Market Reports

Baltimore Retail Market Stands Tall, Poised for Another Solid Year Ahead

by Alex Tostado March 23, 2020

It’s gearing up to be another solid year for Baltimore’s retail industry. Thus far, the first quarter has shown few surprises and has largely been a continuation of the success the sector saw in fourth-quarter 2019. Rent has remained relatively flat the past two years, outside of a few developments that have delivered, and we’re expecting more of the same this year. After a small bump in the road five years ago, the market has stabilized and retail vacancy in the Baltimore metro region remains tight. With limited new supply coming to market, landlords are focused on backfilling existing space. Class A and B properties continue to show healthy leasing trends, while Class C properties continue to be the value options for mostly local retailers. Baltimore metro’s primary retail corridors — York Road, Reisterstown Road, the core of downtown Baltimore, Columbia, White Marsh and Annapolis — continue to thrive. We’re also seeing strong growth along Ritchie Highway from Pasadena to Glen Burnie, buoyed by a string of new store openings at the Pasadena Crossroads Shopping Center, which is anchored by Sprouts Farmers Market, Ulta Beauty, T.J. Maxx, DSW, LA Fitness, Party City, Hobby Lobby, HomeGoods and Gardiner Wolf Furniture. In …

March 23, 2020

Market Reports Office Texas Texas Market Reports

Population Boom Spurs Momentum in Fort Worth’s Office Market

by Taylor Williams March 20, 2020

These days, one of the most widely-shared facts about Texas’ economy is the fact that the Dallas-Fort Worth (DFW) metroplex adds about 360 new residents per day. But a lesser-known part of that statistic involves the fact that Fort Worth is experiencing a faster rate of population growth than Dallas. According to U.S. Census data, Fort Worth was the third fastest-growing city in the country from 2012 to 2017. In 2018, Fort Worth gained 20,000 new residents, compared to just 2,000 new Dallasites. According to the latest information from the U.S. Census Bureau, Cowtown is now the 13th-most populous city in the United States, having surpassed San Francisco and Columbus, Ohio, to reach a total of 895,000 residents. On the heels of all that population growth has come a rapidly expanding local economy. Census data shows that Fort Worth saw more than a 21 percent increase in its population of employed residents in the five years leading up to 2017. This growth enabled Fort Worth to become the third-fastest-growing U.S. job market. Part of Fort Worth’s appeal is the fact that it has a diverse employment base, with growth in medicine, manufacturing and warehousing/distribution being especially pronounced during this cycle. …

March 20, 2020

Market Reports Midwest Midwest Market Reports Minnesota Retail

Influx of Out-of-State Capital Creates Cap Rate Compression in Twin Cities Market

by Kristin Harlow March 19, 2020

In 2019, the Twin Cities net lease retail market experienced a historic year, benefitting significantly from aggressive western U.S. capital. The Twin Cities saw an unprecedented number of buyers from the western United States who were willing to pay a premium above local buyers for quality net leased real estate. There were 95 net lease transactions in the Twin Cities in 2019 that sold below a 7.5 percent cap rate, according to CoStar Group. Of those transactions, 33 percent were sold to buyers based in the West Coast. What’s more, of the net lease properties that sold below a 6.25 percent cap rate, nearly 50 percent were sold to buyers based in the western U.S. In comparison, in 2018, only 25 percent of the net leased properties below a 6.25 percent cap rate in the Twin Cities sold to buyers based in the western U.S. This trend helped average cap rates compress for both net lease multi-tenant pad/strip centers as well as single-tenant cap rates between 2018 and 2019. The average multi-tenant net lease cap rate in 2018 was 7.25 percent versus 7.1 percent in 2019. The average single-tenant cap rate in 2018 was 6.7 percent versus 6.6 percent in …

