Market Reports

Austin Office Market’s Central Business District: Past, Present and Future

by Taylor Williams March 22, 2019

In 1987, Austin was a relatively quiet market where the major industries were higher education and state government, along with some large technology companies like IBM. Fast forward to 2019 where Austin continues to make national headlines, receiving high accolades as a top place to live and a leading city for millennial growth. This transformation — coupled with an increasing number of companies choosing to move or expand in Austin — begs the question: Why Austin? How did the Texas capital go from a fairly sleepy town to one of the hottest markets in the country? What really accounts for this seismic shift and what does the future hold? The Office Boom Begins In 2004, after the dot-com bust hit Austin, a group of private business leaders felt compelled to take the destiny of the city into their own hands with the creation of Opportunity Austin within the Greater Austin Chamber of Commerce. Opportunity Austin was launched with the goal of creating 72,000 regional jobs and increasing regional payrolls by $2.9 billion within five years. To do this, the regional business community invested $14.4 million in the program. These funds allowed the Austin Chamber to increase initiatives for corporate recruitment …

March 22, 2019

Industrial Market Reports Northeast Northeast Market Reports Pennsylvania

Philadelphia Warehouse Inventory Fails to Keep Up with Demand

by David Cohen March 21, 2019

The combined greater Philadelphia industrial markets closed 2018 with 718,266 square feet of positive absorption, according to research from NKF. Year-over-year, overall vacancy declined 20 basis points to 5.5 percent, while warehouse vacancy increased 140 basis points to 6.3 percent. 3.4 million square feet delivered over the past twelve months with 2.3 million square feet designated as warehouse space. The Southeastern Pennsylvania industrial market closed the year with a total of 264,511 square feet in negative absorption. Year-over-year, total vacancy for all property types increased 70 basis points to 6.2 percent. Philadelphia County accounted for a majority of Southeastern Pennsylvania’s occupancy gains, closing the year with 854,488 square feet of positive absorption. This was largely due to significant gains in occupancy that occurred in the first quarter. During the first three months of the year, Dependable Distribution moved into 332,640 square feet at 9801 Blue Grass Road and 185,000 square feet at 11200 Roosevelt Boulevard. In addition, Rainbow moved into 365,000 square feet at 2951 Grant Avenue, also in the first quarter. The negative absorption in the Southeastern Pennsylvania suburban market is not a sign that demand has slowed, quite the opposite. Ecommerce and distribution companies are aggressively seeking high-bay …

March 21, 2019

Market Reports Midwest Midwest Market Reports Minnesota Office

To Attract and Retain Tenants, Office Landlords Get Creative in Minneapolis

by Kristin Harlow March 21, 2019

Stakes are rising in the war for talent, and employers are using amenity-rich real estate to win the hearts and minds of the brightest young recruits. Determined to outflank the competition, companies are increasingly focused on occupying buildings with the best available on-site features, proximity to nearby amenities, and the elusive “cool” factor. Competition escalates To heed the call for better offerings, landlords in Minneapolis have begun to offer unconventional amenities including golf simulators and nap pods. As owners of traditional Class B and C buildings undertake renovations and amenity package upgrades to compete with Class A properties, lines between building classes are starting to blur. Tenants will likely start taking a more cautious approach to real estate, reflecting an increase in business uncertainty and projections for slower growth. This mindset will decrease appetites for relocations, prompting more renewals in 2019. Despite this trend, there will be a healthy number of relocations for those tenants that have not yet right-sized by employing modern furniture systems, single-sized offices, more natural light and more collaborative space. Within tenants’ spaces, private offices will grow increasingly scarce, and those that remain will move to the interior to provide more light, greater flexibility and better …

