Market Reports

Boston Industrial Market Continues Hot Streak

by David Cohen February 13, 2019

Greater Boston’s industrial market continued its hot streak in 2018. Positive net absorption of 350,000 square feet in 2018 marked the eighth straight year of gains. Vacancies, which ended the year at 10.1 percent, have halved since peaking at the end of 2010. Over this time, the market absorbed 17.5 million square feet and is now poised for continued growth. Tenant demand remains strong and some of the larger tenants in the market— Albertsons, Premier Distribution, Trimark, Jofran, Amazon, Wayfair, and Harte Hanks— are seeking a total of 3.5 million square feet of space. Rents are at record highs, in aggregate topping $9.50 per square foot triple-net, which factors in a space-weighted asking rent on available product. Tenants looking for product in the Urban markets are seeing rents at or above $20 per square foot triple-net, while new product in the South and West is into the $7 per square foot triple-net range. Cheaper space can still be found, but landlords have never seen a stronger rental market. Absorption Slows Despite the gains, absorption was held back by several large blocks of space coming onto the market throughout 2018. The closing of the Necco factory in Revere opened up more …

February 13, 2019

Arizona Development Industrial Market Reports Western Western Market Reports

Phoenix Is Defined by Land, Labor, Logistics

by Taylor Williams February 12, 2019

Phoenix has long enjoyed the benefits of land, labor and logistics. In today’s ecommerce-driven market, however, those benefits are propelling the Valley’s industrial activity, and opportunity, to new heights. The region has absorbed more than 5.8 million square feet of industrial space year-to-date. It has also welcomed almost 5 million square feet of new industrial construction, while industrial vacancy rates still sit below 7 percent — their lowest levels in 12 years. Some of this activity can be credited to the price and availability of our land. This typically involves large parcels in the West Valley within close proximity to freeways that are often available at $5 per square foot to $6 per square foot. This is attracting tremendous big box interest, particularly in the Southwest Valley submarket where much of the metro’s more than 5.7 million square feet of new construction is occurring. Lincoln Property Company delivered one of the largest of these developments this past December: the $85 million, 901,700-square-foot Lincoln Logistics Center 40. Underscoring high confidence in the industrial sector, Lincoln Logistics 40 was developed fully speculative with amenities that target ecommerce and logistics-focused users. Among these are 40’ clear height ceilings, sophisticated cross-dock configuration, and extensive …

February 12, 2019

District of Columbia Market Reports Southeast Southeast Market Reports

Nation’s No. 1 Data Center Market in Northern Virginia Isn’t Done with Boom Cycle

by Alex Tostado February 11, 2019

The Northern Virginia data center market continues to outpace the rest of the country’s leading data center markets by more than double. By the close of the first half of 2018, Northern Virginia had 317 megawatts (MW) under construction with Phoenix a distant second at 136.5 MW. (In real estate terms, industry standard is approximately 150 watts per square foot.) What drives Northern Virginia as the leader today is an unparalleled business ecosystem that has grown over the past 20 years from the original edge data center to today’s premier data center market. The market is a prototype for which subsequent data centers strive to achieve. Ideal Data Center Landscape Very few enterprises build their own on-premise data centers. Northern Virginia got its start as a leader in this space by going into colocation data centers. The companies that pioneered the movement, like Equinix, DFT and Exodus Communications, have brought Northern Virginia to where it is today. But, it’s more than that. It takes a confluence of legislative support, fiber, power, development, deployment of new IT technologies and other partnerships to allow the Northern Virginia market to flourish into the tech superpower it is today. Northern Virginia has also been …

