Market Reports

Apartment Developments Have Reached a New Peak in Richmond

by Alex Tostado October 7, 2019

With easy access to the James River, hiking trails and a burgeoning culinary scene, the Richmond region has won numerous accolades for its quality of life. The city remains a top destination for college graduates and young professionals, as well as families and retirees. Apartment demand is fueled by both a growing millennial population and increasing number of empty-nesters who are downsizing. Renters continue to seek accessible apartment communities that are highly walkable with comfortable amenities. As a result, both urban and suburban markets are experiencing an influx of rental demand. The Richmond apartment market continues to experience rising rental rates and interest from out-of-town investors. Apartment rents in Richmond have increased every year since 2012 but remain relatively affordable. The average effective rent reached $1,113 per unit after increasing approximately 3.8 percent over the past 12 months. Accordingly, developers and investors have responded to the steady demand and continue to be bullish on the Richmond market, especially for apartments. There are currently more than 4,000 apartment units under construction, marking a post-recession peak for construction activity. Apartment sales have accounted for more than 50 percent of all commercial real estate transactions during the first half of 2019. Additionally, institutional …

October 7, 2019

Market Reports Oregon Retail Western Western Market Reports

Mixed-Use, Entertainment, Medical Bolster Portland’s Retail Basin

by Taylor Williams October 4, 2019

The retail market in Portland remains competitive. Vacancy rates are staying low at 3.1 percent, compared to about 5.5 percent just five years ago, leading to healthy competition among tenants for space. Retailers and brands are thriving across the board in this market. We’re seeing food halls, outdoor apparel, athletic brands, brew pubs, schools, banks, value brands, homegrown food concepts and many franchise concepts entering or expanding. Competitive socializing and esport lounges are growing in popularity across the country, taking up about 32 percent of the leisure tenant market. Competitive socializing concepts like Voicebox and Punchbowl Social are quickly becoming some of the most popular leisure tenants in the Portland area. Live Nation has recently signed a lease for a new entertainment venue at Lloyd Center, which will soon offer more small-venue live entertainment options. Brands like Pendleton, Nike, Columbia Sports, Apple, Nordstrom, H&M and Zara have flagship stores in the downtown core. Patagonia, Anthropologie and a local favorite, the Mercantile, have all expanded their footprints taking prime real estate in the Portland CBD/West End. The desire for wellness and a balanced lifestyle has led to a boom in demand for retail space. Wellness tenants like medical clinics, dental offices …

October 4, 2019

Market Reports Office Texas Texas Market Reports

With Oil Still Recovering, Midland Office Market May See Higher Vacancy in 2019

by Taylor Williams October 4, 2019

Throughout the first half of 2018, when oil prices appeared to be on a steady upward trajectory, Midland, Texas, saw a number of energy firms up their stakes in the city’s office market. Major names such as Chevron, Anadarko, Apache and Natural Gas Services Group announced build-to-suit office projects in Midland during this time, adding a significant amount of supply to this 6 million-square-foot market. In addition, strong leasing activity by an array of energy firms looking to bolster their operations in the Permian Basin helped the market’s occupancy rate rise to about 92 percent. This growth in occupancy was anchored by a low unemployment rate and accompanied by positive rent growth. Now, however, with oil prices down from their 2018 highs (West Texas intermediate traded at $56.11 per barrel at the time of this writing), there is more uncertainty in the Midland office market. While the office occupancy rate has held steady and rents have even grown slightly during the last year, currently clocking in at about $23 per square foot, Midland could see a significant amount of supply of office space returned to the market over the next six to 12 months. Examples in Action Chevron, which earlier …

