Economic health at the start of 2020 set a foundation for Orlando’s office market that remains in a good position despite headwinds caused by the global COVID-19 pandemic. Nationally, the United States saw its longest-running period of economic growth before non-essential business was paused. Even with the slowdown in tourism, Orlando continues to see an uptick in local economy-boosting sectors, including defense and technology. Additionally, an increasing number of companies and individuals in the Northeast have eyes on Florida to escape denser urban markets and high state and local taxes, which bodes well for the Central Florida region. Fundamentals stay firm The pandemic significantly curbed a lot of new office leasing activity in Orlando in 2020. However, rents have not experienced a measurable decline to date. As of the second quarter, the total average rental rate was $24.92 full-service. Landlords are generally being patient and are not lowering rents or offering above-market concessions when negotiating new deals. Asking rents will likely stay flat for the coming months until the broader economy kickstarts again or the anticipated new sublease space hits the market and compels landlords to be more competitive. Total net office absorption for the Orlando area posted a negative …
By Brandon Wappelhorst, Sansone Group In nearly every aspect of our personal and professional lives, 2020 could unequivocally be summarized as certainly uncertain. The rapid onset of the COVID-19 pandemic has taken its toll on the world and has caused significant disruption to everyday life. While likely further down the list of today’s topical issues, the overall effect of COVID-19 on the office market in St. Louis is still to be determined — but it will undoubtedly have an impact. Over the last few years, the commercial real estate market in St. Louis, much like the rest of the country, had been riding a wave of economic success. Demand for office space was high and the region was experiencing record-low vacancy rates, increasing rental rates, positive absorption, increased volume of office sale transactions and new buildings coming out of the ground. Construction of Edge@West, a 110,000-square-foot office building in Creve Coeur, began in late 2019 after a lease was signed with lead tenant SM Global. Breaking ground at less than 25 percent pre-leased was indicative of the strength of the office market at the time. Clayton, the strongest submarket in the St. Louis metro area, also saw the beginnings of …
By Jeff Forsberg, Principal, NAI Puget Sound Properties It has been interesting, to say the least, since our governor issued the stay-at-home order on March 23 and we all started contemplating a future where we’d never have to get out of our pajamas. Though our market’s industrial sector isn’t immune to disruptions, the immediate fallout from the COVID-19 pandemic is not quite as dire as some might have projected. The Seattle industrial market comprises about 223 million square feet. This essentially covers the area between the two major ports (Seattle and Tacoma) in our region. Bolstered by large lease transactions with PCC Logistics (400,000 square feet), Darigold (284,067 square feet), Scotts (245,185 square feet), Ikea (200,000 square feet), Infinity Global Express (203,505 square feet) and Filson (126,028 square feet), our market posted respectable second-quarter lease stats. The current vacancy rate hovers at 5.05 percent, which is great for any market but slightly above average on what we have seen here over the past 10 years. The average monthly shell rate has remained flat at $0.659 per square foot, but apart from a few subleases, we haven’t seen a dramatic reduction in rent. Driving most of these trends is the rising …
By Brian Tranetzki, Principal, Taylor Street Advisors Multifamily is staying strong despite COVID-19. That’s because this product type was coming off an extremely hot market at the end of 2019 and early 2020 before the pandemic hit. The Phoenix metro area remains one of the few markets nationally with positive rent growth due to the steady population increase. Now, just months away from 2021, the market is faced with many unknown factors, such as unemployment, election outcomes, continued COVID uncertainty and the risk of eliminating 1031 exchanges. In turn, buyer sentiment also remains intense with a flurry of activity on those very exchanges. Development is still robust in the valley, with significant increases in downtown Phoenix, downtown Tempe and Chandler/Gilbert. There are currently more than 15,000 units under construction in the region. The building sizes are getting larger, while individual units are getting smaller. Developers are focused on building Class A properties with an emphasis on higher-end amenities, pool areas and concierge services. The class type determines whether it’s a landlord or tenant market. Tenants have several options in the Class A rental space, particularly as new units are delivered, which makes this a tenant-friendly environment. Class A vacancy is …
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In Search of Relative Value in Orange County’s Apartment Sector
Orange County offers residents all the key elements of the American dream. Its virtues are numerous and faults few. Indeed, Moody’s Analytics ranks the quality of life in the OC 10th highest among the 378 U.S. metros it reports on, just a half-step behind leaders Santa Barbara and Santa Cruz. Orange County is a terrific place to live, but is it a good place to invest? Gauging by observed capitalization rate trends, one may conclude that county apartment properties are highly prized gems. Class A trophy properties trade to going-in yields in the 4.00 percent to 4.10 percent area, and Class B and C garden complexes are typically priced to yields in the mid-4s, all only 25 basis points or so behind Los Angeles and the San Francisco Bay Area comparisons. But judging from transaction velocity, one might draw a different conclusion. Only six Orange County multifamily properties of 50 units or more have changed hands since mid-year 2019, and not a single sale has closed since February. Even by the cautious norms of the moment, this stands out as a market in search of price discovery. Slow transaction velocity can be ascribed, in part, to the prevailing buy and …