February 11, 2019

Market Reports Retail Texas Texas Market Reports

Retail Landlords Aim to Connect on First Swing

by Taylor Williams February 8, 2019

Developers of new retail product in the e-commerce era face an array of roadblocks, from rising land and construction costs to heightened scrutiny from lenders on cash flows. Besides a larger economic downturn, in today’s Darwinian retail environment, nothing makes a new project fizzle or a stabilized center depreciate faster than lost income and occupancy brought on by an un-engaging, uninspiring tenant mix. Consequently, developers are devoting more of their budgets than they have in years past to researching, meeting and analyzing users to ensure they nail their tenant rosters on their first try. This is particularly true for developers whose business models center on long-term holds of their properties. “If we put a problem tenant in a center on day one, we inherit that problem for the term of the lease,” says Anderson Smith, co-founder of Capital Retail Properties, a Houston-based retail firm that holds its developments for the long term. “So it’s very important that we do it right the first time.” Smith says that his firm’s first move when researching a potential tenant is to check out that company’s Instagram account, which provides insight on the retailer’s approach to store build-outs and quality of product or service. …

February 8, 2019

Market Reports Michigan Midwest Midwest Market Reports Multifamily

National Investors Begin to Take Interest in Detroit Market

by Kristin Harlow February 7, 2019

In 2018, the Detroit real estate market had a banner year for transactions, new developments and big headlines. Chief among these was Ford Motor Co.’s acquisition of the vacant Michigan Central Station, a major media event that attracted attention from all over the world. Other notable news stories predominantly revolved around Quicken Loans founder Dan Gilbert and his Bedrock Real Estate Services. In 2018 alone, Bedrock delivered the 129-key Shinola Hotel, began construction on the 847,000-square-foot Monroe Blocks and laid the foundation for the 912-foot tall Hudson’s tower. The combined costs of these projects exceed $2 billion. From a brokerage standpoint, it also was a successful year. Q10|Lutz Financial Services, a Birmingham-based commercial mortgage banking firm, had its best year on record. Similarly, Farmington Hills-based Friedman Real Estate’s investment sales division had transaction volume of a half-billion dollars, according to the firm’s manager of opportunities, Jared Friedman. Some highlights and market insights into the Great Lakes State’s commercial real estate market are below. Multifamily redevelopment Downtown Detroit has received most of the notable press this cycle, in particular for the flock of millennials and young professionals who up-ended trends and brought their skinny jeans and electric scooter habits to …

February 7, 2019

Market Reports Massachusetts Northeast Northeast Market Reports Office

Small But Mighty Cambridge Office Market Primed for More Growth

by David Cohen February 6, 2019

Although one of New England’s smallest geographical submarkets, spanning only 7.1 square miles, Cambridge packs a serious one-two punch between its thriving office and life science sectors. Routinely ranked as one the nation’s most densely populated cities, universities, research institutes and private corporations employ many of the 110,000 residents of Cambridge. Not surprisingly, 44 percent of those residents are highly educated millennials between the ages of 18 and 35, according to the most recent U.S. Census and American Community Survey. Those millennials form the unparalleled labor pool that has employers clamoring for talent. Hosting more than 230 life science and high-tech companies, research from CBRE suggests that Cambridge contains upwards of 700 start-ups, many of which are pioneered by entrepreneurial professionals spinning out from larger institutions. Known as the city of squares, Cambridge is divided into three distinct submarkets, each with their own distinctive flavor — East Cambridge, anchored by MIT and Kendall Square; Mid Cambridge, home to Harvard University and West Cambridge/Fresh Pond area. Collectively the city contains roughly 11.2 million and 14.6 million square feet of commercial office and life science space, respectively. Low Vacancy, High Rents Cambridge finished 2018 maintaining incredibly low office and life science vacancy …

February 6, 2019

Hawaii Industrial Market Reports Western Western Market Reports

Low Vacancy, High Demand Define Hawaii’s Industrial Market

by Taylor Williams February 5, 2019

When we last reported on the health of Oahu’s industrial market in December 2017, we offered rationale for a then 1.88 percent industrial vacancy rate. This was fueled by demand from contractors building large residential condo developments, the construction of a nearly $10 billion light rail system (voter approved at less than $5 billion), booming tourism and military sectors and large public infrastructure improvements. Oahu’s small 40.4-million-square-foot industrial market was under further compression as industrial product was being taken by the state to support rail construction, or lost due to high rise residential construction and the expansion of our main Honolulu harbor. A prohibitive industrial construction cost scale, which generally exceeds $125 per square foot for metal skin shell warehouse, had also slowed spec and build-to-suit construction. Fast forward to late 2018, and our statistics reflect an industrial vacancy rate bouncing off the bottom at just 2.02 percent. The monthly industrial base rent average is $1.20 per square foot and monthly operating expenses are $0.40 per square foot. This vacancy rate average reflects a small increase over the previous quarter as tenants scrape the bottom of the inventory barrel looking for suitable space. LoopNet cites six industrial availabilities of more …

