Market Reports

Redefining Retail Real Estate in Philadelphia

by David Cohen March 6, 2019

When the Philadelphia Eagles were headed to the Super Bowl in 2018, they were the underdogs. The odds — and subsequently media headlines — were against them. But the team proved those predictions wrong, and went on to clinch its first championship. The retail market in Philadelphia, and nationwide, tackled similar challenges last year. As mature department stores shuttered and retailers filed for bankruptcy, the industry faced ongoing uncertainty. However, the rapidly changing dynamics represent vital opportunities for retail real estate owners to reimagine the mall experience. In Philadelphia, the high density of residents, workers, college students and visitors create a more than $1 billion retail demand annually, according to the Philadelphia Retail Report 2018 compiled by the Central Philadelphia Development Corp. In order to capture consumer interest, industry leaders need to evolve alongside the community’s changing needs and landlords and brands today have been transforming the conventional retail real estate model, carving a new path to success. Looking ahead, the future looks bright. Here’s a look at key trends driving the next level of retail real estate in Philadelphia. Innovative Concepts As habits of shoppers continue to evolve, brick-and-mortar space today can offer opportunities beyond traditional retail whereby real …

March 6, 2019

Market Reports Multifamily North Carolina Southeast Southeast Market Reports

Is Raleigh’s Multifamily Market Still a Strong Investment?

by Alex Tostado March 5, 2019

The short answer: absolutely. You don’t need to be a savvy commercial real estate professional to notice the impact multifamily has on Raleigh’s urban landscape. Areas like North Hills/Midtown, Downtown and Hillsborough Street are typically at the forefront of everyone’s mind when they think of new Raleigh developments, but it’s not just Class A development in the city’s urban core that has seen a boom. Class B and C suburban product have seen the most significant rent growth through the cycle that continues to increase each quarter. Moreover, we are seeing new construction intensify along our suburban corridors. It’s also no secret that Raleigh has one of the healthiest economies in the country. The Milken Institute reported recently that Raleigh ranks No. 2 in the nation for creating and keeping quality jobs. Economic factors like wage and employment growth, quality of life, proximity to higher education and a bustling tech sector have created a perfect storm of dynamic economic activity. Much to their chagrin, Raleigh natives haven’t done a very good job of keeping this a secret, and the number of fresh new faces coming to the Triangle continues to rise. In fact, the Raleigh-Durham market grew by nearly 60,000 …

March 5, 2019

Market Reports Multifamily Texas Texas Market Reports

Why Arlington Should Be on Every Multifamily Developers’ Radar

by Taylor Williams March 1, 2019

Our borrowers’ favorite question is, “Where should we build next?” As a lender specializing in financing Texas apartment communities, it’s hard to get the answer wrong. Our state is full of cities adding jobs and people at faster rates than the nation as a whole. As we drill down to help our clients differentiate between “good markets” and “good opportunities,” we focus on several factors including the current rental market, supply and demand and location. When considering these factors, the city of Arlington stands out as an overlooked “good opportunity.” It’s surprising how little attention this city of 400,000 in the middle of the metroplex has received from multifamily developers in recent years. Even as home to an ever-expanding General Motors assembly plant, one of the state’s largest universities, an entertainment district featuring two $1 billion stadiums, an extensive highway system, easy access to Dallas-Fort Worth (DFW) International Airport and a pro-growth local government, we haven’t worked with a developer yet that had Arlington on its list before we talked. Yet the selling points are obvious. Current Rental Market Overall, market-rate properties in Arlington show steady occupancy at 93 percent with average rents of $1.20 per square foot and annual …