By Scott Olson, Skogman Commercial Since starting a series of annual articles on Cedar Rapids in 2013 after the recovery from the historic floods of 2008 and 2016, I never anticipated the city would be facing an event in 2020 that would reach beyond those levels of flood impact. Now, the COVID-19 pandemic has given our city new challenges for this year and beyond. Hopefully this is a once-in-a-lifetime health event that, unlike the floods, has impacted nearly every city in the country in many ways. But there is a reason Cedar Rapids was named “All America City” in 2014. Here is why I make that statement. In February 2020, SmartAsset.com named Cedar Rapids the No. 2 “Most Recession-Resistant City in America.” Then as the pandemic spread, Business Insider named Cedar Rapids the No. 11 “Top American City to Live in After a Pandemic.” With the historic low interest rates created by the pandemic and a decade-low inventory of listed residential properties, Cedar Rapids was ranked by lendedu.com as the No. 34 city with the most affordable homes in the U.S. That report showed that 96 percent of our homes are affordable for the average household living in the city. …
Richmond has been considered a secondary market in the eyes of many national investors, and for good reason. Rental rates don’t compare to Washington D.C., New York City or other major primary markets. But a strong leasing market mixed with a large-scale population shift leads to one question: is now the time to start investing in the Richmond office market? Home to seven Fortune 500 companies, as well as fast-growing companies such as CoStar Group and Capital One, Richmond has made its mark as one of the top cities in the country when it comes to attracting recent college graduates. Offering affordable and diverse housing, amazing food and entertainment, close proximity to beaches and the nation’s capital with a high demand for skilled workers, Richmond is the perfect city for just about anyone. Hence, Richmond has seen a massive boom in its working-class population, which has led to lower vacancy rates, increased rents and a rise in new office developments. The revitalization of two major submarkets is also impacting the growth in millennial population. Scotts Addition and Manchester have both seen significant interest and investment from local and national developers. These submarkets are bringing the live-work-play feel to Richmond’s downtown …
By Christine Beechan, area vice president, Morgan Properties If there’s one certainty about the unusual year that is 2020, it’s that COVID-19 has significantly impacted every industry across the globe. For apartment owners and operators, we’ve entered uncharted territory in terms of changing renter demands, unconventional leasing methods and new operational procedures. Consequently, it’s especially important right now for apartment professionals to understand the complexities of the current state of the market and where it’s heading. As 2021 is fast approaching, here are three key trends we can expect to see in the Philadelphia multifamily market for the remainder of 2020 and into the new year. Demand Remains Stable When the pandemic initially hit, we noticed a decrease in leasing because Pennsylvania was under strict orders to shelter-in-place. Because of this uncertainty, people wanted to see how the pandemic would shake out and ultimately decided to stay put, affecting markets across the nation. However, as those restrictions were lifted and the economy started to stabilize, we noticed people felt more comfortable moving into new units, which is typical during the summer season prior to school commencing. Unlike most cities, both urban and suburban parts of Philadelphia have seen accelerated growth …
By Taylor Williams The sudden merging of a healthy pipeline of multifamily product in Texas with a global pandemic that has caused a drastic increase in working from home is forcing apartment builders and designers to get exceedingly creative with all facets of their projects. Unit interiors and common areas of apartment buildings must now provide makeshift workspaces for adults across a wide range of industries, as well as for the preexisting members of the gig economy and for children who have been forced to engage in virtual learning. Working from home is just one of many lifestyle changes that COVID-19 has brought about in the last six months. Multifamily developers and architects are tasked with trying to judge the staying power of these changes and to find balances between implementing features that promote safety and wellness without busting their budgets. “We know we have to adapt to COVID-19 and be proactive,” says Yewande Fapohunda, senior vice president at High Street Residential, the residential subsidiary of Trammell Crow Co. “Lifestyles and behaviors are rapidly changing, and though we don’t know how long they’ll last, we have to think short- and long-term with our reactions.” It’s a tricky process to say …
By Marty Dougherty, City of Sioux City Downtown Sioux City, Iowa is currently experiencing growth and transformation on an unprecedented scale. This emerging and vibrant place is not only celebrating its rich and colorful history with multiple historic property renovations, but has made strides to re-invent itself and take the downtown to new levels. These efforts include the growth of new residential options, an increasing number of cultural attractions and quality-of-life amenities, new entry corridors and a commitment to an extraordinary and ever-evolving riverfront park. This energy and economic activity offers a range of development opportunities, including residential, office, retail and entertainment. While COVID-19 has had some minor impacts, all of the ongoing downtown construction projects have been able to stay on track and are being completed on schedule, as of the writing of this article. Reinvestment district Over $150 million in public and private capital is currently being invested in a 25-acre downtown reinvestment district. This entertainment, cultural and residential district has been designed to extend from the downtown’s entryway directly into the heart of downtown. The district features four signature projects, with a total of 10 public or private buildings that will be fully completed in 2020. These …