March 19, 2020

Industrial Market Reports Texas Texas Market Reports

As Industrial Booms in Metroplex, Fort Worth Carves Out A Distinct Niche

by Taylor Williams March 17, 2020

Dallas-Fort Worth (DFW) has been among the top metros for industrial development and investment alike, with net absorption and leasing rates holding strong for the past several years. With the bulk of industrial development in DFW being big box product over 100,000 square feet, there’s been minimal development of smaller assets. So far in 2020, roughly 4.3 million industrial square feet has gone under construction in the metroplex. Approximately 10 percent (362,000 square feet) of that total centers on industrial projects under 100,000 square feet — the result of higher construction costs for smaller assets that don’t justify market rents. Current market rents do not satisfy yield requirements for developers to construct smaller assets. However, the general investment outlook for existing smaller industrial product is much more secure due to minimal new competing properties. Roughly 15 million square feet, or 40 percent of North Texas’s industrial pipeline, sits within five miles of DFW International Airport or Fort Worth Alliance Airport, according to CoStar. Approximately 3.3 million square feet of new product is expected to come on line by the second quarter in the DFW Airport region. Over half of the 30.9 million square feet of product under construction in DFW …

March 17, 2020

Baltimore Multifamily Rent and Occupancy Forecast March 2020

Content Partner Lument Market Reports Maryland Multifamily RED Capital Group Southeast Southeast Market Reports

Underappreciated Multifamily Markets: Maryland Edition

by Jaime Lackey March 17, 2020

Although attractive multifamily investment opportunities may still be available in gateway cities, investors increasingly are sourcing deals in secondary markets where land and asset prices are lower, cap rates a bit more generous and an unpicked gem of value-add fruit can still be found on the vine by intrepid late-cycle buyers. Parties looking to replicate past successes may not have to look too far afield as Maryland markets — overshadowed of late by Washington and Philadelphia — offer much of what they seek with perhaps a lower degree of risk. In the last decade and particularly the last three years, the catalyst for economic growth in the Capital Area has shifted from government to high-tech services. As the tide turned, the focus of commercial real estate activity moved south toward Washington’s central core and Northern Virginia. In the process, the Maryland suburbs lost some of their star power. The diminished status of Montgomery and Prince George’s counties wasn’t entirely a matter of perception. Suburban Maryland apartment performance materially underperformed national averages in 2017 and 2018, and the spread widened between cap rates applied to Maryland properties on one hand and District and Northern Virginia assets on the other. Same-store property …

March 17, 2020

Industrial Market Reports Maryland Southeast Southeast Market Reports

After Historic Industrial Leasing Year in Baltimore Region, What Comes Next?

by Alex Tostado March 16, 2020

Industrial leasing activity in the greater Baltimore metropolitan region last year began with a whimper thanks to the federal government shutdown in January and February, but quickly gathered steam and never looked back, even in the final days to close out the year. In fact, the pace was record-breaking and historic by any measurement, with more than 9.5 million square feet of space absorbed. This figure was approximately 40 percent higher than 2018, which was also a tremendous year. There is more good news locally for companies that make their living developing warehouse and industrial space, brokers who match end-users for the available spaces and related professionals. Central to this activity is that fact that lots of people live in the Combined Statistic Area of Baltimore-Washington, D.C. region, which is the fourth largest MSA in the country and is still growing. A certain Seattle-based online retail company is establishing its second headquarters just down the road in Northern Virginia and its positive impact is being felt throughout the region. The central Maryland marketplace boasts an enviable transportation network led by major north-south axis Interstate 95, is within close proximity to several major seaports (Baltimore, Wilmington and Philadelphia) and one-third of …

March 16, 2020

Market Reports Retail Texas Texas Market Reports

Fort Worth Retail Market Displays Benefits of Natural Growth

by Taylor Williams March 13, 2020

When I talk to out-of-staters about Texas, they often think I mean “Dallas” when discussing the Metroplex as a whole. That’s when I explain how important the Fort Worth market is to our thriving and healthy Dallas-Fort Worth (DFW) retail scene. Weitzman, which operates offices in Texas’ major markets, has handled development, leasing and management in the Fort Worth market since our founding 30 years ago. Today, the Fort Worth area is home to some of the state’s most robust residential, commercial and cultural growth. In terms of retail, our most recent market survey shows that as of January 2020, Fort Worth’s retail market is about as healthy as it’s ever been. The Fort Worth-area market, which we’ll call Fort Worth for the sake of simplicity, largely encompasses Tarrant County. Today, Fort Worth reports a total multi-tenant retail inventory of 62.8 million square feet. As a reference, that figure accounts for about a third of the entire DFW retail market inventory, which clocks in at just over 200 million square feet. Fort Worth’s occupancy rate is around 93 percent, a healthy rate on par with the Dallas area’s occupancy. In terms of subcategories of retail product, the numbers of Fort …