March 21, 2019

Industrial Market Reports North Carolina Southeast Southeast Market Reports

High Demand, Barriers to Entry Push Raleigh-Durham’s Industrial Rental Rates

by Alex Tostado March 18, 2019

The Raleigh-Durham industrial/flex market, totaling approximately 135 million square feet, continues to be strong with overall positive absorption. Absorption for industrial totaled 1.6 million square feet and flex was over 3 million square feet for 2018. Vacancy is trending lower, helping make the region a landlord and seller’s market. With increasing construction costs, lower vacancy and solid demand, the rental rates and sales prices are now the highest of any region in North Carolina. Our rental rate for new industrial product is currently in the mid to high $5 per square foot range and trending higher. Some developers and brokers speculate the Triangle may become a $6 per square foot market for institutional-grade warehouse space in 2019. Ground zero for the region’s warehouse market is in the general vicinity of Raleigh-Durham International Airport (RDU). Most distributors that locate here are delivering to the local market and need the central location and access to Interstate 40. The historical barriers to entry near the airport have been high land costs and lack of land not encumbered with wetland or easements. Another barrier to entry that has crept into the picture are some local municipalities desiring a “higher end” product than warehouse and …

March 18, 2019

Market Reports Retail Texas Texas Market Reports

Redevelopment Defined Fort Worth Retail Market in 2018

by Taylor Williams March 15, 2019

2018 was a year of redevelopment, adjustment and correction for the Fort Worth retail market. Some real estate professionals believe this activity was the result of the collective, pent-up demand among quality retailers for a store presence in Fort Worth. Some believed they that could duplicate the atmosphere created by The Domain, a 1.2 million-square-foot mixed-use destination in Austin that has achieved tremendous success. The previous three years saw more than 2.5 million square feet of new retail space delivered in Fort Worth, a figure that exceeds the combined total for the previous 10 years. For example, in September 2017 Simon Property Group, in partnership with Cassco Development Co., opened The Shops at Clearfork, a 500,000-square-foot, open-air luxury shopping, dining, entertainment and mixed-use destination situated in the heart of Fort Worth. The Shops at Clearfork also includes office space. Other retail projects that contributed to new supply included WestBend, Waterside, Left Bank and Presidio. This new development caused a spike in vacancy to 8.7 percent by the end of the year as landlords were all looking to stabilize their assets from the same tenant pool. At the same time, retailers, restaurants, service firms and experiential companies were cautious and calculated …

March 15, 2019

Indiana Industrial Market Reports Midwest Midwest Market Reports

If You Build It, Will They Come? Indy Industrial Tenants Demand Smaller Spaces

by Kristin Harlow March 14, 2019

Recently, my national research colleagues released “The Top 10 Commercial Real Estate Trends for 2019,” a piece featuring predictions on subjects such as trade tensions, labor shortages and the evolution of “co-everything.” Of all the predictions, one stood out as being especially relevant for the Indianapolis industrial market as we inch further into 2019. Indianapolis has lacked industrial space for occupiers seeking to grow, particularly in smaller segments. The great news is that the market is well on its way to remedying this ailment. Demand causing shortage As we all know, the industrial sector is undergoing an e-commerce revolution. This has created a rush of demand by retailers and third-party logistics (3PL) providers for distribution and warehouse space, especially in cities like Indianapolis, which historically has been recognized for logistics strength. As a result, industrial market fundamentals have generally tightened across much of the United States. In the fourth quarter of 2018, the U.S. industrial vacancy rate fell to 4.8 percent, the lowest rate on record. Similarly, Midwestern markets currently sitting at 4.8 percent vacancy have experienced a 50-basis point decline in vacancy since the fourth quarter of 2017. Pair that with north of 111.5 million square feet of …

March 14, 2019

Market Reports Massachusetts Mixed-Use Multifamily Northeast Northeast Market Reports Office

Greater Boston Commercial Market Remains Robust

by David Cohen March 13, 2019

While other U.S. cities have demonstrated volatile economic markets, Boston has sustained a strong, healthy economy for more than 40 years. This economic health coupled with the city’s diversity of industries has had a lasting, positive impact and increased demand for commercial space in the greater Boston market. The snapshot of the Class A and B, lab and office market is strong but shows some signs of regression. Today, overall vacancy for lab and office including sublet space is 12.8 percent, according to research from Colliers International. When you break down the numbers by region, the current downtown Boston office market has 71 million square feet, with a 9.2 percent vacancy rate. Cambridge has 23.6 million square feet of space and 3.8 percent vacancy and the suburbs total 123.5 million square feet with 16.6 percent vacancy. The entire Boston area absorption for lab and office space is 5.2 million square feet. While those stats are favorable compared to the last two years, (2017 with 1.8 million square feet and 2016 with 1 million square feet), they are dwarfed by 2015 which had absorption of 5.8 million square feet. It is also the first time that Class B rents have topped …

