Market Reports

Despite Costs, Developers Pursue Rehab Opportunities for Detroit’s Historic Buildings

by Kristin Harlow July 30, 2020

By Steven Phillip Siegel Mies van der Rohe. Yamasaki. Kamper. Kahn. Portman. Gyllis. Some of the biggest architects in the world have a presence in Detroit. Motown’s exceptional confluence of architects and designers earned the city a UNESCO City of Design designation, the only city in the United States to receive the UN’s award for design excellence. However, beginning in the early 1970s, many of the city’s finest architectural works slowly sank under a weakening market amid tenant (and residential) flight to the suburbs. In the aftermath of the Great Recession, developers, led by Dan Gilbert’s Bedrock, began slowly redeveloping Detroit’s architectural gems. Historic properties like downtown’s David Stott Building or New Center’s Fisher Building saw massive capital investments in recent years. Yet, many city residents and tenants find it hard to comprehend why rents on these new projects are so much higher than the rest of the market. The narrative of Detroit’s architectural gems — and the financial Jenga it takes to make them succeed — tells the story of the city’s modern-day renaissance. “To us, it’s a passion project,” says Brett Yuhsaz, Bedrock’s director of construction, who has worked on some of the city’s most notable historic rehabs, …

July 30, 2020

Market Reports New Mexico Office Western Western Market Reports

Office Market Remains Steady in Albuquerque

by Jeff Shaw July 28, 2020

By Jordan Shipley, Associate Broker, Allen Sigmon Real Estate Group Lease rates are up and vacancy is down, two important things all landlords want to hear. For office landlords in New Mexico, these are two promising trends that have continued for the past few quarters to round out 2019. Average asking rates in Albuquerque came in at $18.76 per square foot, full service, according to Collier’s fourth-quarter 2019 Albuquerque office market report. Colliers also noted this was the first time average market rates have stayed above $18 per square foot for three consecutive quarters. This is currently the highest-recorded asking rate on record for the market. Office users that are relocating are shrinking their overall space with fewer hard-wall offices and more collaborative work areas. With this trend comes ability to use tenant improvement money in different ways than simply walling off an office for each employee. Some of this money can now be spent on amenities like coffee bars, modern finishes, and wellness features, such as showers for those who bike to work or exercise at lunch. Collaboration is also extending beyond the demising walls of the office space as mixed-use projects become more popular. Winrock Town Center and Uptown Tower, two …

July 28, 2020

California Market Reports Office Western Western Market Reports

L.A.’s Office Market Pauses after Robust Start to 2020

by Jeff Shaw July 22, 2020

By Chandler A. Larsen, Principal, Avison Young This year started off where 2019 finished for the Los Angeles office property sector – and that’s red hot! During the first two and a half months of the year, office space absorption was on pace to beat 2019. Rents were steadily increasing past $39.84 per square foot on an annual gross basis, record-high (psf) sales prices were recorded across product types and rising construction costs were complemented by a construction pipeline of more than 8 million square feet of office space. Suddenly, by mid-March, COVID-19 had taken hold in the U.S. and abruptly halted all the momentum the Los Angeles office sector had built up. However, the emergency interest rate cuts proposed by central banks across the globe have flooded markets with liquidity, helping to avoid contagion throughout the financial sector. This, in conjunction with the $170 billion in commercial investor relief included in the current stimulus package, points to the potential for a short downturn. Nevertheless, the jury is still out on just how long and how deep this slowdown will be as previously unimaginable unemployment numbers continue to be reported and economic forecasts are trending in the wrong direction. In …

