Market Reports

Metro Milwaukee Industrial Market Poised to Remain Strong

by Kristin Harlow May 14, 2020

The southeastern Wisconsin industrial real estate market had a banner year in 2019 and remains strong. According to Catalyst, the industrial market in southeastern Wisconsin had a vacancy rate of approximately 4 percent at the end of 2019 and that rate has moved down slightly to 3.9 percent during the first quarter of 2020. This rate is well below the historical vacancy rate in southeastern Wisconsin, which averages between 7 and 9 percent. Several submarkets are significantly lower than the southeastern Wisconsin average: Racine, where the massive Foxconn project is underway, has a 3.8 percent vacancy rate; the large Waukesha submarket, which has nearly 83 million square feet of inventory, has a vacancy rate of 1.9 percent; and the Sheboygan submarket, which has about 27 million square feet of industrial space, has an astonishing 0.1 percent vacancy rate. These extraordinarily low vacancy rates suggest that demand for industrial space in southeastern Wisconsin remains very robust and that, particularly in certain submarkets, supply has not been able to keep up with demand. While lease rates have remained fairly steady throughout the last year, upward pressure on such rates continues to build. Nevertheless, there are some signs of the market taking a …

May 14, 2020

California Market Reports Office Western Western Market Reports

The Changing Face of the Inland Empire Office Market

by Jeff Shaw May 11, 2020

An hour east of downtown Los Angeles, the Inland Empire office market contains about 25 million square feet of office product in San Bernardino and Riverside counties. This market has undergone tremendous growth over 10 years, and a more diverse stable of occupiers has moved in since the area was decimated by the housing crisis of 2007. At times overlooked, the Inland Empire’s office market is more than just the low-cost alternative to Southern California’s LA and Orange counties. With a sector vacancy rate of just 9 percent (lower than neighboring submarkets) the Inland Empire’s economic engine is supporting one of the fastest job growth areas in the country over the past decade, boasting an unemployment rate of only 3.6 percent. The fourth quarter of 2019 witnessed the first speculative general office building development in more than eight years. Average asking rates have also increased to $2.05 per square foot, the highest level since 2009. With sustained positive absorption and continued rising rental rates, this area has shifted to become a landlord market over the past couple years and, with this, concessions will continue to evaporate. Education and health services, government, and professional and business services have all seen recent …

May 11, 2020

Kansas Market Reports Midwest Midwest Market Reports Mixed-Use

Wichita’s Downtown Revitalization Serves as Catalyst for New Projects

by Kristin Harlow May 7, 2020

Wichita has been experiencing a strong downtown revitalization that has brought construction of new and redeveloped office, retail and mixed-use projects throughout its urban core over the past few years. Two years ago, companies began relocating downtown as shifting workplace demographics incorporated close proximity, “live, work, play” amenities in order to grow their businesses as well as attract and retain talent. Today’s businesses are seeking modern Class A finishes within Wichita’s center where these types of environments exist or will be available in the near future as developments continue. Downtown revitalization In the early 2000s, downtown Wichita lost many of its office users to more suburban office developments on the east and west edges of the city, leaving high vacancy rates and rendering many downtown office buildings functionally obsolete. Now this trend has reversed after the Wichita Downtown Development Corp. put together a comprehensive master plan to revitalize the urban core. Developers purchased key catalytic sites and repurposed them into economic drivers for downtown as shifting demographics brought about the need for businesses to attract and retain top talent with both onsite and walkable amenities. As new office projects downtown are beginning construction and being completed, the idea of relocating …

