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AlabamaMarket ReportsMultifamilySoutheastSoutheast Market Reports

Birmingham’s Multifamily Market Is Healthy Despite Softening, Outlook Is Favorable

by John Nelson

By David Wilson of Berkadia Birmingham’s apartment market has softened, which is consistent with trends both nationally and regionally in other Southeastern metros. But the market remains healthy and balanced despite a bump in new construction. With total employment gains exceeding 18,000 in 2023, a substantial jump from the 5,500-person gain in 2022, and unemployment rate falling to 2.2 percent, the Birmingham economy is as strong as it’s been in over 10 years, and the economic outlook is very favorable.  The majority of population growth has been in the southern areas such as Shelby County, although a steady delivery of new Class A apartments in downtown Birmingham in recent years, and the opening of a Publix grocery in 2017 on the ground level of the 436-unit 20 Midtown development, is helping the city core to grow. Research by Berkadia Birmingham reveals 12 properties comprising 2,936 units are under construction in the Birmingham area, excluding Tuscaloosa. These properties reflect a cross-section of product types such as a purpose-built student property and an affordable Low-Income Housing Tax Credit (LIHTC) property. Four are in their initial site work phase, while another four are beginning preleasing. New developments In the thriving Highway 280 submarket, …

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CaliforniaMarket ReportsMultifamilyWesternWestern Market Reports

Softened Rents, Tenant Dynamics Define Orange County’s Multifamily Market

by Jeff Shaw

— By Pat Swanson, executive vice president, Colliers International — As Orange County enters 2024, its multifamily market stands at the brink of transformation, confronting challenges like softened rents, affordability dynamics and the resilience required in the face of tenant-related complexities. In the midst of a robust economy, the region grapples with obstacles and opportunities that will significantly shape the future of its real estate sector. Orange County’s economic vitality is evident, with a 5.2 percent growth in U.S. GDP and a thriving job market. However, the looming shadow of interest rate fluctuations and inflation above 3 percent has briefly slowed down real estate transactions. While rates are predicted to stabilize, the potential for modest reductions later in the year signals a period of nuanced economic growth and sustained higher rates. In 2024, Orange County’s multifamily housing market is set for change, departing from previous trends of rent increases. The region anticipates modest growth that will be influenced by factors like slower job growth, an influx of 510,000 new units and the mounting challenge of finding qualified tenants. Affordability takes center stage, with rent-to-income ratios reaching 29.8 percent. The widening affordability gap between owning a home and renting is further …

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CaliforniaMarket ReportsRetailWesternWestern Market Reports

Orange County Retail — Is the Juice Worth the Squeeze?

by Jeff Shaw

— By John R. Read, senior vice president, CBRE Retail Investment Properties-West — Undoubtedly, 2023 proved to be a volatile year. It was marked by persistent inflationary pressures, four 25-basis-point interest rate hikes by the Fed and a surge in the 10-year U.S. Treasury yield (from the high 3 percent range in January to peak levels near 5 percent in October). These changes had a pronounced impact on retail real estate investors, businesses occupying retail centers and consumers who frequented these establishments.  The real estate sector particularly grappled with the cost of financing in an environment of higher interest rates. While these challenges did temper Orange County’s retail market to some extent, it largely remained resilient due to its strong underlying fundamentals. These include a substantial population of high-income earners, flourishing industries like tourism and destination-oriented shopping centers, as well as a supply constrained retail property base with limited large-scale retail development. The unemployment rate in Orange County remained steady at 3.8 percent in December 2023, unchanged from November’s revised rate. This rate is notably higher than the year-ago estimate of 2.7 percent. In comparison, California’s unemployment rate stands at 5.1 percent rate, while the national rate during the same …

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AlabamaMarket ReportsOfficeSoutheastSoutheast Market Reports

