The industrial market’s direct vacancy in greater Reno increased by 80 basis points to 4.53 percent at the end of the third quarter of 2018. It was carried by 715,821 square feet of positive net absorption, a relatively below average figure, as well as by an increase in new deliveries. Notwithstanding, pending transactions currently underway in the fourth quarter should mitigate the increase in the market’s overall vacancy. Tenant demand in the third quarter was robust for spaces with less than 50,000 square feet. Transactions that involved Class A space accounted for 84 percent of the total gross absorption. The North Valley was the best performer of all the submarkets, resulting in a 35 percent decrease in availability. The I-80/East submarket, however, recorded a substantially negative quarter due to deliveries/new availability pushing the vacancy to 12 percent. Sublease availability was static for yet another quarter, which demonstrates stability in the market. The average transaction size in Reno decreased slightly to 53,195 square feet. Heading into the fourth quarter, the market witnessed an increase in inquiries and tours involving more than 200,000 square feet. This gave existing landlords confidence that vacancies and new deliveries will be leased in the short term. …
Strong market performance has allowed the Louisville industrial market to recently post the highest quarter of positive net absorption in market history during the second quarter of 2018, which occurred on the heels of the second-highest quarter of positive net absorption recorded just one quarter earlier. This outcome has been the result of recent build-to-suit projects, the availability of quality product and growing demand by new and prospective tenants in the Louisville market. Beyond healthy supply and demand fundamentals, Louisville is achieving great balance with access to available labor along with low utility costs. Tenant Demand Picks Up There are currently over 20 active prospects considering 200,000 square feet or larger in the metro Louisville market. Much of this demand is attributed to the high level of activity at the two local Ford Motor Co. plants, as well as the proximity of the UPS Worldport, the 5.2 million-square-foot-core of UPS’s global air network located in the heart of metro Louisville. Along with the natural interest from companies in the automotive supply chain and e-commerce companies benefiting from the proximity to UPS, we have recently seen an increase in pharmaceutical and food-related companies considering Louisville for a location. Strong Labor Force …
Mixed-use development is not new. It has been around since the shop owner lived in the apartment above the store. Today, however, the term is used to describe an urban environment that allows people to walk easily among a variety of integrated functions. At first glance, one might think mixed-use development in the Plano-Frisco-McKinney area, known as the Far North submarket, is strictly for big-name developers. Familiar destinations such as Legacy West in Plano and The Star in Frisco underscore this notion, offering retail, restaurants, office, hotels and apartments. Take a closer look, however, and you’ll see that the region is also starting to add smaller mixed-use projects that provide convenience, amenities and experience for occupants and visitors. Numbers Matter Will the many kinds of mixed-use development happening now in Far North Dallas be sustainable? If the current market reports are any indication, then the answer is yes. The saying goes that if the vacancy rate in Dallas-Fort Worth (DFW) is less than 20 percent, then the construction cranes come out. CoStar’s Mid-Year 2018 report shows that the DFW office market ended the second quarter with a 15 percent vacancy rate. Specifically in the Far North Dallas, which also comprises …
Today, Detroit looks starkly different than a decade ago. The city was hit hard by the Great Recession, but shortly thereafter, businesses started moving their operations into the downtown corridor. Businessman Dan Gilbert moved Quicken Loans into its downtown headquarters in August 2010, bringing approximately 1,700 employees with him. Today, Quicken’s footprint has expanded to 17,000 employees working downtown. Other companies followed, such as when we moved our headquarters downtown in 2012. As the city has regained its footing, retail has helped bring people into the downtown corridor, both from around the city and from out of the suburbs. To date, Woodward Avenue and Capitol Park have been the two main hubs of retail activity in downtown Detroit, with once-vacant buildings housing national brands and unique entrepreneurs. As these two neighborhoods become more populated, retailers are starting to look for other neighborhoods in Detroit with potential to be redeveloped into standout retail options. This begs the question: can other neighborhoods in Detroit flourish and support retail, beyond the central business district? As Detroit’s renaissance expands to other neighborhoods throughout the city, we expect there to be more opportunities ahead. Any incoming retailers and developers should consider what categories may be …
It’s starting to feel like the 1970s all over again in Reno’s multifamily market. This is particularly true in terms of occupancy. A recent report from RealPage noted the current market’s eye-popping 97.3 percent multifamily occupancy level. This figure was only eclipsed once, nearly four decades ago, at a double eye-popping 97.9 percent when the region experienced a spike in new jobs. Reno’s total job count continues to grow at a record pace, fueling a nearly full apartment market. But, of course, the housing and job markets in Reno are both much larger than they were in the ‘70s, though there are similarities. In fact, current market conditions bring to mind the ages-old adage, “Those who fail to heed the lessons of the past are condemned to repeat them.” Developers cannot build multifamily units fast enough to sate demand. New residents arriving for new jobs cannot easily find an apartment, and those who do may have to pay a higher-than-expected rental rate. Consider this from the U.S. Bureau of Labor Statistics: Reno’s economy expanded during the four years ending in May 2018 (the latest statistics available from the Bureau) by a steady 4.2 percent. This was an enviable gain for …
