Market Reports

Chicago’s Office Market: the Dichotomy Between Large and Small Law Firms

by Kristin Harlow October 11, 2018

Over the past four years, Chicago’s legal sector has accounted for almost 750,000 square feet of negative net absorption despite a robust economy keeping demand for legal services of all types strong. While much has been written about large law firms shedding space as they reconfigure their offices with open floor plans that appeal to millennial and Generation Z talent, not all are following the same course of action. Finding the right size At one end of the spectrum, many large law firms are electing to relocate to ultra-efficient trophy towers, justifying the exorbitant construction costs and rent increases associated with building out new space in Class A+ towers by shedding enormous amounts of space from their footprints. Of the four firms larger than 100,000 square feet that have elected to reduce their space when relocating to newly constructed towers since 2015, all have been able to shed roughly 35.5 percent of their prior footprints on average, with some firms achieving even greater reductions. For example, Holland & Knight attained a 45 percent space reduction in its recently announced move from 105,000 square feet at Citadel Center to 57,000 square feet at 150 North Riverside. There are also many large …

October 11, 2018

Hospitality Market Reports Nevada Western Western Market Reports

Best Practices for Structuring Nevada Hotel, Casino Deals

by Taylor Williams October 9, 2018

One of the first questions clients ask when considering a hotel casino acquisition or the development of a new hotel casino project in Nevada is whether they have to obtain a gaming license. Since applying for a gaming license requires the disclosure of extensive, private personal information — and obtaining a gaming license can take several months — buyers and developers often want to learn about alternatives to the license. Those alternatives are briefly summarized below. Sale-Leaseback: The sale-leaseback structure involves the current hotel casino owner and/or operator selling substantially all of the assets to the buyer. The buyer, in turn, then leases all of such assets back to the seller. The seller retains the gaming assets and liabilities, utilizes the other assets per the lease and continues to operate the hotel casino for the lease term. The advantage of this structure is that the sale transaction can be closed quickly since the parties do not have to wait for the buyer to obtain its gaming license. A potential disadvantage to the seller is that it still has to operate the property. Possible disadvantages to the buyer are that the buyer assumes the future licensing risk and, generally speaking, cannot …

October 9, 2018

Florida Market Reports Multifamily Southeast Southeast Market Reports

Orlando Sustains High Level of Multifamily Demand, Leading to New Construction

by John Nelson October 8, 2018

Fundamentals in the Orlando multifamily market are exceptionally strong and should remain healthy as long as this economic cycle continues. Following a period of no construction after the recession, new supply is finally starting to catch up with pent-up demand held in check during the downturn. Even with over 7,000 units projected to be delivered annually for the next several years, occupancy rates should hold strong between 95 and 96 percent. Supported by continued economic expansion in the Orlando metro area as well as strong population and job growth, we remain bullish on the multifamily market and do not see the potential risk of oversupply any time in the near future. The justification for continued new construction makes sense given Orlando’s history. As in most markets throughout the country, the recession halted new multifamily development in Orlando. From 2007 to 2009, there was virtually no new supply added to the market. It was not until 2010 that construction picked up again, and by that time, post-recession job creation had already taken off, causing a tremendous amount of pent up demand for housing. Each year since, new supply has been quickly leased, and it has not yet slowed. As of July …

October 8, 2018

Foster-Ridge-Distribution-Center-San-Antonio

Industrial Market Reports Texas Texas Market Reports

Constraints in Austin Push Distribution South, Bolstering San Antonio’s Market

by Taylor Williams October 5, 2018

Less than 100 miles along Interstate 35 separates downtown Austin from downtown San Antonio. But thanks to strong job and population growth throughout the region, that short stretch is becoming home to two industrial markets that occupy distinctively different, yet thriving, niches in the local economy. The CliffsNotes version of this story is that Austin is trending toward servicing smaller, local tenants with ties to the tech sector, while San Antonio is moving toward being a regional distribution market for larger, nationally known users. Both markets are tight: the vacancy rate for both Austin and San Antonio is between 5 and 6 percent and both are seeing very healthy tenant demand and absorption of many current and planned developments. But to understand how the markets have come to function so differently from one another, we must consider the key driving factors in each metro. Austin: Access & Availability Developing new industrial space in Austin — an industrial market with about 79 million square feet of product, according to JLL’s research — is rife with challenges. The entitlement and zoning processes are exceptionally time-consuming, and most infill land sites are priced at levels that make new construction economically implausible. But the …

October 5, 2018

Illinois Industrial Market Reports Midwest Midwest Market Reports

Infrastructure Investments Spur Industrial Development in Chicago Market

by Kristin Harlow October 4, 2018

There is no question that all signs are pointing in the right direction for the nation’s second-largest industrial market. Midway through the year, the vacancy rate has stabilized below 7 percent for the first time in over a decade. On top of that, quarterly deliveries totaled 4.5 million square feet, of which 3.9 million square feet was speculative. In the second quarter, 7.9 million square feet was absorbed. So what’s next for Chicago’s industrial occupiers? Luckily there are two seasons in Chicago, winter and construction. With that, state and federal agencies are collaborating on massive transportation infrastructure improvements, and funds continue to flow to improve and expand our region’s road and rail infrastructure. In addition, the Illinois Tollway has been proactively deploying capital for projects. As a result, industrial occupiers are benefitting from an enhanced flow of goods and more efficient distribution, while the industrial development community has responded with new speculative and build-to-suit projects in key areas to take advantage of these transportation improvements. I-57 Corridor Before 2014, there wasn’t a full four-way interchange at I-57 and I-294, which represented one of the few rare nodes in the nation where two interstates crossed paths but did not allow a …

