Continued job growth, coupled with a 4.3 percent unemployment rate (down from nearly 9 percent in 2010) in the greater Baltimore metropolitan region are the primary reasons giving real estate development companies the confidence to construct speculative commercial office buildings in select submarkets throughout central Maryland. After delivering more than 1 million square feet of space in Baltimore City, another 1.6 million is presently rising in the downtown skyline. Industries including financial services, medical and healthcare, education, cybersecurity and manufacturing continue to exhibit excellent health, and a location approximately 40 miles from the center of Washington, D.C., remains one of Baltimore’s most valuable assets. Below is a quick scan around the entire metro area: Canton Merritt Properties announced plans earlier this year to construct a 20-story, 200,000-square-foot speculative office building along Boston Street. Previously announced, but yet to begin just several streets away, is Corporate Office Properties Trust’s $1 billion project containing more than 1 million square feet of commercial office and retail space. Since the opening of The Shops at Canton Crossing, a shopping center developed by 28 Walker Associates several years ago, this submarket has experienced a retail renaissance, although the inclusion of new commercial office product is …
Capital sources of all types see opportunity in the apartment sectors of core Texas markets, which regularly lead the nation in employment and population gains. With so many investors trying to park money in this space, sales prices have risen, cap rates for multifamily properties in major markets have compressed and lenders are competing among themselves to finance acquisitions. When lenders compete, borrowers win. For multifamily lending in sizable markets, value-add borrowers are seeing tighter spreads on their loans, a factor of both more lenders entering the space and the Federal Reserve’s decision to raise short-term interest rates. But rising land and construction costs have also contributed to skyrocketing prices on newly built multifamily product, which has weeded out some potential investors. Rather than shun the market entirely, however, many of these buyers are targeting Class B and C assets for value-add plays that will attract residents who can afford higher rents. In Texas, these kinds of deals are being executed at record paces. “The transaction velocity for value-add multifamily deals has been at historical highs in this cycle,” says Warren Hitchcock, senior vice president in NorthMarq Capital’s Houston office. “The significant amount of capital flowing into the space, combined …
Like several other markets across the country, the Twin Cities is experiencing the peak of the post-recession construction cycle. However, the traditionally tight multifamily market is in one of the best positions to absorb new units. In fact, Minneapolis-St. Paul has consistently reported one of the lowest vacancy rates in the nation due to a strong economic base and pent up demand for new units. Metro Minneapolis is the second-largest economic center in the Midwest and the local economy has grown at an average of 3 percent over the past five years, a healthy rate in the Midwest. The 18 Fortune 500 companies headquartered in the area are a significant driver of job growth and rental demand, along with the hundreds of support firms. As a result, the unemployment rate is below 3 percent and among the lowest in the nation. Despite a lack of available talent, employers managed to create 30,600 jobs in the year-long period ending in the second quarter. Overall, payrolls expanded by 1.5 percent during that time. Employment growth is encouraging development across several sectors in the market. In South Minneapolis, construction along the Blue Line is taking shape as $300 million in projects are coming …
Las Vegas continues to benefit from a strong labor market, which is driving demand and strong fundamentals in the multifamily sector. Employment in Southern Nevada increased by 3.4 percent over the past year, reaching one million workers, while the total population in Southern Nevada increased 2.2 percent, surpassing more than 2.2 million people. With a well-documented shortage in housing, developers added more than 3,200 new apartment units during the year and still saw vacancies decrease 30 basis points to 5.2 percent. Part of what is driving the tremendous growth in Las Vegas is the billions of dollars in commercial developments. This includes several major resort renovations (Palms, Monte Carlo, Caesars), several new resort developments (Paradise Park, The Drew, Resorts World), and the $1 billion expansion of the Las Vegas Convention Center. There is also the $1.9 billion football stadium that is helping usher the city into a new era of professional sports. On the capital side, multifamily properties continue to be highly sought after by both private and institutional buyers. Although transaction volume slowed in the first quarter of 2018 compared to the same period a year ago, total volume was more than $350 million in the first quarter, marking …
