia and Manhattan, who are seeking a more affordable living option. These migratory tenants are flocking to …
The rising demand for bulk warehouse space among e-commerce users is driving the New Jersey industrial market. After climbing to 14.1 percent during the third quarter of 2010, the vacancy rate for warehouse space for the 10-county region in Northern and Central New Jersey has declined to 12.5 percent during the first quarter of 2013. More than 7 million square feet of inventory has been absorbed since the middle of 2011. Increased demand resulted in rising average asking rents during 2012, the first year of steady increases since 2007. Nearly 90 percent of the net absorption occurred in Central New Jersey, more specifically along the New Jersey Turnpike from exits 7A to 8A, where vacancy rates ascended to as high as 22.5 percent during the third quarter of 2009 and currently stand at 14.4 percent. Adding to the momentum of activity in Central New Jersey is Amazon’s commitment to open two large fulfillment centers here, demonstrating the significant impact that e-commerce is having on the state’s commercial real estate market. The first of these two warehouses, which is slated to open in 2014 in Robbinsville (Mercer County), will generate an estimated 700 jobs and more than $22 million in tax …
What comes to mind when you say the name “Hoboken” today? A thriving downtown area filled with young, hip residents, high-class retail and 24/7 traffic that rivals areas of downtown Brooklyn. However, that wasn’t the case 10 years ago. National and regional tenants seeking space would first — and in most cases only — look to the suburban centers that were the heart of New Jersey life. Downtown retail areas were seen as lunch-driven areas boasting only five-day foot traffic and not enough parking. Now mainstays like Starbucks, Chipotle and Panera Bread have all made a home for themselves in Hoboken. What has brought about this change — which has seen Hoboken thrive but also brought about a new era of downtown retail that can be seen in the emerging neighborhoods of Newark and Jersey City? A prime factor in these areas’ rise to prominence has been the massive swell of development, not only in office towers but in entertainment centers and residential hubs. The opening of the Prudential Center in Newark four years ago revitalized the area with more than 200 events each year, including home games for the New Jersey Devils. The project was truly the first …
As we come off the high of the holiday season and take a look at how New York retail fared throughout the year, we can expel a deep sigh of relief knowing that the Big Apple continued to recover faster than the national average and has a bright outlook for 2013. While New York City’s retail recovery has been slow and steady, the year closed on a positive note with total retail vacancy rates hovering around two percent. New York City continues to be a one of the most vibrant and growing retail markets in the world as the local economy has seen steady gains in private sector hiring that outweigh cuts in government employment. While Hurricane Sandy dented the recovery, the city rebounded almost immediately with Black Friday weekend sales exceeding expectations. New York’s resiliency and continued low unemployment bodes well for the Big Apple’s continued success. Big Apple Big Deals The New York retail market saw some notable large deals in 2012 including H&M’s new 57,000-square-foot lease and Cartier’s 50,000-square-foot renewal on Fifth Avenue. This coupled with the unprecedented 200,000 square feet available on Fifth Avenue solidifies the opportunity for a successful 2013. While the market has seen …
Blessed by a favorable location and high quality of life standards, the Danbury, Conn., retail market has grown in the recent 18 months and should continue to expand in 2013. Key among growth indicators are: * Whole Foods is opening its first store in the Danbury market in 2013. * Panera Bread and Petco recently opened second stores in this market. * Toll Brothers is under way with a new 1,200-home community in anticipation of regional population growth and changing demographics. * Danbury has the lowest unemployment rate in the state (7.1 percent seasonally unadjusted as of January 2013, according to the Bureau of Labor Statistics). Location and Demographics Danbury is located in northern Fairfield County on the border of New York State and is approximately 50 miles north of New York City. (The Metro train to NYC takes just over an hour.) The population is approximately 80,000. Danbury serves Fairfield and Litchfield County in Connecticut as well as Westchester, Putnam and Dutchess counties in New York. Stamford, Conn.; White Plains, N.Y.; and Hartford, Conn., are each about an hour away. The relatively short commutes to these larger urban hubs entice real estate occupiers for office space and retail tenants …