October 4, 2018

Industrial Market Reports Nevada Western Western Market Reports

Opportunity, Demand Define Las Vegas Industrial Market

by Taylor Williams October 2, 2018

The Las Vegas industrial sector set records in 2017, with more new construction and higher net absorption than any other time in the market’s history. New construction was dominated by pre-leased space primarily driven by transportation and logistics companies, namely ecommerce and retail-related businesses. As a result, the overall vacancy rate decreased to the second lowest level in market history. As a percentage of overall market size, Las Vegas led the country in both new construction and net absorption. The significant momentum of 2017 did carry over to the first quarter of 2018, albeit at a relatively slower rate. New construction totaled 1.3 million square feet and net absorption lagged deliveries at a positive 1 million square feet, marking the 22nd consecutive quarter of positive net absorption. The overall direct vacancy rate in the first quarter of 2018 was 4 percent, an increase of 50 basis points over the previous quarter. This provided much-needed inventory for tenants looking to enter or expand into the Las Vegas market. While the North Las Vegas submarket dominated 2017, accounting for nearly 70 percent of total net absorption, it is the Southwest submarket that is surging in 2018 with 53 percent of net absorption …

October 2, 2018

Industrial Market Reports Maryland Southeast Southeast Market Reports

After Record-Setting 2017, Baltimore Looks to Extend Its ‘Industrial Revolution’

by John Nelson October 1, 2018

The greater Baltimore metropolitan region achieved positive absorption of more than 6 million square feet of warehouse and industrial space in 2017, smashing the previous record by several million square feet and triggering yet another wave of speculative development activity. While on the surface there seems to be no end in sight to this unprecedented level of activity as we cross the midway point of 2018, there does exist several warning signs that are worth monitoring. But, who wants to dwell on anything remotely negative, when experiencing a seemingly end-less supply of 600,000-square-foot requirements? A Major Industrial Market The Baltimore-Washington, D.C. region is considered the fourth largest MSA in the country with more than 10 million people in the Combined Statistical Area. Several major seaports are within close proximity, approximately one-third of all consumers residing in the United States can be accessed within a one-day truck drive and developable land is still avail-able, although an increasing number of projects involve the demolition of unusable product to make way for the modern variety. Local fundamentals mirror conditions found in “white-hot” sections of the country, including the Inland Empire in Southern California, Northern New Jersey and sections in Pennsylvania where Interstates 81 …

October 1, 2018

Market Reports Office Texas Texas Market Reports

Austin’s Office Market Goes Boomtown, San Antonio’s Continues Impressive Growth

by Taylor Williams September 28, 2018

Compared to Houston and Dallas, the office markets of Austin and San Antonio have a hard time competing on sheer size alone. However, these two central Texas cities are undergoing rapid changes that are leaving longtime residents amazed at the constantly morphing skylines. Both metros boast strong office markets that are growing with the entire Texas economy. But how do they match up in a head-to-head comparison? Basic Numbers At approximately 50 million square feet of office space, Austin holds a size advantage over San Antonio, which has about 30 million square feet. As of the second quarter 2018, annual full-service average office rents in Austin are also substantially higher at $36.54 per square foot compared to San Antonio’s $22.05 per square foot. Both markets have seen steady year-over-year increases in rates as the economy has recovered from the Great Recession. The familiar real estate mantra, “Location! Location! Location!” plays a big role in office rates and affordability in each market. Austin’s central business district (CBD) continues to draw major employers, including Google and Indeed, which combined occupy about 667,000 square feet of office space. This downtown migration has pushed vacancy in the CBD down to 10.1 percent, with rents …

September 28, 2018

Industrial Market Reports Midwest Midwest Market Reports Minnesota

Industrial Owners Find Success in Reinventing Flex and Showroom Spaces

by Kristin Harlow September 27, 2018

The most active commercial real estate category in the Twin Cities metro area over the last several years, in terms of leasing activity and new construction sales, has been industrial product. New construction has been trending toward office warehouse and bulk buildings with higher clear heights, as tenants are implementing new racking systems and growing upward to optimize their space. On the surface, this trend may sound like it will leave behind the lower-clear height flex and office showroom buildings. However, owners of flex and office showroom buildings in Minneapolis-St. Paul are finding new interest by providing creative amenities and repositioning assets that are attracting entirely new tenant prospect types and reinventing what an office showroom building can become. The ability to target a wider potential prospect pool including office users, retailers and non-traditional industrial users is reliant on proper vacancy preparation to be able to show the space as a true blank slate. Through white-boxing the space, owners show that the space has high ceilings with an industrial feel, an aesthetic that many office users are interested in, but at a significantly lower price point versus many office buildings. Another benefit of the office showroom product is that there …

September 27, 2018

Market Reports Nevada Office Western Western Market Reports

Office Trends Toward Creative, Collaborative in Las Vegas

by Taylor Williams September 25, 2018

Some of the larger companies with long-term growth forecasts are focusing on expansion and amenity-rich office environments for recruiting purposes. However, more people in less space continues to be the trend for companies with slower growth opportunities that are focused on efficiencies and overhead costs. The average standard amount of office space per employee dropped from 225 square feet per person to between 150 square feet and 175 square feet per person in the past couple years. That being said, occupancy cost is not always the main driver in choosing an office location. There seems to be much more emphasis now on quality, functionality and conveniences. In many cases, this is based more on how we work rather than just cost savings. Open work spaces, perks like on-site dining and retail, and providing collaborative environments that foster employee interaction have proven to increase employee productivity significantly. Design is a critical component of this type of work space. Companies are looking for workplace designs and furniture systems that offer flexibility and adaptability as technology evolves. Technological infrastructure enhances the culture and efficiency of a business and protects the security of a company’s trade information. It also saves resources like …

September 25, 2018

Newer Posts

Older Posts