Market Reports

Office Expansion Continues in Portland for 10th Consecutive Year

by Taylor Williams July 26, 2019

Consistent investment trends, a steady demand for tenants, stable in-migration and several new additions to the skyline have provided Portland with a strong first half of 2019. With more than 100,000 square feet of positive net absorption this year, the Portland office market shook off any lingering negative sentiment from 2018 and started the year strong. Portland has built a reputation as a second outpost to cities like Seattle and the Bay Area. Companies tend to initially set up small offices before quickly realizing Portland is a viable alternative to other larger hubs. In-migration remains strong but the major growth the market has experienced recently has been from homegrown companies ramping up or expanding their operations. We’re continuing to see office rents grow at almost 12 percent year over year. Portland office rents average $32.12 per square foot, making them nearly 60 percent cheaper than San Francisco and 25 percent cheaper than Seattle. The city is also well situated to attract companies that are being priced out of primary markets but still need to be geographically close. When you layer on our cost of living and high quality of life, Portland becomes even more attractive, which also contributes to its …

July 26, 2019

Industrial Market Reports Midwest Midwest Market Reports Ohio

Cincinnati Industrial Market Absorption Drives 8 MSF in New Construction

by Kristin Harlow July 25, 2019

In 2018, the Greater Cincinnati industrial market experienced record-breaking positive net absorption of 7 million square feet, the highest level of absorption in more than a decade. This was followed by only 201,000 square feet of direct net absorption in the first quarter of this year, which at first glance could be concerning. But the good news is that 8 million square feet is currently under construction across our market. Over the past five years, new construction deliveries have been a consistent source of growth and positive absorption in Greater Cincinnati. The industrial market typically does not experience a high absorption rate in the first quarter when compared with the rest of the year. The low absorption figure in the first quarter of 2019 is actually due to lack of available supply rather than a major market change. Leasing impact New-construction, pre-leased buildings were a major source of positive net absorption in 2018. Winter weather and construction schedules limited first-quarter completions to just 520,000 square feet. The largest delivered facility was the 308,000-square-foot West Chester Trade Center #1, a bulk distribution building in the Northwest submarket. TSC Apparel moved into 196,000 square feet at the facility, absorbing more than 60 …

July 25, 2019

Market Reports Massachusetts Northeast Northeast Market Reports Retail

Demand for Retail Space Surges in Boston

by Taylor Williams July 24, 2019

Bolstered by strong growth in its millennial population and high-paying jobs, Boston’s urban core continues to boast one of the lowest retail vacancy rates in the country. But this trend has also led to a wave of new development that could temper that good news for Boston retail owners. According to data from Marcus & Millichap, metro Boston’s retail vacancy rate is expected to rise by 40 basis points from 3.2 percent to 3.6 percent in 2019, a year in which 1.3 million square feet of new projects are slated for completion. By comparison, the national vacancy rate stood at 10.2 percent at the end of the first quarter, reports Reis. Marcus & Millichap predicts that the uptick in metro Boston’s retail vacancy will slow the pace of annual rent growth to 3.3 percent. Population growth is fueling demand for housing, which in turn spurs demand for retail to serve those new residents. Metro Boston’s population has grown by more than 112,000 people over the last five years, according to Marcus & Millichap, and the area boasts a median household income in excess of $90,000. While the local rate of population growth mirrors that of the United States as a …

