A strong, vibrant urban core is vital to the success of the entire metropolitan region, and although currently struggling to regain its footing in some critical areas, Baltimore City will eventually return to prominence in the eyes of international investors, CEOs and the general public. Local stakeholders retain confidence in the city based on its strong fundamentals, including nationally renown hospitals, an impressive labor force (a recent CBRE survey ranked Baltimore City as the No. 11 U.S. market for tech talent) and proximity to the Nation’s Capital and continued federal government spending. The city’s infrastructure, led by Interstate 95, the Port of Baltimore and Baltimore/Washington International Thurgood Marshall Airport (BWI), is among the most highly regarded across the country. There is an overall uptick in leasing and development activity in 2019, with an emphasis on mixed-use communities with an “engaging story to tell” based on the projects design, location or both. Baltimore City inches forward Ground was officially broken on the first phase of Port Covington, the $5.5 billion mega-project planned on a 235-acre waterfront parcel in south Baltimore that is expected to be anchored by the new Under Armour headquarters. This inaugural section will include 1.3 million square feet …
As we look toward the end of 2019, multifamily investment sales and mortgage banking transactions in the greater Philadelphia market are at an all-time high. For lifelong Philadelphians, it’s exciting to witness the area’s longstanding foundation successfully take shape through numerous real estate projects in the city and its suburbs. The Philadelphia multifamily market continues to capture interest from a variety of capital sources. Berkadia’s Philadelphia team alone has $4.3 billion in firm or funded transactions from January through August of this year. Specifically, institutional investors have demonstrated an increased interest in this market, as both national and international players continue to recognize the area’s relative value and sound fundamentals. We expect these trends to continue throughout the remainder of 2019 and into next year, regardless of any major headwinds at the macro-economic level. The driving forces behind Philadelphia’s success include a robust volume of new Class A developments, a more tactful approach to value-add deals, marketplace efficiencies and most of all, a continued demand for multifamily product. The market’s new Class A properties have been well-received in terms of leasing velocity. More construction capital is available than in years past; top-of-the-market rent discovery has generally proven out. In addition, …
In 2019, Dallas/Fort Worth (DFW) once again represents the nation’s top metro for job creation and net migration. These market conditions are occurring at an opportune time as more than 26,000 multifamily units have been completed throughout the market this year, marking a record wave of annual deliveries. This influx of new apartments will increase the metro’s rental inventory by 3.3 percent, yet robust demand for new supply allows net absorption to match delivery volume, lowering overall vacancy by 20 basis points. Prolonged Absorption Over the past three years ending in June, DFW’s apartment stock expanded by 10 percent, or 74,000 units, yet vacancy adjusted moderately during this period. Unit availability hovered in the high-4 to high-5 percent range, with demand supported by the creation of 400,000 jobs, robust in-migration and the widening gap between a monthly mortgage payment and average rent. The extended period of strong leasing velocity was highlighted by the second quarter of 2019, when a record 12,000 apartments were absorbed. Performance during this three-month stretch lowered vacancy by 90 basis points on a quarter-over-quarter basis. With employment growth slated to further improve during the second half of this year — the result of corporate relocations and …
Class A product is going off the market fast in Northern California’s industrial basin. Older product is sitting on the market longer, while mid-sized spaces are still the East Bay’s bread and butter. Net absorption has been pegged on a negative trend due to new construction and the volume of deals slowing down. Certain products are giving concessions to compete with newer product, while some landlords are trying to push the market limits to see how heavy tenant’s pockets really are. Several significant leases were signed in the East Bay during the second quarter of 2019. The largest deal of the quarter belonged to Service West, a furniture installer that signed a renewal and expansion totaling 252,021 square feet in San Leandro at 2350 Williams Street. Javelin Logistics, a logistics and distribution provider, also inked a new lease for 134,279 square feet at 7091 Central Ave. in Newark. Confluent Medical had the largest research and development deal of the second quarter, totaling 65,385 square feet. The material science tech company renewed at 47513 Westinghouse Drive in Fremont. The most significant investment sale of the second quarter occurred at 44100 and 44200 Osgood Road in Fremont. This is where Western Digital …
With all the changes occurring in retail over the past decade, the industry, as a whole, is being transformed before our eyes. These shifts have impacted how new retail development is taking place throughout the Phoenix area. It is also driving a significant change to how retail developers will operate over the next decade. The operational changes are dramatically affecting the prototypes of retailers. These changes are making it necessary for some retailers to relocate from an inline space at the back of a center to an outparcel with street-front visibility. It becomes even more complicated as more and more tenants are demanding a drive-thru. Panera Bread, Chipotle and Starbucks are just a few examples of retailers that have revised their real estate requirements to accommodate a drive-thru. Many retailers are also consolidating their total number of stores or downsizing their traditional physical footprint, which is also impacting centers. Some chains have even waved the white flag and closed their business altogether. These changes are driving the design of new retail projects throughout Phoenix. While the traditional configurations of regional malls, power centers and neighborhood shopping centers will always be a staple, the retailer’s shift to be up front and …
