Market Reports

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

Market Reports Office Texas Texas Market Reports

First Takes: Texas Office Markets React To COVID-19

by Taylor Williams April 21, 2020

It’s still too early to pinpoint how long and how severe the disruption caused by the outbreak of COVID-19, the disease caused by the novel coronavirus, will be to the major office markets of Texas. But brokers in Dallas, Houston and Austin are already seeing their markets display short-term adjustments with regard to deal velocity and structure. As commercial brokers know all too well, every deal is different. Companies are making decisions on whether to delay or pursue office lease consolidations, renewals or expansions based on their unique cash-flow situations, sales outlooks and current positions in their business cycles. In addition, because many office-using jobs don’t qualify as essential services, the uncertainty about how long employees will have to continue to shelter in place and work from home is leading many companies to reassess their short-term needs in terms of size, location and density. Lastly, there are the office users whose businesses have already been walloped by reduced consumer spending. For these companies, decisions about future leasing activity may very well be taking a backseat to a more pressing short-term need to escape an existing lease with minimal bloodshed. Office brokers have their hands full addressing the unexpected and unforeseen …

April 21, 2020

Industrial Market Reports Texas Texas Market Reports

Institutional Capital Targets El Paso Industrial Market As Rental Rates Rise

by Taylor Williams April 17, 2020

El Paso’s industrial market is growing and maturing, as evidenced by a surge in investment demand from institutional capital sources over the last 18 to 24 months. Whereas in past cycles, institutional capital found its way to El Paso by developing here, new players have been ready to buy existing portfolios, but we have seen very little new spec development. Stonelake Capital Partners, LINK Industrial Properties and Equity Industrial Partners/Raith Capital Partners are examples of new investors actively buying into the El Paso industrial market. Several factors have contributed to El Paso’s rise on the radars of institutional investors, but the heart of this trend is simple rent growth. The average asking rent for Class A and B industrial properties increased by a stunning 15.8 percent between 2018 and 2019. Rent growth in the East El Paso submarket increased by an even greater margin of 24.3 percent. As those numbers suggest, demand for industrial space in El Paso, which is largely driven by manufacturing activity in the sister city of Ciudad Juarez, Mexico, is quite strong. Demand for space comes from a diverse set of industries, namely automotive, consumer goods and electronics. El Paso has also seen new industrial demand …

April 17, 2020

Market Reports Midwest Midwest Market Reports Nebraska

Winning the Fight on Business Talent Erosion in Nebraska

by Kristin Harlow April 16, 2020

Although an article on soil erosion might seem more fitting coming from Nebraska, the greater erosion concern for the Cornhusker State is retaining its young and talented workforce. Nebraska’s state education system ranks No. 6 in the country and its high school graduation rate ranks No. 4 in the country, according to U.S. News & World Report. But Nebraska is faced with the dual challenge of retaining young, homegrown talent as well as attracting the next generation of talent from outside the state. Nebraska is presently leaking young talent to surrounding states with an annual net outward migration of approximately 3,300 persons and ranks 39th in the country with respect to attracting talent between the ages of 25 to 29 years old, so it’s a double whammy. A 3,300-person out-migration of talent might seem fairly modest, but over time, it can and will become significant. Like a faucet that continually drips, you don’t realize the cost until you get the water bill. Taking steps to enhance both the retention and attraction of young talent is key to Nebraska’s economic success. Thankfully, such steps are being pursued in both the private and public sector. Two plans of action in particular are …

April 16, 2020

Market Reports Multifamily Texas Texas Market Reports

El Paso’s Multifamily Market Takes On COVID-19

by Taylor Williams April 14, 2020

As a multifamily investment sales brokerage firm, Greysteel has transacted close to 2,000 units in El Paso over the last 12 months. To say the El Paso multifamily market has been hot would be an understatement. But with a sudden pandemic causing economic chaos, jobs are at risk and multifamily owners are facing ever-increasing pressure. First, let’s talk about how El Paso has recently performed. Demand for multifamily product in El Paso has been particularly strong lately, and we’ve been able to bring new in-state and out-of-state investors into the market at cap rates never before seen in El Paso. Many of these investors are surprised to learn that El Paso is the sixth-largest metropolitan area in Texas and the 18th-largest city in the country. As cap rates on multifamily properties have compressed across the United States, El Paso has offered a safe haven for higher yields that can be elusive in major markets with high levels of competition. El Paso also has a diverse public/private sector that barely felt the pain of the 2008 recession — cumulative job losses totaled less than 3 percent of the total employment base. Job growth has expanded steadily, and employment was approximately 13 …

April 14, 2020

Market Reports Multifamily New Jersey Northeast Northeast Market Reports

Multifamily Capital Chases Limited Supply in Northern New Jersey

by Alex Patton April 14, 2020

An abundance of capital continues to flow into Northern New Jersey’s multifamily market, with most investors completing 2019 as net buyers and major institutions looking to remain active in 2020. Over the past decade, domestic and foreign investors alike have diversified into the multifamily space in Northern New Jersey and nationwide. The result has been a highly competitive playing field with limited opportunities. And with more capital in the market than opportunities to place it, many larger funds are now looking to make portfolio acquisitions in order to divest large amounts of capital at once. Brian Whitmer, Cushman & Wakefield Excluding portfolio deals, transaction volume for multifamily investment in Northern New Jersey reached $1.6 billion in 2019, marking a 38 percent year-over-year increase, with 4,846 units sold across 27 transactions. This rise in deal volume can be attributed largely to the “Mack-Cali Effect.” The locally based REIT made two major 2019 purchases in Jersey City — SoHo Lofts ($264 million) and Liberty Towers ($409 million) — that accounted for 41 percent of the year’s individual transaction volume. Buyer Patterns While larger institutions and REITs like Mack-Cali are active in Northern New Jersey, private investors still dominate the regional market. This …