March 13, 2019

Industrial Market Reports Texas Texas Market Reports

Quality of Labor, Land Availability Buoy Fort Worth Industrial Market

by Taylor Williams March 8, 2019

The DFW industrial market has enjoyed unprecedented growth over this seven-year development cycle. The market has added approximately 118 million square feet of industrial inventory over that period and absorbed 143 million square feet. Population growth in the Dallas-Fort Worth (DFW) metroplex, the state of Texas and the south-central U.S. region, as well as growth in e-commerce, are the primary tailwinds propelling this extraordinary growth. Ever since Hillwood broke ground on AllianceTexas in the late 1980s, putting north Fort Worth on the radar of industrial users, the expansion in the Fort Worth industrial market has been an ever-increasing part of the overall DFW industrial market’s growth. However, the Fort Worth industrial market’s growth is really accelerating now based on the lack of available developable industrial sites in Dallas and the Mid-Cities. Further, when users and developers compare Fort Worth and southeast Dallas, the two areas with available industrial spaces and developable industrial land, Fort Worth’s advantages with regard to infrastructure, amenities, and most importantly, labor, stand out. As the area reaches peak employment, and with labor cost being the highest percentage of a user’s overall operational cost, the workforce factor has become the most important site selection criterion for users …

March 8, 2019

Indiana Market Reports Midwest Midwest Market Reports Retail

The Resilience and Importance of Retail in Indianapolis

by Kristin Harlow March 7, 2019

While Indiana is well known for the Indianapolis 500, the state’s economy is firing on all cylinders and experiencing noteworthy job growth. Indiana’s marketing campaign, “A State That Works,” has been successful in attracting investment to the state by touting its highly ranked business climate, competitive cost of doing business, pro-business tax climate, low cost of living, extensive logistical infrastructure and access to strong educational systems. In June 2018, Bloomberg ranked the Indiana cities of Elkhart (No. 1), Kokomo (No. 3) and Columbus (No. 13) for having the largest employment gains in the country since the recession. The Indianapolis metro area has created one of the nation’s top burgeoning tech scenes with a 68.1 percent increase in tech job growth from 2006 to 2016, landing No. 5 on Forbes’ list of “Cities Creating the Most Technology Jobs.” The state’s stable economy and encouraging unemployment rate have provided strength to the rapidly evolving retail industry. While national news is filled with retail bankruptcies and store closures, there has been tremendous retail activity backfilling vacancies and spurring new development from the following retail sectors: grocery, home living, health and wellness, beauty, fitness, off-price/discount, and dining and entertainment. Backfilling bankruptcies Following the bankruptcy …

March 7, 2019

Market Reports Northeast Northeast Market Reports Pennsylvania Retail Uncategorized

Millennials Catalyst for Retail Transformation of Center City Philadelphia

by David Cohen March 6, 2019

As consumer shopping habits continue to evolve and shoppers get younger, retailers are trying to strike the right balance between their online and physical presence. Those that find this omnichannel harmony are thriving in cities across the United States. Philadelphia’s Center City, in particular, is capitalizing on its booming millennial population and attracting retail concepts that cater to this group. According to Center City District’s 2018 State of Center City Philadelphia report, millennials make up 40 percent of Philadelphia’s downtown population, one of the highest percentages in all U.S. cities. With millennials moving into the peak spending years of their lives, Philadelphia is experiencing a multitude of development with most of the focus being on mixed-use. Mixed-use development, which combines retail and residential, and sometimes office, is attractive to the millennial generation who are driven by convenience and want the ease of living, working, dining, and shopping all in one place. The largest retail development projects Center City is seeing right now are happening in the Midtown Village neighborhood, which had been largely neglected until recently when it comes to large mixed-use developments. A few notable projects here are The Collins, a residential community that features 90,000 square feet of retail …

March 6, 2019

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