October 4, 2019

Industrial Market Reports New Jersey New York Northeast Northeast Market Reports

Industrial Development Shifts Westward From Port

by Taylor Williams October 2, 2019

Demand for industrial space is roaring throughout the submarkets surrounding the Port of New York and New Jersey, propelled by the port’s handling of a record amount of cargo thus far in 2019. As a result of the healthy demand, as well as more product coming in and out of the port, landlords are enjoying positive rent growth accentuated by a limited supply of quality industrial space. The port experienced record growth in cargo volume handled during the first six months of 2019, according to internal data from the organization. The number of 20-foot equivalent units (TEUs) handled by the port has already exceeded 3 million for the year and surpassed 611,000 in June alone. This figure represents an all-time record for the port during the first half of the year, enabling it to surpass the Port of Long Beach for the first time in 20 years. Increasing amounts of inventory coming in and out of the port translates to greater demand for industrial space to store, process and ship product. But the port submarket has but a meager supply of real estate to meet the demand. Due to a limited space available for lease, the industrial submarket experienced negative …

October 2, 2019

Market Reports Retail Texas Texas Market Reports

Housing, Labor Fundamentals Showcase Midland-Odessa Retail Market’s Potential

by Taylor Williams October 1, 2019

The Midland-Odessa retail market continues to get stronger, even with the slight dip in oil prices over the last year. West Texas Intermediate crude oil prices stood at $56.11 per barrel as of August 28, 2019. The economy has remained very strong, with the average unemployment rate in the Midland and Odessa MSAs averaging 2.4 percent in 2018 — essentially full employment. That unemployment rate is also about two percentage points lower than it was in 2012. Housing Drives Retail This strong economic outlook for the Permian Basin oil and gas market is creating major demand for laborers in the area. According to a February 2019 article in the Midland Reporter-Telegram, the size of the Midland-Odessa workforce grew from 173,400 to 180,900 employees between 2017 and 2018. This rapid growth has driven record development in the local housing market. Karr Ingham, an Amarillo economist who prepares the Midland-Odessa Regional Economic Index for the Midland Development Corp., noted that new housing starts set annual records across the board in 2018 — “and it wasn’t even close.” The 1,778 new housing permits in 2018 exceeded 2017’s total of 1,330 by nearly 450 permits, or 33.7 percent. A record 322 permits were issued …

October 1, 2019

Market Reports Retail Southeast Southeast Market Reports Virginia

Retail Demand in Richmond Strengthens as Vacancy Nears Lowest Level This Cycle

by Alex Tostado September 30, 2019

Virginia’s capital city added more jobs in 2018 than in 2017 and 2016 combined. The addition of 11,000 jobs in 12 months aided a 7 percent population growth since 2010 and a median household income increase of $10,000 since 2016. With only 2.9 percent unemployed, residents now have more disposable income to shop. Richmond’s rapid growth brought vacancies to the lowest they’ve been in almost 15 years. At 4.7 percent, vacancy is near the cycle’s lowest trough of 4.5 percent in late 2005. Grocery store competition and limited speculative construction are driving down vacancies. In January, Food & Wine magazine published that Richmond was “Secretly the Supermarket Capital of America.” Publix’s takeover of Martin’s gave the Florida-based grocer a foothold, and new Publix stores are coming by the fourth quarter of 2019 in Westpark Shopping Center, Swift Creek and The Village Shopping Center. Kroger retains the highest market share despite operating only 18 stores compared to Food Lion’s 48. At last count, Aldi stores number 11, The Fresh Market four and Lidl six. With only two stores, however, Wegmans is the per-store average sales leader. Besides grocers, other expanding big box users include Launch Trampoline Park, Burlington, Conn’s HomePlus and …

September 30, 2019

California Market Reports Retail Western Western Market Reports

San Diego Retail Development Continues — Strategically

by Taylor Williams September 28, 2019

Whether it’s existing properties, new development, redevelopment or a repositioning effort, the key to success in San Diego’s retail market is to focus on customer experience. You have to make it attractive for them to come out from behind their computer screens, go outside, get some fresh air, look a total stranger in the eye and be social. The market is dominated by the coastal areas between Little Italy and Carlsbad. Primary core centers that are well located and occupied with strong daily needs anchors have the most fundamental stability. Secondary centers in beach-area submarkets have some vacancies but are attractive to tenants due to their proximity to the areas with the highest disposable incomes. Investors of tertiary centers, for the most part, are looking for ways to make their centers’ relevant, with forward-thinking owners investing capital to incorporate a mixed-use component like office, hotel or multifamily. Consumers in San Diego want a vibrant, inviting center with a superior customer experience immersed in beautiful landscape under the sun. The key is having a retail environment with premier anchors to get the customer to the center, along with a great mix of tenants and events to keep the customer at the …