February 5, 2019

District of Columbia Market Reports Multifamily Southeast Market Reports

D.C.’s Multifamily Market Sees Strong Demand for its Healthy Development Pipeline

by Alex Tostado February 4, 2019

Washington, D.C.’s multifamily market has enjoyed success in recent years, and 2018 has been no exception. The regional economy continues to function at an extremely healthy level, adding 77,100 new jobs in the trailing 12 months ending July 2018, much more than the annual average of 41,000 since 2010. The region has outgrown its previous dependence on the federal government, which contracted by 4,800 jobs over the same period, further highlighting the strength of the region’s private sector. This sustained economic upside is only further enhanced by the looming possibility of Amazon’s HQ2, Apple and other large tech contracts. The strong job growth has been matched by a steady increase in population, which has grown 10.44 percent since 2010, to roughly 6.25 million people. To accommodate such growth, the supply pipeline has been equally as robust, delivering nearly 13,000 units per year for the past five years. In addition to all the recent deliveries, absorption has remained steady and strong, with the market absorbing a net positive of 7,570 units over the trailing 12 months. Furthermore, Class A rents have still managed to grow 1.4 percent over the past year, while overall market rent growth has grown an even higher …

February 4, 2019

Market Reports Multifamily Texas Texas Market Reports

Survey: Multifamily Metrics Will Cool in 2019

by Taylor Williams February 1, 2019

Multifamily properties have produced strong returns for commercial developers and investors over the past few years. But the apartment supply wave appears to have crested, suggesting 2019 will bring a slower pace of rent growth. Consequently, pricing levels should come down, cap rates should creep upward and returns on investment should cool. According to a report from commercial real estate research firm Yardi Matrix, America’s multifamily market experienced 3.1 percent annual rent growth for the 12-month period ending November 2018, the latest data available at the time of this writing. The report also featured 2019 rent growth projections for America’s 30 largest multifamily markets, 19 of which are expected to see their paces of rent growth either decline or remain the same this year. Brokers who participated in Texas Real Estate Business’ annual forecast survey indicated that investment activity for multifamily assets in Texas should be more modest in 2019. This group ranked multifamily second among property types likely to experience a high velocity of sales in 2019, suggesting the new year could see more properties brought to market in anticipation of future elevation of cap rates. Numerical Context Most recently, the story on multifamily in Texas has been demand, …

February 1, 2019

Industrial Market Reports Midwest Midwest Market Reports Missouri

Will a Tight Labor Market Limit St. Louis Industrial Growth?

by Kristin Harlow January 31, 2019

The St. Louis industrial market is in the middle of a significant construction boom. Total square footage under construction is at a record-high 6.3 million square feet, with 2.8 million square feet of activity completed in 2018. The last two years have experienced historically high levels of overall net absorption with 4 million square feet in 2017 and 5.6 million square feet in 2016. These absorption levels are significantly higher than pre-recession market numbers. The expected 3 million square feet of positive absorption in 2018 is 1 million square feet higher than what had ever been recorded prior to 2014. A significant portion of this absorption is due to several large transactions in newly constructed, and often tax-abated, parks. Whether or not this level of construction and sizable deals is sustainable remains to be determined, but many trends within the economy indicate that this can continue. The vacancy rate for the St. Louis industrial market dropped to 6.21 percent in the third quarter of 2018, the lowest rate since 2006. This drop in available space bumped average direct asking rates up to $4.58 per square foot, the highest level since before the recession. Earth City and North …

January 31, 2019

Newer Posts

Older Posts