July 24, 2019

Industrial Market Reports Texas Texas Market Reports

With Oil Recovering, Houston Industrial Market Turns to Distribution

by Taylor Williams July 23, 2019

For many years, companies seeking to establish major distribution operations for the southwestern United States flocked to one market: Dallas-Fort Worth (DFW). Any deal that required a warehouse or logistics space of several hundred thousand square feet or more headed to the metroplex, and Houston received what was left — deals falling anywhere from 20,000 to 100,000 square feet. That began to change in 2010, when oil was consistently trading at close to $100 per barrel. Subsequent innovations in hydraulic fracturing that lowered the threshold at which offshore drilling companies could turn a profit, combined with escalated tensions among Middle Eastern producers, kept prices for American crude at high levels until December 2014. At the time of this writing, oil futures traded at about $58 per barrel, suggesting that any hopes of a recovery by mid-2019 had been premature. But between 2010 and 2014, when the party was in full swing, Houston experienced tremendous job growth that attracted tens of thousands of new residents to the city. More housing was built, and significant amounts of industrial absorption began to stem from the need to store and distribute consumer goods, from food to furniture to household appliances. Today, Houston’s population is …

July 23, 2019

Georgia Market Reports Retail Southeast Southeast Market Reports

Main Street’s Retail Resurgence is Well Underway Across Metro Atlanta

by Alex Tostado July 22, 2019

Main Street is making a comeback, and this is not news by any means. This growing trend is not only affecting real estate in the greater Atlanta area, but also throughout the United States. Main Street’s demise began with the design of President Eisenhower’s interstate highway system. It allowed travelers to bypass once sustaining rural towns and divided urban cities in their hearts. In Atlanta, it’s easy to notice with the unconscionable prejudice that comes with the interstates that divide our city compounded by the inefficiency of MARTA. The fall of Main Street was further catalyzed by the rise of the service-based economy and exportation of U.S. manufacturing to low cost nations, allowing larger retailers to capitalize and increase their market share by selling low-cost goods. Increasing affordability, especially for consumer goods, is great for everyone -— no one wants to be digging out of their savings for daily necessities — especially in a time when almost half the country cannot afford a $400 medical bill. However, this increased our fascination with saving on discretionary spending and led to increased demand for the “big-box” store. Large retailers’ capitalization on this trend led to increased foot traffic to their centers. Developers’ …

July 22, 2019

Market Reports Oregon Retail Western Western Market Reports

Construction Pipeline Woes Benefit Portland’s Retail Market

by Taylor Williams July 20, 2019

Portland’s retail market is supported by steady employment gains that are luring new residents. Employers have created almost 23,800 jobs over the past 12 months, while the metro added nearly 27,400 people. This is a population growth rate that is nearly double that of the U.S. Household income also advanced at a faster clip than most of the country. Portland’s median household income jumped 5.3 percent over the past year. This is well above the national level of 3.6 percent, providing residents with more discretionary spending power. Retail sales have surged 5.8 percent year over year as a result, which is significantly higher than the U.S. rate of change. These growth trends are expected to continue through 2019, boosting the retail sector. The need for retail space may be escalating, but construction remains measured. This has funneled expanding retailers into the dwindling supply of existing space as vacancy tightens. Developers added 319,000 square feet year over year in March, slightly lower than the 327,200 square feet 12 months earlier. Deliveries will remain sparse as builders have less than 300,000 square feet under construction. Much of the new supply is ground-level space in mixed-use office or apartment projects in walkable, urban …

July 20, 2019

Market Reports Multifamily Texas Texas Market Reports

Houston Multifamily Occupancy, Rent Growth Return to Normal After Setbacks

by Taylor Williams July 19, 2019

Houston’s multifamily market has endured battles from all fronts in recent years: the oil slump, hurricanes, flooding, overbuilding in select submarkets, sluggish rent growth of late and lavish concessions to new renters that have been mainstays during this period. But the market now appears to be moving in the right direction with a sense of normalcy. From late 2014, when the oil downturn began, through the price bottoming in early 2016, Houston’s energy economy consistently made headlines across the nation’s publications. Each article claimed that at lower oil prices, the city’s over-reliance on energy would shut off job creation and growth. Yet this period also provided an opportunity to illuminate the incredible diversity within the greater Houston economy. Up until the oil downturn, the city’s diversity had been theoretical and unproven; now, along with the city’s resilience, it is indelible. Expanded activity at Port Houston, particularly in terms of manufacturing, in addition to plastics and petrochemicals, has propelled Houston’s job growth. The same applies to the market’s emerging role as a logistics hub and the expansion of the Texas Medical Center and regional healthcare providers, as well as strong growth in financial services and construction sectors. All told, the metro …