March 1, 2019

Illinois Market Reports Midwest Midwest Market Reports Office

Chicago Office: Fulton Market Isn’t in the West Loop

by Kristin Harlow February 28, 2019

Long before the emergence of Fulton Market, local real estate professionals referred to the West Loop as the office submarket between Wells Street and immediately west of the Chicago River. But today some also refer to the Fulton Market area, an area one mile west and across a natural boundary of the Kennedy Expressway, as the West Loop. So which is it? The West Loop is the leading — and by far the largest — office submarket in Chicago with over 50 million square feet of office space inventory. Its proximity to public transportation and wide setbacks along Wacker Drive and the Chicago River offer better view corridors and more access to natural light — key competitive advantages in an area that permits more buildable density than the periphery of the central business district (CBD). On the other hand, Fulton Market has its own distinct “edgy” identity that some area office tenants consider the antithesis of the Loop (recall that the original reference to the Loop meant the area surrounded by the Elevated CTA tracks, the “El,” that loops around the CBD). The West Loop proper has witnessed significant change in the last 10 to 15 years. The …

February 28, 2019

Market Reports Massachusetts Northeast Northeast Market Reports Office

Office Demand Holds Steady in Suburban Boston Markets

by David Cohen February 27, 2019

Boston’s metro west office market continued to move along at a steady clip in 2018. Many of the trends seen in the west market have been consistent over the past few years. One of the most prominent trends is that tenants continue to prefer high-quality properties. Class A product has benefited from the demand, resulting in a limited supply of Class A large blocks. In contrast, commodity space is still lagging from a demand standpoint. Additionally, many landlords have been performing gut renovations on older properties and have been reaping the rewards of their investments. The west market has also benefited from tenants migrating from Cambridge and life science demand, which are two closely related trends. Cambridge, particularly Kendall Square, is well known as the national hub of the life science industry. With that pedigree, pricing there has grown tremendously, and available space is scarce. As such, many life science occupiers are looking west to fulfill their needs, and the Cambridge market conditions have pushed other non-life science occupiers west as well. A proximity to the inner urban core makes towns like Watertown and Waltham particularly attractive. The above trends are not new, but one is. New economy tenants, who …

February 27, 2019

Market Reports Multifamily Northeast Northeast Market Reports Pennsylvania

Philadelphia Multifamily: A Safe Haven for Global Capital

by David Cohen February 27, 2019

Fueled by low interest rates, an abundance of available debt capital, and superb fundamentals, the demand for multifamily assets in the U.S. has exploded over the past few years. This increased demand has led to fierce competition between capital in the multifamily sector, and consequently, a dramatic compression of going-in cash yields. With rents in “top-tier” cities at peak levels, these markets look prohibitively expensive. As a result, foreign capital is beginning to explore new markets to find more attractive yields. Long considered a second-tier U.S. city by global capital, Philadelphia has historically been overlooked in favor of cities such as New York City, Washington D.C., Boston, Chicago, San Francisco, and Los Angeles. When evaluating Philadelphia in comparison to other major metropolitan regions, the slow and steady growth of the Philadelphia MSA did not differentiate it enough to attract the foreign investor. Instead, those capital sources targeted cities with higher population growth, job growth, and rent growth. In good times, that calculation paid off with higher yields and greater appreciation. However, today most investors conclude that we are in the late stages of this real estate bull market. Yet, they still have capital which needs to be deployed. Those divergent factors …

February 27, 2019

Market Reports North Carolina Office Southeast Southeast Market Reports

Raleigh-Durham’s Strong Job Growth Lifts Office Fundamentals, Investment Sales

by Alex Tostado February 25, 2019

The Raleigh-Durham region’s continued strong job growth is fueling sustained demand from tenants, keeping the office market firmly in favor of landlords despite a notable increase in construction activity in recent months. The region added 26,500 jobs between October 2017 and October 2018 for a growth rate of 3 percent. Unemployment fell from 3.8 percent to just 3.0 percent during this time, hitting its lowest level since 2000. Despite not making the final cut for massive headquarters expansions from Amazon and Apple, Raleigh-Durham experienced significant economic development wins in 2018. Major job announcements came from office-using tenants such as Advance Auto Parts (435 jobs), Pendo (590 jobs), Arch Capital Services (365 jobs), Ipreo (250 jobs) and LabCorp (422 jobs). As in many markets across the United States, co-working operators significantly increased their presence in the region in 2018. Spaces has signed leases at five Raleigh-Durham properties, and WeWork committed to two locations and has stated that it plans to triple its local footprint in the near term. In November 2018, Forbes ranked North Carolina the nation’s No. 1 state in which to do business, and Urban Land Institute and PricewaterhouseCoopers named Raleigh-Durham the No. 3 U.S. market in their Emerging …