The face of Louisville is changing rapidly, but it has leveraged what the state of Kentucky is historically known for best, bourbon. Louisville is a short drive from most of the legendary distilleries in the Commonwealth. However, the downtown Urban Bourbon Trail is booming with tourism and many brands actually distilling their spirits onsite. Jim Beam’s Urban Stillhouse, the Evan Williams Bourbon Experience, Copper & Kings, Angel’s Envy Distillery and Rabbit Hole Distillery are locations where patrons can sample and buy their drink of choice and learn about the history of these companies and the evolution of the industry as a whole. Most recently in June, Brown-Forman Corp. opened its Old Forester Distilling Co. experience at the newly restored Whiskey Row on Main Street. The company is not only distilling and sharing its history at the site, but like others on the Urban Bourbon Trail there are areas to host receptions and parties. Duluth Trading opened next door on Whiskey Row late last year to begin to fill a growing need for retail space downtown. Convention Center, Hotels After two years being closed, earlier this month Louisville celebrated the reopening of the $207 million renovation and reconstruction of the Kentucky …
For the remainder of 2018, positive demand drivers will alter new apartment supply’s impact on operations in Louisville. The metro has had a large volume of new apartments to open this business cycle. Since 2013, an annual average of 1,500 units has been completed, totaling approximately 7,400 apartment units. As this new supply entered the market, initially strong leasing helped push vacancy down 100 basis points to 4.6 percent at the end of 2016. However, absorption of apartments softened last year as new units continued to open, lifting vacancy back up 90 basis points to 5.6 percent. This year, approximately 2,800 apartment units will be completed, further testing demand for luxury rentals in Louisville. A team of factors should fuel positive absorption, preventing an alarming uptick and keeping the vacancy rate in the mid-5 percent range. Payroll expansions by tech firms, manufacturing companies and hospitals will support consistent year-over-year hiring and income growth this year. Sub-4 percent unemployment suggests employers will recruit from outside the market to fill open positions or hire recent graduates from the University of Louisville and other local colleges. These job gains should increase the rate of household formations and bolster the market’s millennial base, an …
While most of the Dallas/Fort Worth (DFW) area has seen a boom in industrial construction over the past decade, the Plano and McKinney submarkets have been relatively quiet until recently. Due to significant growth in residential development in the northeastern side of the metroplex, e-commerce and last-mile distribution users are increasingly demanding space in these areas. Consequently, these submarkets are no longer considered just a home for technology-based tenants. Several new projects, either under construction or proposed, are focusing on mid-size to large users. Total combined vacancy rates in these areas for flex and warehouse product are now below 5 percent. The average rental rate for flex product is around $12.25 per square foot and the average rate for warehouse space is $6.36 per square foot. Although the vacancy rate is as low as it has been in the past five years, there is a tremendous amount of activity and several market transactions that are likely to positively impact demand for speculative industrial space. While no transactions completed at this time, there have been several prospects working on proposals in the 60,000- to 100,000-square-foot size range in Plano and another prospect looking to lease between 200,000 to 600,000 square feet …
When it comes to location identification for development, you have to think creatively. In a highly competitive market like Milwaukee, mixed-use projects offer a great opportunity to showcase creativity, take advantage of complementary uses and drive tremendous value for clients and investors. The success of a mixed-use project lies in location. A high-profile location will help attract businesses, which then helps build traffic. Ideally, you want to think outside the box to generate repeat visits with businesses that will help sustain that traffic. An innovative mix of retail, restaurant, hospitality, office and even healthcare can greatly enhance a development. Mixed-use retail developments create new opportunities for healthcare projects. Health systems and physician practices are choosing to prioritize locations they may not have previously considered. There’s been a significant expansion of and increased focus on the outpatient ambulatory environment. The trend of developing specialty outpatient facilities, ambulatory surgery centers and micro-hospitals continues to gain momentum and allows for expansion to remain competitive while maintaining efficiency. An outpatient facility brings traffic. Finding a high-visibility location where customers are already engaging increases the convenience factor. Built-in traffic drivers like restaurants and retail help with trip assurance. For example, after wrapping up a clinic …
The northern Nevada office market is picking up steam, despite still lagging behind the robust growth taking place in the industrial and multifamily sectors. Year-to-date net absorption of 136,607 square feet has brought overall market vacancy rates down to 10.1 percent. Rates are well below that in the more desirable office submarkets. South Reno, once plagued with vacancy rates exceeding 30 percent during the downturn, now hovers at a rate of 6.3 percent. Downtown vacancy rates currently sit at 7.9 percent with no new supply on the horizon. In fact, no significant office property has been built in downtown Reno since 1981. Reno is a market in need of new office supply; however, new office construction is challenging to build on a speculative basis except in the most amenity-rich locations that offer visibility and accessibility. The lack of incoming supply and rising demand has caused office lease rates to increase. Rates have generally remained stable over the past few years with the exception of Class A office lease rates, which have climbed steadily over the past 12 months. There is a gap between existing Class A office lease rates, which range from $2 per square foot to $2.50 per square …