Market Reports

Strong Economy, Low Unemployment Drive Twin Cities Office Market Success

by Kristin Harlow September 19, 2019

Our Twin Cities office market remains strong as the population of millennials and empty nesters continues to migrate to first- and second-ring areas, bringing revitalization and new investment into the city’s commerce and infrastructure. With vacancies remaining exceptionally low and fewer developments on the horizon, rents have shown consistent growth. We are seeing fewer new buildings under construction for single-tenant users. Most are geared toward multi-tenant, mixed-use concepts. Newly renovated buildings with many amenities are performing well in attracting and keeping tenants. With the metro’s unemployment right around 3 percent and employers with jobs to fill, tenants have the leverage. Offering modern and high-tech communal spaces with multiple amenities is key. Tenants and buyers are leveraging this trend, therefore spaces with the allure of contemporary and updated finishes are highly desired. It is imperative that landlords and owners renovate and update their buildings in order to stay relevant in today’s market. Many tenants are simply moving from one space to another nearby because it has been updated and improved upon. That is one of the bigger challenges — improvements that keep the space relevant. Space configurations Employers often offset higher rent costs by embracing space efficiency and flexible workspace strategies …

September 19, 2019

Industrial Market Reports New Jersey Northeast Northeast Market Reports

Array of Industries Drives New Jersey Industrial Market’s Growth

by Taylor Williams September 18, 2019

New Jersey’s industrial market continues to expand, driven by a plethora of industries, including retail, manufacturing, food companies, transportation and logistics. As the popularity of e-commerce shows no signs of abating, New Jersey has become a key location for distribution centers and last-mile delivery hubs to serve the entire Northeast region. E-retailers are scooping up available industrial space, taking advantage of New Jersey’s excellent air, freight, port, and rail infrastructure that links it to the rest of the region and the country. Increasing Demand After taking a slight breather during the first quarter of 2019, in part due to a lack of available high-quality space, total leasing activity has increased by 20 percent during the past three months, bolstered by more than 20 leases exceeding 100,000 square feet. Absorption was widespread, with occupancy level increases in 16 of 25 submarkets for both the quarter and year over year. In total, 2.4 million square feet of positive net absorption was recorded during the second quarter of 2019, the highest level since the third quarter of 2018. Moreover, occupancy levels increased by 8.6 million square feet during the past 12 months, the eighth consecutive quarter where more than 8 million square feet …

September 18, 2019

Market Reports Texas Texas Market Reports

For Clients’ Sake, Technology Must Be Used in Tandem With Critical, Creative Thinking

by Taylor Williams September 17, 2019

There are now dozens of commercial real estate platforms and apps on the market today that are designed to assist brokers in their day-to-day activities, and many are quite good. However, any technology should primarily serve to enhance how brokers serve their clients and not direct how that service is provided. Too often, the process a technology lays down may actually become a stumbling block in the way of creating the most economical and beneficial transaction for a client. Overreliance on Tech By way of explanation, let’s start with a simple example. You’re at any checkout counter. The cashier rings up your order and the register shows that you owe $13.42. You hand over $20. Suddenly, for some unknown reason, the cash register screen goes blank. And then the cashier’s face goes blank, too. Making change the old-fashioned way is simply no longer taught, because technology has taken the place of thinking through the problem. A comparable scenario could happen if brokers rely solely on what a commercial real estate platform tells them to do. Wrapped up in completing the formula and following a detailed path, there may seem to be no room for creative thinking. But in fact, that …

