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 …
By Mark Russo, director of research, Newmark Knight Frank The industrial markets of Northern and Central New Jersey have held strong thus far in 2020 as heightened e-commerce activity has offset the disruption caused by COVID-19. Total e-commerce sales rose by 31.8 percent in the second quarter relative to that period in 2019, according to data from the U.S. Department of Commerce. While demand for retail and office space has been negatively impacted, steady rent growth and stable vacancy highlight the resilience of the industrial sector. Industrial tenants moving into new deliveries have helped generate 4.2 million square feet of positive net absorption year-to-date. Vacancy currently averages 4.3 percent, down from 4.5 percent a year ago. Meanwhile, the average asking rent grew by 2.1 percent over the past year to a record mark of $9.20 per square foot. Online Shopping Fuels Leasing Social distancing measures and store closures caused by the pandemic have accelerated the adoption of online shopping. This has led to increased demand for logistics and distribution space among e-commerce companies. In fact, e-commerce deals have accounted for 75 percent of industrial leasing activity in Northern and Central New Jersey since April, compared to a quarterly average of …
By Chris Bruzas, Berkadia While the COVID-19 pandemic has had a dramatic impact on the commercial real estate industry, bright spots have emerged across the multifamily landscape. Nationally, secondary and tertiary markets demonstrate resilience and strong performance, despite challenging circumstances. One of these bright spots is Indiana. Since the start of the year, Berkadia’s investment sales and mortgage banking teams have closed more than $498 million in combined sales and financing across the state. While Indiana has long been a solid market in the Midwest, in recent years it has emerged as particularly attractive to investors for a few key reasons. Available scale The ability to acquire scale is increasingly important to investors looking to break into new markets and MSAs. Immediate scale is attractive for several reasons. For investors, acquisition at scale enhances geographic and unit diversification at the outset. It also allows investors, specifically those new to the region, to maximize business efficiencies on expenses. If a new buyer can acquire 1,000 units in proximity, they can reduce the burden of staff, construction costs and travel costs, to name a few. Additionally, it helps with leasing. If a prospective tenant tours a property that doesn’t have floor plans …
By Tom Weitzel, managing director, JLL The Philadelphia office market at the moment is running in place, which is to say that there is certainly energy being expended, but it is going nowhere fast. Tenants and landlords alike are partnering with real estate experts to navigate this challenging time. However, while office users evaluate businesses and study workforces, the benefit of making a decision has not yet outweighed the downside of making a wrong decision, so most users are adopting a “wait-and-see” approach. Tenant Perspective Tenants are finding it challenging to make long-term decisions about their office spaces given the lack of clarity in the future. Business leaders and executives are tasked with considering factors such as health and safety, productivity, profitability and overall employee morale on a daily basis as they evaluate their physical office space usage during COVID-19. Throughout the region, executives continue to balance health and safety concerns with operational needs as they advance office re-entry plans. They are also assessing the current productivity of their employees compared to that at the beginning of the pandemic. Many companies that we have spoken with have cited declining productivity and creativity from their employees. At the same time, these …
By Marc Isdaner, senior managing director, principal, Colliers International; and Ian Richman, senior managing director, Colliers International Strong job and population growth in recent years have caused the Philadelphia/Southern New Jersey industrial market to continually rise on the radars of both investors and developers. As the nation battles COVID-19, we see demand for industrial space growing as more users look to service last-mile customers in densely populated areas. This market is no exception. With the right guidance and counseling, investors can achieve strong returns here, even as variables like user demand and land/construction costs continue to rise, bringing valuations and sales prices along with them. Projects Get Bigger We continue to see developers take down large tracts near major thoroughfares in this region, oftentimes building on speculative bases. Examples of such projects are Mansfield Logistics Park, a 960,000-square-foot, two-building spec development by Clarion Partners off Interstate 295 in Burlington County that is nearing completion; and The Cubes at East Greenwich, a two-building spec development located off I-295 in Gloucester County. The latter project is being developed in an area that was largely inactive until 2018, as land sites and established industrial parks such as Pureland were essential built out. Scout …
The Memphis industrial market was off to another record-setting year for the third straight time. Then, the Mike Tyson punch no one could have ever expected came: the shutdown of the entire country. Even after sheltering in place for months and nonessential businesses out of the office until further notice, our industrial market is holding firm. The Memphis industrial market holds over 285 million square feet of useable space and offers the basic tenets for distribution. Memphis International Airport is the second largest cargo airport in the world. Additionally, Memphis is home to 400 trucking companies; it is the third-busiest trucking corridor (Interstate 40 spans from East Coast to California); it is one of only four cities to be served by five long-haul Class 1 rail systems; it has the fourth largest inland port in the country; and it has the second largest stillwater port. Memphis is also home to the FedEx worldwide hub and also houses UPS and US Postal Service hubs. All these companies operate 24 hours per day, 365 days per year. Because of this, Memphis provides the most cost-effective distribution and logistics operations in the country. And in the midst of a worldwide pandemic and shelter-in-place …
By Brian Leonard and Mark Volkman Tides are changing throughout the U.S. as companies work to confront COVID-19 and its implications on the national supply chain. Changing consumer preferences are forcing businesses to reevaluate their current supply chain and diversify their sources of supply. Since COVID-19, retailers across the country have experienced a 54 percent increase in online sales. This shows the value shoppers place on convenience and accessibility — the only missing factor from online shopping is the immediacy of a physical store. As a result, 51 percent of global retailers now offer same-day shipping to available areas, and 65 percent plan to offer same-day delivery services within a year. These factors, combined with the expectations of a “next normal,” will require fulfillment centers to be positioned close to customers to ensure timely deliveries. And finding a well-equipped, centrally located space can be a challenge. Luckily for investors, the Cincinnati market is emerging as a destination for warehouse and fulfillment centers. Cincinnati is nationally recognized for its accessibility to major markets, talented workforce and plentiful intermodal properties. Because of these reasons, major retailers like Wayfair and Hayneedle are dominating the market, making larger footprints harder to come by. Here …