April 14, 2020

Alabama Market Reports Multifamily Southeast Southeast Market Reports

Birmingham’s Apartment Market Starts 2020 Hot, but Coronavirus Impact Looms

by Alex Tostado April 13, 2020

The Birmingham multifamily market demonstrated its evolving strength last year. Continued job growth and limited apartment inventory led to the area reporting its highest occupancy rate in 10 years (94.8 percent) and monthly effective rent advancing 1.8 percent annually to $984 by year-end. In the early months of 2020, we did not see any slowdown in terms of deal volume. Due to rising concerns around market volatility and ongoing impacts of the COVID-19 crisis, we are faced with uncertainty in terms of how the local Birmingham area, along with the rest of the country, will perform in the year ahead. It is difficult to predict market activity, but Birmingham has demonstrated positive trends worth noting. Catching investors’ eyes In recent years, the area’s employment growth and strong fundamentals have piqued investor interest. Out-of-state groups are increasingly venturing into Birmingham. This trend has led local developers to emphasize merchant-builds, actively constructing and redeveloping properties to fill this competitive demand. Off-market transactions have recently seen an increase in frequency as investors are able to be more aggressive on pricing, which is enhanced by this unprecedented interest rate environment. Across all asset classes, the Birmingham market has enticed investors with a variety of …

April 13, 2020

Market Reports Multifamily Texas Texas Market Reports

How Workforce Housing Owners in Texas Can Help Tenants Amid COVID-19 Crisis

by Taylor Williams April 10, 2020

Multifamily developers across the country know that these are unprecedented and uncertain times for nearly everyone due to COVID-19. Houstonians making up our workforce, which many consider “the essential class,” include professionals like teachers, police officers, nurses and firefighters who invest in other peoples’ betterment every day. These are the people who are working day in and day out to provide us with various fundamental needs during this time of mandated quarantine. Many of these individuals are tenants of workforce housing properties, and to the relief of developers, are most essential to the world right now. However, not all jobs can be kept, and with over 3 million people in the United States having lost their jobs in just a week’s time, necessary processes and procedures about how to work with residents who might be in a financial bind due to COVID-19 have become a requirement. In early March, developers including our firm began to work with both the National Apartment Association and the Houston Apartment Association for recommended guidelines to effectively help our tenants who need it most. Additionally, several landlords came together to better understand what other complexes are doing on the ground to best serve our residents. …

April 10, 2020

Industrial Market Reports Midwest Midwest Market Reports Ohio

Developers Flock to Columbus Industrial Market

by Kristin Harlow April 9, 2020

Columbus continues to be a powerhouse in the industrial market of the Midwest. Fueling this growth are its strategic logistics location as well as being the Ohio state capital and home to eight colleges and universities in central Ohio. Job creation in Columbus remains ahead of Ohio with employment expanding nearly 22 percent since 2010, twice the state’s rate of expansion. The region’s largest employers include The Ohio State University, OhioHealth, JP Morgan Chase and Nationwide Mutual Services. These companies employ nearly 100,000 in central Ohio. Columbus is also one of the hottest housing markets in the nation, with overall median sales prices increasing 7.6 percent over 2018 and sellers receiving, on average, 98.7 percent of the last list price at sale. Columbus has a greater access to the U.S. market within a 10-hour drive than any other major metropolitan area in the country. The area has access to 46 percent of the U.S. population within a 10-hour truck drive. This proximity continues to attract large corporations to the area, including Amazon, Facebook, Google and Walmart, who are all occupying new distribution and data centers in the region. The market’s industrial vacancy rate of 5 percent at the end of …

April 9, 2020

Alabama Market Reports Retail Southeast Southeast Market Reports

Birmingham Retail a Solid Bet Before COVID-19 Outbreak, and it Will Bounce Back

by Alex Tostado April 6, 2020

What a time to write an article on the state of the retail real estate market in Birmingham. A few short weeks ago this would have been a much easier task. The fundamentals of the Birmingham retail market are healthy and exciting despite the current health crisis and the fact that we have experienced very little population growth. I travel across the country regularly, and there is a national undercurrent about Birmingham that is exciting. Birmingham is spoken about nationally as a city with great food and quality of life, which are the types of things always said about a city prior to it hitting a tipping point. We expect that consumer behavior is going to be different coming out of the pandemic, and that the way retail and restaurant businesses operate will continue to adapt to that consumer behavior. Traditional developments Traditional shopping centers continue to be strong regional draws, with tenant mixes focusing on local and national brands. Lee Branch is one of the most successful in Birmingham. The Dick’s Sporting Goods and Golf Galaxy side-by-side concept opened in February at Lee Branch and is the first of its kind in the state. Discount retail, although not new, …

April 6, 2020

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