September 17, 2019

Industrial Market Reports Maryland Southeast Southeast Market Reports

Land Scarcity in Baltimore Driving More ‘Smart Growth’ for Industrial Sector

by Alex Tostado September 16, 2019

Continuing a trend that started approximately 10 years ago, the Central Maryland region remains an extremely attractive area for warehouse and industrial development with vacancy rates hovering in the 7 percent range, more than 3 million square feet currently underway and an additional 5 million square feet of space expected to break ground over the next 18 months. But new challenges are also starting to emerge in this marketplace, driven by barriers-to-entry such as land scarcity and increased government regulations. On the positive side, rental rates continue to inch upwards and end-user requirements in the 30,000- to 100,000-square-foot range, long the bread and butter of this region, have returned. Over the past decade, numerous local and national developers have been enjoying the high life in the Interstate 95 corridor spanning from Harford County north of Baltimore City, through Howard County and touching Prince George’s County, which is considered a suburb of Washington, D.C. A who’s who of retail royalty have signed substantial leases such as Amazon, Best Buy, FedEx, Floor & Décor, The Container Store, The Home Depot, Pier 1 Imports, Sephora Cosmetics, XPO Logistics and Under Armour. While many touched 1 million square feet of space, what previously was …

September 16, 2019

California Market Reports Multifamily Western Western Market Reports

San Diego’s Multifamily Market Outpaces Its 2018 Performance

by Taylor Williams September 14, 2019

San Diego continues to exhibit very strong fundamentals with a healthy and diversified economy, as well as a continued shortage of housing supply. The unemployment rate of 3.3 percent is below both the California and national unemployment rate. Tourism, biotech, healthcare, education, military/defense, drone manufacturing, business services, software and other high-tech industries have made San Diego a magnet for venture capital and other business investment, creating the jobs of the future. Amazon, Apple and several other high-profile technology companies have also announced expansions in San Diego. The region attracted $744 million in venture capital this past year alone. Local housing policies, which have been unfriendly to new development, have made it very expensive to build, thereby perpetuating the shortage of housing. This dynamic has continued to bode well for multifamily investment in the region. CBRE’s Apartment Market Report for the end of the second quarter illustrates the following year-on-year changes from 2018: • The vacancy rate moved 9 basis points to 3.6 percent • Rental rates increased by 2.9 percent • New construction deliveries dropped by 14 percent • Sales volume included 95 transactions with a total dollar volume of $476 million (compared to 32 sales transactions last year that …

September 14, 2019

California Market Reports Office Western Western Market Reports

San Francisco’s Office Market is More Boom than Bust

by Taylor Williams September 13, 2019

San Francisco has been a boom-and-bust market since the Gold Rush. The current intense scrutiny of the yield curve, combined with the stock market’s recent erratic behavior, has sent warnings of the next looming recession. Just how will this affect the office market? Fortunately for the Bay Area, not much. Today, several key factors insulate San Francisco from a severe downturn, unlike past cycles. Among them are Proposition M and a concentration of venture capital, highly skilled talent and some of the world’s largest companies. Since 1986, Proposition M has limited the amount of office development the city will authorize in any given year. The program aims to guard against typical boom-and-bust cycles. The San Francisco office market only includes 85 million square feet, as opposed to Manhattan or Houston, for example, which comprise 400 million and 240 million square feet, respectively. Manhattan currently has 12.4 million square feet of office space under construction, while San Francisco has 3 million square feet in the pipeline. The entitlement limit under Prop M has been reached, meaning no additional new projects can be approved until October when another 950,000 square feet will be allocated for the next year. At first glance, these …

September 13, 2019

Industrial Market Reports Midwest Midwest Market Reports Missouri

Myriad Factors at Play for St. Louis Industrial Market Activity

by Kristin Harlow September 12, 2019

The St. Louis industrial market continues to rally after posting 22 straight quarters of positive absorption. Record leasing activity and historically low vacancy have put the region on pace to deliver another 6.5 million square feet of Class A industrial space in 2019. This is in a market that averages deliveries of approximately 2.5 million square feet annually. Current drivers engendering this industrial activity include the following. Discipline Developers in St. Louis have long been known for their disciplined approach to building. Vacancy in a stable market hovers near 7 percent for the region. The vacancy rate for industrial space leading into the third quarter was 5 percent, up slightly from the previous quarter, according to CoStar. Continued speculative development, particularly in the Metro East, added to the increase. This, coupled with a large vacancy left in Lakeview Commerce Center by World Wide Technologies as it shuffles into a new 2 million-square-foot facility in Gateway Commerce Center East, were the most evident culprits. Expect vacancy to uptick slightly again in the third quarter as speculative deliveries by NorthPoint Development at Gateway Tradeport along with Exeter in Gateway Commerce Center come online. E-commerce No discussion surrounding the industrial market would be …