Birmingham’s Office Market Presents Opportunities Amid Economic Uncertainty

by John Nelson

By Brad Jones of Cushman & Wakefield/EGS Commercial Real Estate Despite ongoing challenges facing the national economy, Birmingham’s commercial real estate landscape remains steady and consistent. Over the past seven years, encompassing both pre- and post-pandemic periods, the overall vacancy rate for Birmingham’s multi-tenant office market has exhibited fluctuations like most markets, ranging from 12.9 percent in 2017 to 19 percent in 2023, according to research from Cushman & Wakefield/EGS Commercial Real Estate. However, for perspective, Birmingham’s year-end vacancy rate of 19 percent remains below the national average vacancy rate of 19.7 percent recorded in 2023, according to research from Cushman & Wakefield. Office leasing activity in Birmingham has maintained momentum, experiencing a notable 12 percent year-over-year increase from 2022. Total leasing activity for 2023 totaled 718,219 square feet. Class A transactions dominated with 564,681 square feet leased, indicating a continued preference for Class A office space (i.e. a flight to quality). This is good news for Class A product in this supposed period of economic slowdown. Office investment sales activity in Birmingham has, however, decelerated in the current economic climate. The impending ripple of debt maturities poses challenges for large institutional owners and creditors. At the same time, it …

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Market ReportsRetailTexasTexas Market Reports

Beyond the Hype: How AI Can Drive Success at Texas Retail Centers, Mixed-Use Destinations

by Taylor Williams

By J. Wickam Zimmerman, CEO, Outside The Lines Inc. The use of artificial intelligence (AI) technology is growing in retail commerce, where it’s already helping businesses track inventory, forecast demand and suggest new products to consumers. But how does AI figure into retail real estate? Can it be used to enhance engagement and drive success at the properties themselves? Could it help entice shoppers to step away from their online shopping carts and venture out into the real world? The answer is a resounding yes, and we’re already seeing this play out in the Lone Star State. Creating Spaces That Attract & Retain With major Texas markets like Dallas-Fort Worth and San Antonio seeing record-high retail occupancy rates, many property owners are focused on capitalizing on this momentum. To keep foot traffic high and remain competitive with other local developments and online shopping, it’s more important than ever to create unique draws to centers.  A key strategy involves creative placemaking and offering experiential destinations that are increasingly bolstered by technology, including AI. To stay ahead, retail centers today must offer an experience that can’t be replicated virtually. This requires having dynamic, interactive onsite features and leveraging technologies that are just …

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CaliforniaMarket ReportsWesternWestern Market Reports

California’s South Coast Region Sees Burst of CRE Activity

by Jeff Shaw

The South Coast Metro area — consisting of north Costa Mesa and south Santa Ana — has been a hotbed of activity lately. Toyo Tire Holdings of Americas (TTHA) leased 60,000 square feet in the Harbor Gateway Business Center in early January. The Gateway is situated at the northwest corner of Harbor Boulevard and Sunflower Avenue near freeways, major thoroughfares, apartment communities, shopping, dining and entertainment. In addition to that, the 2,500-acre, 3.5-square-mile Metro area is home to a Theater & Arts District that boasts performance venues like the Renée and Henry Segerstrom Concert Hall and the Tony Award-winning South Coast Repertory. It also has South Coast Plaza, a retail mecca that includes 280 boutiques and restaurants, with an additional 100 restaurants situated within about a one-mile radius of the shopping center. This activity has not only benefitted the nearby businesses, residents and visitors, but the South Coast Metro Alliance as well. The non-profit corporation of property owners and major businesses added three new corporate partners last year, including Related California, Travel Santa Ana and Breeze IT.  Related California is the West Coast affiliate of Related Companies, a fully integrated real estate firm that develops multifamily residential and mixed-use properties …

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IllinoisIndustrialMarket ReportsMidwestMidwest Market Reports

Chicagoland Industrial Market Remains Resilient

by Kristin Harlow

By Noel Liston, Core Industrial Realty The 10 major submarkets that comprise the broader Chicagoland industrial market all performed at or above expectations in 2023. While absorption was not as robust as the pandemic boom that saw back-to-back record years, 2023 was a solid year for absorption and a strong year in rental growth throughout the broader market.  Significant deliveries of speculative developments were offset with solid absorption by manufacturing, assembly and food & beverage-related industries that picked up the slack left from a less enthusiastic e-commerce market. Broadly speaking, the greater Chicagoland industrial market started 2024 with a vacancy rate of ±7.3 percent. This vacancy rate is up from the low 5 percent range the market averaged for the second half of 2023.  Assuming equilibrium (a market that favors neither tenant nor landlord) for the market is historically a ±6 percent vacancy rate, the current vacancy rate can be deceiving. This is, in large part, due to the jump in vacancy as a result of the delivery of a significant amount of larger, speculative industrial developments in certain submarkets where land zoned for industrial with relatively good access to a major highway or interstate was still available.   Further, …