March 13, 2020

Illinois Market Reports Midwest Midwest Market Reports Office

Now Is the Time to Invest in Chicago’s Office Market

by Kristin Harlow March 12, 2020

There is a widely held belief that investing in the Chicago office real estate market in 2020 is potentially a bad bet. While some investors are concerned by headlines decrying the fiscal health of Illinois, the supposed overvaluing of Cook County tax assessments and softening of the Chicago market, our experience tells us those fears will create opportunities for contrarian investors willing to dig deeper. Because these misperceptions are scaring away some institutional investors, the time is ripe for continued investment in Chicago office properties to take advantage of opportunities that more cautious investors are passing up. Municipal realities At the state level, much has been written about Illinois’ fiscal health. In a report released in September 2019, government watchdog Truth in Accounting labeled Illinois a “Sinkhole State” and ranked it 49th in the nation for its financial condition. After failing to raise enough revenue by hiking taxes to fund the state’s debt, leaders from Illinois have said that massive pension reform — not tax hikes — is the way out of our current debt crisis. Consequently, office real estate investors should not be overly concerned that the state of Illinois will potentially shift the state’s tax burden onto their …

March 12, 2020

Market Reports Maryland Office Southeast Southeast Market Reports

The Burgeoning Columbia Market Steps Out of the Shadows of Baltimore, D.C.

by Alex Tostado March 9, 2020

As real estate becomes more operational, a trend has emerged of major investors migrating away from big metros into secondary and tertiary markets. Occasionally, those markets move out of the shadows of their larger neighbors and acquire their own identity. Enter Columbia, Maryland, which initially attained national attention and acclaim as one of the first master-planned communities in the United States. Columbia is now in the midst of a major transformation. Built from the ground up in then-bucolic Howard County, Columbia was founded by developer James Rouse in 1967. Strategically located between Baltimore and Washington, D.C., the now 53-year-old community is blossoming with its own talent creators, talent attractors and 14 million square feet of new live-work-play development in a downtown transformed by The Howard Hughes Corp., a successor to The Rouse Co. The beginnings of Downtown Columbia’s emergence include the Merriweather District, which opens this spring. The first of three neighborhoods planned for downtown Columbia, the Merriweather District is being developed as a regional hub of culture and commerce. Talent creators The Howard County market is already home to cybersecurity incubators and cyber-focused venture capitalists like DataTribe and AllegisCyber. These companies consistently house and fund entrepreneurs developing innovative approaches …

March 9, 2020

Illinois Industrial Market Reports Midwest Midwest Market Reports

Industrial Landlord Consolidation Means Chicago-Area Tenants Should Be Ready to Negotiate

by Kristin Harlow March 5, 2020

In December 2019, Prologis, the largest industrial landlord in the world, announced its acquisition of Liberty Property Trust, another publicly traded REIT with a large industrial portfolio of its own. This deal, valued at $12.6 billion, seems to have become the norm in recent months. Companies such as Prologis and Blackstone Group, as well as regional ownership groups, have gobbled up industrial investment opportunities whenever they can. Just 10 years ago, the industrial real estate asset class was battling high supply and low rents, due primarily to the Great Recession. But with the growth of e-commerce and omnichannel logistics, this asset class is now considered one of the best investment opportunities available. So how is this consolidation of industrial ownership impacting the Chicago-area industrial market, and what should tenants know so that they can make informed real estate decisions? Local numbers While it seems like there are just a handful of landlords controlling the marketplace, when you look at the numbers, the prognosis isn’t so bad. Nationally, no single owner controls more than 10 percent of the U.S. market. Instead, landlord dominance is more of a local concern, and typical real estate indicators continue to influence lease terms. However, there …

March 5, 2020

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