September 12, 2019

Market Reports Northeast Northeast Market Reports Office Pennsylvania

Strong Demand, Record Rents Drive Office Investment, Development in Philadelphia

by Taylor Williams September 11, 2019

Robust employment and population growth are fueling Philadelphia’s renaissance and propelling the region’s office sector to new heights. The lack of new office construction over the past decade has driven rents to record levels and is creating value-add acquisition opportunities throughout the region. With a tight labor market and talent acquisition at a premium, companies want to lease state-of-the-art workspaces that attract future employees. Key features of these spaces include access to public transit and surrounding retail and restaurant options. Limited availabilities within this product type are driving rents for quality space, as well as the development pipeline for new office buildings. However, after years of little construction, several proposed office buildings in both downtown and the suburbs are close to breaking ground and creating the next crop of new office inventory for the region. Record Rents In the second quarter of 2019, average asking rents for office properties in downtown Philadelphia hit a record $31.33 per square foot, a 20 percent increase over the past five years. This growth has been driven by out-of-town investors acquiring buildings and raising rents, as well as by growing demand for downtown office space, both from new in-bound demand and organic growth from …

September 11, 2019

Market Reports Retail Texas Texas Market Reports

New Tenant Mixes Drive Retail Redevelopments

by Taylor Williams September 10, 2019

A persistent need for a tenant mix that is resistant to e-commerce and which facilitates a unique, authentic experience is prompting owners of older retail centers and malls to assume high levels of risk and redevelop their properties. While there can be a plethora of non-tenant-related factors that spur redevelopment projects — the basic need to charge higher rents, the structural and aesthetic deterioration over time, a desire to restore a public perception of vibrancy — the ultimate success of almost every retail redevelopment project hinges on the tenancy. For shopping centers, this typically entails adding more restaurant users and other retail categories that offer a critical service or a unique shopping experience, as well as integrating open recreational spaces. For malls, adding entertainment uses is becoming increasingly important, particularly when an anchor space has been vacated or sold back to the owner. When paired with a telltale sign like sluggish sales and/or negative rent growth, any of the aforementioned factors can be the catalyst for pulling the trigger on a redevelopment project. But whatever the impetus for the project, without marketing to and leasing tenants that can afford market-rate rents, align with the surrounding demographics and drive foot traffic throughout …

September 10, 2019

Market Reports Maryland Multifamily Southeast Southeast Market Reports

After Urban Construction Boom, Baltimore Multifamily is Moving to the ’Burbs

by Alex Tostado September 9, 2019

The multifamily real estate landscape is booming across the Baltimore metro with exciting new development popping up throughout this burgeoning market. Luxury apartment developers have focused their attention on Baltimore City’s urban waterfront neighborhoods by creating a distinct live-work-play environment. At the same time, suburban developers have focused their efforts along the Interstate 95 corridor, drawn to affluent neighborhoods supported by top ranked school districts. While an increase in development has led to a rise in urban vacancy rates, the influx of tech startups, coupled with the city’s employment drivers — medical and educational institutions — has helped to stabilize these rates. TIF investment has also helped paint a bright future in Baltimore for mixed-use ventures like the East Baltimore Development project around Perkins Homes and the 250-acre Port Covington development in south Baltimore. Both projects are anticipated to support new multifamily housing in these areas. Development boom Vacancy rates have increased following a nearly 20,000-unit spike in new construction from 2014 to 2018. More than 3,900 new units were completed in 2018 alone, and another 6,400 units were underway at the start of 2019. The boom is expected to taper off in 2020 and has already caused a decrease …

September 9, 2019

Newer Posts

Older Posts