July 22, 2020

Market Reports New Mexico Retail Western Western Market Reports

New Mexico Retail Pauses, But Should Return After COVID-19

by Jeff Shaw July 21, 2020

By George Chronis, Senior Advisor, SVN/Walt Arnold Commercial Brokerage New Mexico retail has been negatively impacted by the state’s stay-at-home order due to the coronavirus. The retail industry was looking pretty promising with robust sales and leasing activity in 2019 and at the beginning of 2020 – New Mexico included. I thought we were off to a good start with several developments near completion, several in progress and several more to begin in 2020. The full economic impact of shuttering our economy for two months or more won’t be known for quite some time. General retail, gyms, restaurants and soft good retailers have been hit the hardest. I have recently consulted with landlords, tenants and developers who have active projects throughout the state. Developers and landlords in the Permian Basin have been hit especially hard by a double whammy. This includes New Mexico’s stay-at-home order, which was compounded by lower global demand for crude oil and the price war between Saudi Arabia and Russia. We shall see who emerges and reopens for business when the stay-at-home order is lifted. There will be some opportunities to expand for those who still have strong financial positions after all this passes. Many landlords …

July 21, 2020

Industrial Market Reports Multifamily Retail Texas Texas Market Reports

What’s Up Next For San Antonio?

by Taylor Williams July 17, 2020

Interviews conducted by Taylor Williams During the 10-year expansionary cycle, San Antonio posted one of the highest rates of population growth in the country, bringing new development of luxury apartment communities, modernized e-commerce facilities, bustling entertainment destinations and a landmark Class A office building. While some short- and long-term pain from COVID-19 is inevitable, there is also some optimism on the horizon. Industrial broker Cody Woodland of NAI Partners, multifamily developer David Lynd of LYND Co. and retail investment sales specialists Kevin Catalani and Price Onken of CBRE share thoughts on what’s happened and what’s coming in the Alamo City. Texas Real Estate Business: In terms of your sector, what have you seen in the San Antonio market in response to COVID-19? Cody Woodland: Much like other industrial markets, we’ve seen many tenants put their requirements on hold, including some sizable leases near execution. Most of these resulted in short-term extensions that should resurface in 2021. We’ve also seen numerous deals with essential users requiring immediate short-term space for storage purposes due to fluctuations in supply chains, primarily in the grocery and medical product sectors. Even during the pandemic, some long-term leases have still transacted, such as Dollar General’s 285,000-square-foot …

July 17, 2020

Market Reports Oklahoma Retail Texas Texas Market Reports

Far North Oklahoma City Retail Market Hits Its Stride

by Taylor Williams July 14, 2020

By Stuart Graham, Senior Vice President, CBRE; Mark Inman, Senior Vice President, CBRE; and Kendra Roberts, Associate, CBRE The Oklahoma City retail market has had a growing and changing landscape over the past few years as the sector’s healthy fundamentals continue to draw both local and national investors. Although much of the growth has been focused on the downtown Oklahoma City area, we are beginning to see a new hotspot emerge in the Far North neighborhoods. High-quality schools and affordable housing in the Far North Oklahoma City submarket of Edmond, as well as in the surrounding neighborhoods, have been major draws for young families. Both the Deer Creek and Edmond School Districts rank among the top three school districts in the state and also enjoy high national rankings. As a result of these residential and educational features that are attracting younger households and driving population growth, the Far North Oklahoma City submarket has recently seen a significant uptick in both retail investment and development activity that better support this underserved and growing community. To illustrate this submarket’s rise, consider the fact that nearly 20 percent of the total volume of retail product currently under construction in the Oklahoma City area …

July 14, 2020

Market Reports Mixed-Use North Carolina Office Southeast Southeast Market Reports

Northwood Office is Adapting and Expanding 535-Acre Ballantyne Office Campus for a Post-COVID-19 World

by John Nelson July 13, 2020

As one of the largest owners and operators of office space in the Charlotte market, Northwood Office is focusing on what office users want — safety, quality, productivity, flexibility and a sense of community. The firm’s largest asset is Ballantyne, a 535-acre campus featuring 4.4 million square feet of Class A office space situated in the heart of a 2,000-acre community. Ballantyne is home to 17,000 employees and 300 companies. While the COVID-19 pandemic has shifted the landscape for office space, Ballantyne is well-positioned to deliver what employers need in the current environment. “The benefit of working close to home is more appealing than ever, and Ballantyne’s location near the Carolinas border and public transportation options make it accessible for everyone,” says John Barton, president of Northwood Office. “However, Ballantyne’s hallmark is its abundant open space. Always our differentiator, its value takes on a whole new level in a post-pandemic world.” Northwood Office’s priority is the safety and well-being of its customers and team members while also maintaining its buildings at the highest level. The company assembled a task force to prepare and adapt for a phased re-entry to office buildings. New operational procedures underway include ample signage instituting social …

