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 …
It isn’t just temperatures that are scorching in the Phoenix metro this summer. The multifamily rental market is hot as well; and vigorous demand is coming from both renters and investors. Investors are snapping up apartment properties and paying hefty prices. Buyers spent $3.72 billion on 94 Phoenix-area apartment complexes in the first half of 2019, a 41.8 percent jump from the first half of 2018. Sales in the $50 million range experienced the greatest rate of acceleration. The Driving Factors Behind Strong Demand Phoenix is the fastest-growing city in the U.S., according to recently released data from the U.S. Census Bureau. The region saw an increase of 25,288 new residents between 2017 and 2018, topping all other U.S. cities. One reason for that growth is that Phoenix remains more affordable than many other large U.S. metros. People are flocking to the Valley from high-cost, high-tech cities like Los Angeles and San Diego. Phoenix also boasts a thriving job market that includes a fast-growing, high-paying tech sector. Other booming industries include bioscience/healthcare and financial services. In fact, the Phoenix metro led the U.S. for new jobs created from May 2018 to May 2019 with 66,500 non-farm jobs, representing 3.2 percent …
The Dallas-Fort Worth (DFW) economy is booming with tremendous population, income and job growth trajectories that directly benefit the local retail sector. Shopping center investors have taken notice, as evidenced by the total transaction volume for retail properties during the last 12 months reaching its highest level in more than 10 years. Compelling Fundamentals Investors continue to buy retail properties in Dallas as a result of DFW’s healthy and diversified economy. Population growth and in-migration patterns are significant factors with more people moving to DFW last year than any other metro area in the nation (246 people arriving daily), according to recent data from the U.S. Census Bureau. This surge has pushed DFW’s population to more than 7.5 million residents. Additionally, employment growth has exploded, with DFW leading the nation in job creation last year by adding 116,400 jobs. The Dallas metro unemployment rate has recently dropped to 3 percent, which is the lowest rate in 20 years, and this has further contributed to powerful employment dynamics that continue to fuel consumer retail spending. DFW was also recently ranked as the No. 5 market in the nation for technology jobs, which typically are higher-paying and will add strength to an …
As I have enjoyed writing in six previous August articles since 2013, we have seen Cedar Rapids, the 2014 “All-America City,” go from flood recovery in 2008 and 2016 to record levels of development. The city set a record for building permits in fiscal year 2018 of $375 million, which was $133 million over the previous year and $29 million more than the 2012 record by $29 million. Activity in fiscal year 2019 is estimated to be a very impressive $320 million. Flood protection system reached another milestone on Nov. 22, 2018, when the city and Army Corps of Engineers officially signed the agreement for $117 million of federal funds to allow the entire east side of the river flood protection system to be completed within five years. The west side is being funded through a state sales tax rebate program and 10 years of flood bonds to allow the entire $750 million flood protection system to be completed in the next decade. This year there are already four sections under construction with several additional portions being bid over the next several months. The flood protection system will not be just berms or walls that will block the view of …
Retail leasing activity across New York City accelerated during the second quarter of 2019, but the market continues to see vast discrepancies in supply-demand balances across various submarkets. In certain parts of Manhattan, year-over-year asking rents declined by double-digit percentages, according to the Real Estate Board of New York (REBNY) Spring 2019 Report. Midtown East, for example, saw its average asking rent drop by 22 percent from $3,900 per square foot to $3,050 per square foot during this time period. The corridor between 42nd and 49th streets experienced similar activity, sliding 20 percent from an average asking rent of $1,000 per square foot to $800 per square foot. Historically high vacancy and low absorption rates are behind the negative rent growth. Due to the high cost of doing business in New York, landlords have also struggled to backfill spaces vacated by tenants that were victims of the e-commerce world. As a result, property owners are being forced to bring down their tenant improvement allowances and integrate more flexibility into their leases, primarily in the form of shorter lease terms to stimulate cash flows. Midtown East had approximately 100 vacant retail spaces totaling more than 500,000 square feet at the end …
The momentum of the Charlotte office market continued in the first quarter of 2019, as office rents rose for an eighth consecutive quarter and the city notched a major economic development win with the announcement that BB&T and SunTrust would merge, creating a new bank that will be headquartered in Charlotte. The news came on the heels of announcements late last year that Honeywell plans to relocate its corporate headquarters to the city and that LendingTree would expand its headquarters, creating 436 jobs over five years. The city’s economic strength has been fueled by a growing labor market that was led by the tech sector in 2018. Last fall, CompTIA’s 2018 Tech Town Index found that Charlotte is the No. 1 city for information technology workers when it comes to job opportunity and cost of living. At the time of the report, more than 44,000 IT jobs had been posted in Charlotte over the previous 12 months. That number is projected to grow by 11 percent over the next five years as Bank of America Corp., Wells Fargo & Co. and Ally Financial look to fill IT jobs at all levels. Office rental rates in Charlotte increased by 6.5 percent …
Charlotte has been in expansion mode for several years, due to population growth, excellent logistics infrastructure, low operating costs and low unionization rates. At the mid-point of 2019, the market continues to expand at a healthy rate and is growing outward into Cabarrus, York and Gaston counties. This expansion follows a strong 12-month period ending first-quarter 2019 when nearly 6 million square feet of new product was delivered. Now encompassing 322 million square feet of space, Charlotte is the second largest industrial market in the Southeast. Charlotte’s accessible location and low cost of doing business is attracting many e-commerce and logistics providers, as well as more traditional industrial businesses looking to expand or realign their space requirements. One common theme is consolidation of business units, which has been a significant benefit to the Charlotte market. Among the examples are J.J. Haines & Co. consolidating its Carolina warehousing operations from several Carolinas locations into a 500,000-square-foot distribution center in Cabarrus County and Staples consolidating from multiple Charlotte facilities into a 600,000-square-foot logistics center in south Charlotte. Driven by available land and access to key transportation routes, a look at the market’s growth patterns shows that development and leasing are extending up …
As job growth supports a healthy economy in Southwest Florida, the region is experiencing major population growth, causing a surge in new Class A multifamily construction. The number of new construction Class A units in Southwest Florida has increased by nearly 150 percent year-over-year. In first-quarter 2018, there were 257 Class A units completed, and in first-quarter 2019, that number rose to 622. With this increased supply of Class A properties, there is now more demand in Class B properties among renters, and ultimately from investors. Class B properties tend to have more affordable rental rates, and investors have now noticed the potential for higher investment returns. Illustrating this demand, in the first quarter of 2018 in Southwest Florida, there were 17 Class B properties sold that totaled nearly $39 million. In first-quarter 2019, the sale volume increased to $68 million with nine properties sold. Also, investors were willing to pay more for these assets if they had a value-add component With Class B vacancies being tight at 4.6 percent, investors are making interior and exterior improvements to properties and gradually raising rental rates to increase their returns. For example, a value-add Class B multifamily property in Fort Myers recently …