Multifamily rental demand in Metro Phoenix has been supported by higher education, while job growth has bolstered construction in the core and neighboring suburbs. Arizona State University has transformed the multifamily properties surrounding its large campuses in Tempe, Downtown Phoenix, Glendale and Mesa. The multifamily rental assets in the West Valley submarket have also been rejuvenated by Grand Canyon University. Thanks to these institutions and several others in the Greater Phoenix area, the growing skilled labor force has benefitted from job growth by supporting several Fortune 500 companies that have continued to increase their presence throughout the region. The recent expansions allow more graduates to remain in the Phoenix area and attract many new professionals to the market, ultimately enhancing rental demand in Phoenix and its neighboring suburbs. The rising number of residences has compressed vacancy rates in the metro as thousands of units are absorbed annually. This market demand will support the continued rise in rental prices and spur apartment development in the upcoming years. Apartment development has continued its strong pace in Phoenix. The metro is expanding its rental supply with about 8,250 units finalizing in 2019. Of this year’s deposit, roughly 2,600 units will be added to …
Until about six years ago, the Dallas-Fort Worth (DFW) industrial market was considered a second-tier market, lagging behind the likes of New York-New Jersey, Chicago and Los Angeles in terms of investor interest and demand. Today, the metroplex is not only holding its own with the traditional gateway markets, but in some cases surpassing them, thanks to growth from an exceptionally diverse group of tenants and industries. Natural population growth throughout North Texas has prompted stronger demand for industrial space across a range of user bases: e-commerce, global logistics, consumer products, building materials, pharmaceuticals, food, furniture, aviation. Some notable, six-figure leases that have been executed in the metroplex over the last 12 months and which reflect the diversity of tenant demand — as well as the geographic range of submarkets seeing strong activity — include the following: Smuckers (1.1 million square feet in south Dallas), furniture provider Steelcase (618,000 square feet in Carrollton), marketing firm Taylor Communications (232,000 square feet in south Dallas), ITW Food Equipment (184,000 square feet in Fort Worth), Alliance Glazing (137,000 square feet in Garland), Panoramic Doors (127,500 square feet in Fort Worth) and CEVA Logistics U.S. (100,000 square feet in Coppell). As these deals illustrate, …
Demand for industrial space in Philadelphia and suburban Pennsylvania counties has been strong over the last five years. The last meaningful wave of speculative construction occurred in 2002. Couple that with the fact that much of the area’s industrial inventory was built prior to 1980, and we have a market that is ready to absorb a rising volume of speculative product. Organic growth and new-to-market requirements have absorbed most of the quality supply, leaving inventory that is at 40 to 50 years old and functionally obsolete for many requirements of today’s e-commerce users. Activity has been slower in the year’s first six months as companies have been more cautious about planning for future growth. Another factor has been the lack of quality-space options, with less than 1 percent of the inventory considered institutional, Class A space. This dearth of quality space is reflected in the single-digit vacancies. Developers, tenants and brokers will be watching closely as over 5 million square feet of speculative industrial space is projected to deliver in the next 12 to 24 months. Strong Urban Demand There is pent-up demand from local warehouse and manufacturing companies as well as increasing demand from third-party logistics (3PLs) users, food …
While Austin is the Texas city that has become most synonymous with a tech-heavy office market over the last decade, the remarkable amount of overall job growth in the metroplex is allowing Dallas to slowly grab a larger piece of the tech pie. While some of the fastest-growing tech firms in the market right now — Google, Facebook, Indeed — have committed to larger office footprints in Austin, many of these firms still retain offices in Dallas due to its strong supply of qualified labor and relatively cheaper cost of doing business. However, in addition to having offices in Dallas, these firms have contributed to commercial real estate growth in the metroplex through build-to-suit data center developments and large colocation leases with established data center operators in the market. Facebook’s $1 billion data center development in Fort Worth is among the largest in the country, and construction recently began on Google’s $600 million data center campus in the southern suburb of Midlothian. IBM SoftLayer, Rackspace, and LinkedIn are other examples of technology firms taking large data center leases in the Dallas metroplex, North America’s third-largest data center market, according to 2019 figures from DataCenter Hawk. Outside of the context of …
Phoenix is known for its strength as a logistics and distribution market. This is particularly true in the Southwest Valley, which has become the poster child for all that makes Phoenix industrial space great: strong population growth, a deep and qualified workforce, an abundance of land and building opportunities, and a lower-cost, business-friendly regulatory environment. As of the second quarter, these benefits helped the Southwest Valley emerge as No. 1 in the nation for industrial prospects looking for space (based on interest from at least 83 tenants with a maximum requirement of more than 30 million square feet). These prospects include national and regional distribution centers, third-party distribution providers, major ecommerce users, and a robust food and beverage sector led by companies like Fairlife Dairy, UFI, Ferrara Candy and Red Bull. It also comes from the reshoring of manufacturing from organizations like Hutamaki, Ball Enclosure and Anderson Windows. Data centers continue to flock to Phoenix as well, purchasing about 2,000 acres over the past 24 months and positioning the Valley among the nation’s top five U.S. data center markets. Data center interests like Microsoft, Vantage Data and Google have selected Phoenix for its low natural disaster risk, ample affordable land …