July 19, 2019

Market Reports Multifamily Oregon Western Western Market Reports

Red Tape, Legislation Tie Up Portland’s Multifamily Market

by Taylor Williams July 19, 2019

The population in the Greater Portland metro grew by more than 80,000 between 2016 and 2019, while the total number of all housing units permitted was 31,538, according to the Census Bureau. This ongoing housing shortage both inside and outside Portland city limits is expected to keep property values and rents growing as demand continues to outpace supply for the foreseeable future. Since 2015, there has been an increase in the vacancy rate as thousands of new apartments have been added and absorbed. Rent and other concessions that grew during 2018 have decreased in close-in Portland, East Vancouver and Oregon City. They have increased, however, in neighborhoods where new units were delivered. After experiencing flat rents two years ago, rent increases averaged 3.7 percent between April 2018 and 2019, according to the Multifamily NW Apartment Report. Portland saw an overall transaction volume increase with a total of 38 institutional transactions in 2018. Properties valued at less than $10 million experienced only a slight increase in transactions between 2017 and 2018. Oregon also became the first to adopt statewide rent control on Feb. 28, 2019. Rent increases are capped at 7 percent plus inflation annually. No-cause evictions are limited. The Portland …

July 19, 2019

Market Reports Midwest Midwest Market Reports Office Ohio

Various Submarkets Attract Cincinnati Office Tenants

by Kristin Harlow July 18, 2019

Over the past decade, Cincinnati has successfully positioned itself as a formidable Midwestern city, hungry for growth and innovation. Whether you’re a startup or a Fortune 500 company, the city (and its surrounding suburbs) can provide an attractive backdrop. The Cincinnati office market largely reflects this momentum. Demand in some areas has slowed, but the office market remains steady. In fact, the office market has experienced a flurry of activity in 2019 and is awash in new lease transactions and announcements of proposed new development. The first quarter of 2019 recorded a 1 percent drop in the entire market vacancy to 14.2 percent, according to Colliers International. The central business district (CBD)’s 12.2 percent vacancy is expected to drop another percentage point, as several pending leases are soon to be announced. I-71 North dominates The most active area is the I-71 North submarket, where five lease transactions came to fruition. Eversana leased 78,000 square feet at 8990 Duke Blvd., filling the former Express Scripts building just months after it went vacant. Worldpay took down 50,000 square feet at 8845 Governor’s Hill Drive across the street from its headquarters. Smith/Halleman Partners, the owner of the multi-building Governors Pointe, attracted Resurgent Capital …

July 18, 2019

Connecticut Industrial Market Reports Northeast Northeast Market Reports Office

Industrial, Office Investment Demand Rises in Westchester, Fairfield Counties

by Taylor Williams July 17, 2019

The investment markets for office, industrial and flex properties in Westchester and Fairfield counties have seen significant activity over the last 12 months. Both debt and equity capital have been flowing into the urban and suburban areas of the counties, demonstrating that these submarkets are viable alternatives to New York City. This year has witnessed one of the largest transactions to ever take place in Westchester and Fairfield counties since we have been recording statistics. This past spring, HFF sold a portfolio of 52 industrial flex assets in multiple parks in both Westchester and Fairfield counties for $488 million, or $167 per square foot. The demand was very strong for these industrial assets, and the buyer pool spanned from private groups to some of the largest money managers in the world. In addition, cap rates are in the 4.25 to 4.85 percent range for more traditional industrial product. Cap pricing is absolutely on track to surpass $200 per square foot, as there is a lack of available land for development and institutional funds’ continue to display an insatiable appetite for the product type. Consequently, these kinds of deals continue to dominate the conversations and market activity. Office Market Interest …

July 17, 2019

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