May 7, 2020

Industrial Market Reports Nevada Western Western Market Reports

Reno’s Industrial Market Remains In Demand

by Jeff Shaw May 6, 2020

Reno’s industrial real estate market has kept a jaw-dropping pace over the winter months. The fourth quarter of 2019 saw record-setting gross absorption numbers for any quarter at 3.34 million square feet with 10 transactions above 100,000 square feet. This amount of activity so late in 2019 typically suggests a slow start to the new year. However, activity seems to have picked up steam, as many users are considering new growth in Reno/Sparks. As a whole, 2019 was a fruitful year for industrial real estate. The market continues to draw attention for its West Coast distribution fundamentals and pro-business environment from tenants, developers and investors. Developers constructed 3.5 million square feet of industrial product, split almost equally between speculative and build-to-suit construction. About 17 million square feet of our 90-million-square-foot market changed hands at market-low cap rates to industrial investment groups. This included many groups that were new to the market, as well as several existing groups doubling down in Northern Nevada. Inventory remains the primary concern for tenants and developers as we come into 2020. With some minor caveats, new construction is getting absorbed as quickly as it is brought to the market. Given the strong start to 2020, …

May 6, 2020

Georgia Market Reports Restaurant Retail Southeast Southeast Market Reports

Landlords, Retailers in Metro Atlanta Impacted by COVID-19 Seek Middle Ground in Lease Negotiations

by John Nelson May 6, 2020

The financial impact the COVID-19 economic shutdown is having on tenants and landlords is a difficult mix of immediate drastic reduction (or elimination) of revenue, along with little or no ability to forecast when the end will come. This combination of severity and unclear duration makes finding potential win-win compromises a real challenge for tenants and landlords in the metro Atlanta area. While deal pipelines across the industry have ground to a halt, companies, teams and individuals are using this sudden influx of time as an opportunity to take up important tasks that, while not producing revenue, will set up future opportunities. They are catching up on conversations, expanding their networks, engaging with social media, doing industry research, continuing their professional educations and learning new skills. Landlords, on the other hand, are having to take this challenge head on and are testing the waters with solutions like pause agreements, rent deferrals (in many cases, equivalent term is added at the end of these leases) and other creative ways to provide relief to their tenants while not endangering their own interests or those of their lenders. There’s no certainty that these issues won’t have to be addressed again, periodically, as the …

May 6, 2020

New Jersey Northeast Northeast Market Reports Office

Office Developers Renovate, Repurpose Outdated Assets in Northern New Jersey

by Alex Patton April 28, 2020

From start-ups seeking flex space to major corporations that are expanding or relocating an entire office, finding a modern office space in the northern New Jersey commercial market is always a challenge. Barbara Gross, Sheldon Gross Realty Overall, it’s a very mature environment, with many older structures and corporate parks lining the highways, and with limited new development. As an example of the resultant complexities, let’s look back to the 1980s and ’90s, when the Route 280 corridor (primarily in western Essex County) was bustling. Office parks had few vacancies, and rental rates were among the highest in the state. Until relatively recently, only a few companies owned the majority of these buildings, thereby “controlling” who went where and at what rental rate. But over time, these owners have been selling the individual buildings in parks to a variety of new owners, resulting in a more competitive marketplace. It’s refreshing to see the new owners investing in renovations and adding new amenities. However, responding to a younger generation coming to or returning home to New Jersey and demanding greener, 24/7 communities, developers are demolishing some of those older office buildings and parks. Projects are before planning boards now that would …

April 28, 2020

Market Reports Retail Texas Texas Market Reports

Texas Retail Landscape Evolves Before Our Eyes

by Taylor Williams April 28, 2020

It’s no question that 2020 has become a turning point in history. Within a few short weeks, what was a booming time in our industry has changed in the blink of an eye. Although the good times may not last forever, it’s safe to say many didn’t expect a sudden change so soon — and on such a large scale. While health remains the nation’s top priority, COVID-19 has taken a toll in some shape or form on plenty of industries in the weeks following its arrival in the United States, with retail unquestionably being one of the hardest hit. However, innovative players are still finding opportunities. Plenty of retailers were already adapting to a changing market defined by e-commerce, and their improvements were unknowingly preparing them for a world under COVID-19 restrictions and limitations. Dinner at a Tap Food delivery apps have become saving graces since COVID-19 changed the daily lives of Americans. Delivery apps such as DoorDash, Uber Eats and Favor are allowing customers who may not want or be able to leave their homes to support their favorite restaurants. While one benefit of these apps would usually be supporting increased sales and avoiding standing in line, these …