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1065-Link-Anaheim-CA
CaliforniaMarket ReportsOfficeWesternWestern Market Reports

Orange County’s Office Market Has a Shot at Optimism

by Jeff Shaw

— By Mike Adams, managing director, office investor services, Stream Realty Partners — The Orange County office market, like many others, is undergoing significant shifts as tenants reassess their office space needs in the wake of the ongoing transition to hybrid work models. Despite persisting challenges, recent developments suggest certain market segments are showing signs of recovery. This, naturally, sparks optimism that the worst of the downturn could be behind us. A key indicator of this positive shift is the noteworthy net absorption of 231,744 square feet, marking the first positive trend since the second quarter of 2022. Orange County’s Airport area has emerged as a leader in this office recovery, witnessing move-ins totaling 204,376 square feet. While the overall market grapples with challenges, such as a slight increase in the unemployment rate and mixed performance in office-using sector jobs, there are pockets of improvement, especially in the Class A segment. This positive absorption has contributed to a 10-basis-point decline in the total vacancy rate quarter over quarter, dropping from 18.7 percent to 18.6 percent. However, when viewed year over year, the increase from 16.4 percent highlights the enduring impact of recent economic challenges. The current vacancy rate remains notably …

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Market ReportsRestaurantRetailSoutheastSoutheast Market ReportsTennessee

Nashville Attracts Big Brands Like In-N-Out While Carving Out Distinct Pocket Neighborhoods

by John Nelson

By Katie Lester of Colliers Nashville’s economy experienced some of the healthiest growth in the nation in 2023, with a job growth rate of 3.7 percent, putting it among the top five of the largest 50 metros. Forecasted by Oxford Economics, overall jobs are projected to grow 1.2 percent in 2024 and by 0.8 percent per year in 2025 through 2028, outpacing the U.S. average of 0.5 percent. Nashville also received high marks from the Urban Land Institute, ranking the “No. 1 Market to Watch” in its 2024 Emerging Trends in Real Estate report. This is the third consecutive year that Nashville has earned the top spot in this ranking, a true nod to the confidence and strength of Nashville’s commercial real estate market. The report credits Nashville and other “Supernova” cities as having above-average levels of economic diversity and high-wage jobs that attract investors’ appeal and confidence in sustaining high growth in the coming years.  These fundamentals have been a boon to the retail market and have helped attract new-to-market retail brands to Middle Tennessee. Most notably, after a multi-city, multi-state search over the course of two years, In-N-Out Burger picked Middle Tennessee to locate its Eastern Operations Hub, …

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CaliforniaLife SciencesMarket ReportsWesternWestern Market Reports

San Francisco’s Life Sciences Market Shows Positive Momentum

by Jeff Shaw

— By Alex Browne, life sciences research director, Transwestern Real Estate Service — The San Francisco Bay Area life sciences market has been resilient in the face of the economic headwinds of the past 18 months. Despite the mix of issues besetting other commercial real estate asset classes, life sciences assets have fared well, with quality science continuing to thrive.  Any shifts within the life sciences sector have been among the landlords and tenants, as the change in deal influence has varied over the past 12 months. Starting in 2017, the bulk of the deal leverage was on the landlord’s side. This, in turn, sparked an appetite for new development looking to meet the increased demand. It wasn’t until 2022 that the tide began to turn, with tenants gaining more leverage in negotiating renewals or electing to search for more favorable, high-quality space. Even though the market’s activity tends to be overshadowed by industry headlines, deals are being done, and space is being delivered and absorbed — albeit at a slower pace.  The Bay Area continues to be the second-largest life sciences hub in the nation, with healthy industry drivers that continue to fuel innovation. The region is home to …

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