September 28, 2019

California Market Reports Office Western Western Market Reports

San Diego’s Office Market Shows Strong Fundamentals, Continued Creativity

by Taylor Williams September 27, 2019

The outlook for San Diego’s office market is sunny and bright. Often considered a less costly option for office users as compared to other Southern California markets, San Diego holds consistent appeal for tenants seeking a coastal address where the weather is mild and the vibe is entrepreneurial and business friendly. The market is following the national trend of stronger occupancy rates and robust absorption, buoyed by a healthy economy. At 10.2 percent in the second quarter — the lowest level in nearly 14 years — San Diego’s office vacancy rate beats the national office vacancy rate of 12 percent — the lowest level in 18 years, despite construction. These fundamentals are demonstrating increased tenant demand. We’re continuing to see growth and expansion of office in submarkets throughout San Diego County. Sorrento Valley is one of the stronger office submarkets due to its centralized location and accessibility to major freeways. Other submarkets with heightened demand are Del Mar Heights, which is close to the ocean and suburban areas that house corporate executives, and Kearny Mesa, another major business center for the county. Carlsbad and Oceanside in North County and Chula Vista in South County are also popular choices. Oceanside and …

September 27, 2019

Industrial Market Reports Texas Texas Market Reports

While the City Thrives, Amarillo Industrial Market Faces Hurdles

by Taylor Williams September 27, 2019

Amarillo has continued on the path of steady growth with a strong unemployment rate of 2.7 percent. Along with its sturdy economy, Amarillo’s commercial market has followed a path of consistent advancement, but there are clouds on the horizon and hints of a stall are visible. Our core market indicators are showing cracks. There are fewer jobs now than there were a year ago. Commodities have been flat at best. Oil prices have experienced declines in excess of 10 percent from this time last year, with natural gas prices dropping nearly 25 percent from a year ago. Despite some early spells of ample moisture, recent heat and low rain totals have hurt Panhandle farmers and ranchers. The uncertainty regarding tariffs on these natural resources has created anxiety as well. For the city’s industrial and commercial real estate sectors, the collective message of these trends is that the long stretch of economic expansion that has propped up the market, may be in the rearview mirror. New Developments Some new land purchases with plans for industrial developments should help the tax base. Caviness Beef Packers recently purchased 100 acres with plans to build a new facility. In addition, the Amarillo Economic Development …

September 27, 2019

Market Reports Midwest Midwest Market Reports Missouri Office

Multiple Office Developments Proposed for St. Louis County

by Kristin Harlow September 26, 2019

The office market in St. Louis has remained very active over the past year. With very little speculative development, the St. Louis County vacancy rate for Class A office space has experienced little change but remains at a historic low of 11.1 percent. Demand remains for large blocks of space in the more desirable submarkets such as Clayton and West County, as there are limited options for existing space. This has created an opportunity for new, proposed office developments gaining securing commitments from large occupiers. Most, if not all, proposed multi-tenant office developments around St. Louis County are contingent upon significant leasing commitments before construction can commence. A few key trends have played a major role in why developers now have the ability to attract large tenants to new developments. Tenants searching for office space in excess of 25,000 square feet have been struggling to find contiguous and efficient options. Rental rates are at all-time highs, with some of the top-tier buildings achieving rents well over $30 per square foot. Lastly, tenants are using office space differently than before and new office developments are providing more efficient floor plates with multiple on-site amenities that tenants highly value today. Project examples …

September 26, 2019

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