February 25, 2019

Industrial Market Reports Texas Texas Market Reports

E-Commerce, Distribution Users Spar for Labor

by Taylor Williams February 22, 2019

Industrial users in Texas, particularly e-commerce firms operating out of large-format distribution centers, are finding it harder and harder to staff their facilities with experienced, talented workers. Development of both speculative and build-to-suit warehouses and distribution centers has been on fire in major Texas markets over the last several years, driven by an abundance of land, exceptional infrastructure and climbing populations. According to CoStar Group, Dallas-Fort Worth’s (DFW) industrial supply grew by 3.5 percent, or roughly 30 million square feet, in 2017. That figure represents the highest single-year inventory growth in more than a decade. Approximately 21 million square feet of new space hit the market in 2018, and for 2019, CoStar forecasts that nearly 24 million square feet of product will be delivered. Houston’s supply growth has been tamer, averaging about 12.2 million square feet annually between 2015 and 2018. But the market is projected to add another 13.2 million square feet this year, per CoStar. With a couple exceptions, more than 90 percent of the new product delivered in DFW and Houston in each year between 2015 and 2018 was distribution space. The distribution building booms in Texas’ two biggest markets have occurred in the face of escalating …

February 22, 2019

Illinois Industrial Market Reports Midwest Midwest Market Reports

Chicago Industrial Predictions: Absorption May Slow in Second Half of 2019

by Kristin Harlow February 21, 2019

As we begin 2019, there are several opposing market forces at work that are sure to influence each of us, and our respective firms and clients. These market dynamics will ultimately dictate who has a great year and why — or why not. This year, it seems the signals are more mixed than in the past several years, so making predictions about the local industrial real estate market is somewhat daunting. Nonetheless, here is what to look for in 2019. A tale of two halves Listen carefully: skip vacations, stay in town, hunker down and make as many deals as you can in 2019. Based on current supply and demand dynamics with several significant users already in play (build-to-suits, new leases, renewals, etc.), plus a recent wave of speculative deliveries, look for the first and second quarters to be fairly robust in terms of gross absorption. This should extend the growing record of 35 straight quarters of positive net absorption, dating back to the second quarter of 2009, with at least two to three more such quarters. But, like in sports, what happens in the first half can be overshadowed by a shift in momentum or other significant change in …

February 21, 2019

Market Reports Massachusetts Multifamily Northeast Northeast Market Reports

Elevated Home Prices, Housing Shortage Keep Vacancy Tight in Boston Multifamily Market

by David Cohen February 20, 2019

A highly educated workforce is driving corporate growth throughout Boston, particularly in the finance, technology and medical sectors. PNC Financial Services and JPMorgan Chase have announced considerable expansions and some international companies, including LogPoint, are setting up North American operations in the Boston metro. As a result, approximately 47,100 positions were created since October 2017, building on the 39,400 jobs added in the prior 12-month period. The pace of hiring has kept the unemployment rate in the low 3 percent band, making it difficult for employers to find quality workers. Overall, healthy employment growth continues to draw more residents and underpins household formation, fueling the need for quality housing. High home prices, however, are putting homeownership out of reach for many, boding well for apartment demand. As a result, vacancy rates remain considerably tight, resting below 4 percent in the third quarter. The still tight vacancy rate is creating a shortage of housing throughout Boston, particularly for lower income households. Consequently, vacancy in Class C apartments has held below 3 percent during the past two annual periods ending in September. Effective rent in these spaces is roughly between $700 and $1,800 per month less than Class A and B spaces, …

February 20, 2019

Newer Posts

Older Posts