July 13, 2020

Market Reports Multifamily Texas Texas Market Reports

McAllen Multifamily Market Shows Positive Rent Growth Amid COVID-19

by Taylor Williams July 10, 2020

By Brad Frisby, Associate, NAI Rio Grande Valley The McAllen-Edinburg-Mission MSA’s multifamily market has posted positive rent growth for the first half of 2020, despite the outbreak of COVID-19 causing nationwide job losses and impacting landlords’ ability to push rents during much of that time. The combined effect of a stimulus package for renters and pandemic legislation that bans evicting residents who cannot pay due to COVID-19-related job losses has largely kept occupancy rates steady throughout the first half of the year. Occupancy rates for Class B and C product rose to the mid-90s, but absorption at Class A properties has taken a small dip. As construction — and economic activity in general — resumes at a greater pace in the second half of the year, we expect new deliveries to come on line and bring the marketwide occupancy rate down slightly. As of May, the McAllen area had added about 500 new apartments to its supply, with an additional 700 or so set to be delivered by year’s end. The North McAllen, Edinburg and Weslaco submarkets will receive the bulk of new deliveries this year. Over half of the new units delivered will be through the Texas …

July 10, 2020

Healthcare Market Reports Midwest Midwest Market Reports

COVID-19 Interruptions Are Largely Short Term for Medical Office Sales

by Kristin Harlow July 9, 2020

By Mike Wilson, Principal, Avison Young As the commercial real estate industry shifts toward a new normal, there are several changes occurring in the medical office sector. This asset class has long been considered a safe haven, even in recessionary times, given its ties to the healthcare system and overall population growth. The onset of COVID-19 and the subsequent stay-at-home orders in many states have created challenges that also touch the medical office sector, although not nearly as deeply as other asset classes. One shift occurring is a varying level of activity among medical office tenants, depending upon whether their services are deemed essential or nonessential. Tenants in essential buildings, particularly those tied to large healthcare systems, are still seeing patient throughput activity as healthcare needs remain. Some elective surgery centers and outpatient testing facilities, however, have seen a temporary pause as medical professionals retrenched due to the state closures. Landlords in turn have had to manage rent relief requests from tenants. These changes are considered short-term and are not expected to have long-term effects on tenant activity or property investment levels. The medical office sector continues to draw the attention of a wide range of investors, due to its …

July 9, 2020

Market Reports Multifamily Texas Texas Market Reports

Texas Multifamily Owners, Investors Turn To Alternative Capital Sources

by Taylor Williams July 7, 2020

By Sam Greenblatt, CEO, Electra Capital Today, a growing number of risk-averse financial institutions are pulling back from the multifamily rental market, leaving owners and investors struggling to complete their transactions. Fortunately, however, private firms are stepping into the gap with alternative sources of debt and equity capital. As the COVID-19 pandemic disrupted the national economy this spring, banks tightened their standards on all types of loans, according to a recent Federal Reserve survey of senior loan officers. Nearly half the surveyed lenders reported that they had tightened standards on multifamily loans in the first quarter. That pullback can have a potentially crippling impact on multifamily transactions. Let’s say an investor seeking to purchase a $50 million multifamily asset has raised $12.5 million (25 percent) in equity with a bank loan due to provide $37.5 million (75 percent). But before the deal could close, the bank implements a tighter 60 percent loan-to-value (LTV) ratio limiting its senior financing to $30 million. Now, the investor or transaction sponsor needs to come up with an additional $7.5 million on short notice or the deal will fall apart. This is where alternative private capital firms can provide flexible, short-term financing solutions, including bridge …

July 7, 2020

Newer Posts

Older Posts