April 28, 2020

Industrial Market Reports Texas Texas Market Reports

Texas Industrial Owners Adopt Short-Term Solutions for COVID-19

by Taylor Williams April 24, 2020

In response to the outbreak of COVID-19, the disease caused by the novel coronavirus, industrial landlords in Dallas-Fort Worth (DFW) are demonstrating greater flexibility on short-term lease structures in order to keep deals moving forward. With most of the nation sheltering in place to stem the spread of the virus, e-commerce activity is accelerating, leading to greater demand for distribution and logistics services. In addition, supply chain operators that service essential industries — such as grocery, healthcare, construction and infrastructure — are working overtime to store and ship the necessary product to end users. In addition, many of these suppliers are also carrying more inventory. This is because are at interest rates are at historic lows, making it cheaper to stockpile goods and equipment, and because the global healthcare crisis has caused demand for certain foods, household products and consumer goods to skyrocket. All of this activity translates to short-term disruption in industrial real estate. Some deals are on hold, and the market is now seeing more unforeseen requirements from firms that need additional space for inventory storage, as well as from distribution and logistics users that are hiring more workers and shipping more product. “Several larger distribution companies are still …

April 24, 2020

Market Reports Midwest Midwest Market Reports Nebraska Retail

Occupancy, Sales Per Square Foot Support Omaha Retail Scene

by Kristin Harlow April 23, 2020

Over the past few decades, Omaha has grown in both size and reputation as a Midwest gem that offers affordable housing, a solid job market, excellent schools and a central location that makes both business and leisure travel a relative breeze. As our city has grown, our lifestyle has adapted, which has had an interesting impact on commercial real estate. While some developments are flourishing, others have been struggling. Overall, retail growth in Omaha is slow, but occupancy is robust in Class A-located centers. The main corridors in west Omaha (Center, Dodge and Maple streets) have strong occupancy and rents now pushing $40 per square foot NNN for new construction. Restaurants, medical/retail (or “medtail”) and fitness have become the main drivers of recent retail space use. “Treasure hunt” discount concepts such as Ross, Marshalls, TJ Maxx, Burlington and Five Below have all opened multiple locations in the past 24 months in a wide range of demographic areas of Omaha. Mall activity Nationally, the traditional shopping mall concept has been plagued by big-name store closures as consumers continue to turn to online shopping. Locally, some traditional malls are faring better than others. Westroads, which opened in 1968, remains strong in both …

April 23, 2020

Market Reports New Jersey Northeast Northeast Market Reports Office

Southern New Jersey Epitomizes Consistency of the Suburban Office Market

by Alex Patton April 21, 2020

As an adjunct of the greater Philadelphia market, but with a population that supports its own industry, Southern New Jersey is the archetype of the suburban office market. While throughout the country there has been a trend of firms migrating back to urban centers, Southern New Jersey has held its own against its metropolitan neighbor. In some instances, this area has outperformed average suburban office market metrics. Rebecca Ting, NAI Mertz For example, the national vacancy rate for suburban office markets stood at 22.1 percent at the end of 2019. Midway through the first quarter of 2020, the vacancy rate in Southern New Jersey’s core of Burlington, Camden and Gloucester Counties stands at 8.7 percent. That rate represents a slight increase from year-end 2019, but is consistent with the 8.5 percent median rate for the market over the past four years. Market rents have been on a steady ascent since mid-2016 and now stand at $21.30 per square foot. The two primary submarkets of Southern New Jersey — Cherry Hill and Marlton–Moorestown–Mount Laurel (3M) — are both performing well and are approaching an equilibrium on the metrics of vacancy rate and market rent. Julie Kronfield, NAI Mertz Office space in …

April 21, 2020

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