A number of high-profile retail and mixed-use developments throughout the greater Baltimore metropolitan area have been stuck in neutral over the past few years, with issues rang-ing from changes to the local real estate environment, construction issues, leasing challenges related to store closings and consolidations, corporate reevaluations and the constantly shifting tastes and shopping habits of the Baltimore consumer. Successful retail projects must en-joy a string of positive outcomes (as well as luck), including support from retailers, the capital markets and the local community. Below is a rundown of local retail or mixed-use developments that have recently sprung to life, as well as some that still remain on the starting block. Mill Station in Owings Mills Owings Mills Mall opened to sig-nificant fanfare in 1986 and stood face-to-face with a wrecking ball in 2016. Numerous ownership groups, design iterations and new retail projects emerging within close proximity kept pushing its reincarnation back further. Finally, the renderings of the “de-malled” project were unveiled to the public last fall, along with announcement of several leasing successes. This summer, construction remains in full bore leading up to an expected fall opening of Costco, followed by Lowe’s Home Improvement, Home-sense, Burlington and Five Below, …
To say the multifamily investment market in Dallas-Fort Worth (DFW) is healthy would be an understatement. With nearly 36,000 units across 183 properties sold in the first half of 2018, according to Real Capital Analytics, a more accurate assessment would be that the sector is — figuratively — on fire. Investor demand for workforce housing remains at an all-time high. With strong economic fundamentals, buyers remain bullish on the DFW multifamily market. Historically low interest rates have attributed to cap rate compression as buyers continue to search for value-add opportunities. While cap rates remain compressed, the yields are still very attractive when compared to alternative investment options. With listings averaging more than 125 confidentiality agreements, 20 tours and 15 offers, the competition has become intense. Winning a deal in today’s market takes more than a strong offer — it takes a good reputation, determination and aggression. Buyer Strategy Buyers can differentiate themselves and establish a competitive advantage by having the equity partner, lender, contractors and management company involved in the transaction prior to the initial offer. Sellers have grown accustomed to tight timelines, limited contingencies and significant non-refundable earnest money at contract execution. In this competitive of a market, sellers …
As most that pay attention to commercial real estate know, the retail real estate market is constantly evolving. That said, with change comes opportunity, and we are both recognizing and capitalizing on that opportunity in the Kansas City market. As has been the case for the last few years, we continue to see a significant amount of “right-sizing” from big box and junior box retailers. Although e-commerce remains a prevalent means of purchasing for consumers, retail closures are not as abundant as many have predicted. Rather, many retailers are tweaking their square footage needs in search of the perfect footprint to optimize in-store sales in conjunction with e-commerce. While e-commerce continues to gain market share, it still accounts for less than 10 percent of retail sales nationwide, as of last year. The need for brick-and-mortar stores remains imperative to the success of most retailers. In the Kansas City metro area, retail vacancy rates remain low at 5.6 percent as of the second quarter. While that is a slight increase over 5.5 percent in the first quarter, it is a significant improvement over last year’s second-quarter figure of 6.3 percent. A few major 2018 transactions contributing to the positive net absorption …
2018 is a compelling time to be in retail real estate, especially in New York. Sure, rents are probably still too high, but the vacancy rate keeps pressure on landlords and developers. There is no doubt Amazon will continue to disrupt and dominate, but reports of retail’s demise have been greatly exaggerated. The lower rents and vacancies are creating opportunity for retailers who can adapt to the factors driving consumers’ shopping habits. Perhaps more importantly, many of the city’s most desirable retail corridors such as Fifth Avenue and SoHo were historically difficult to come by, regardless of a tenant’s ability to pay. Now, opportunity beckons. The latest census data indicates New York City is growing and that the trend will continue as people seek urban environments to live, work and play. Futurists predict urban population growth to continue throughout the century. But it isn’t just residents and workers flocking to the Big Apple. More than 60 million tourists visited the city in 2017 and even more are projected to visit in 2018. Recent technological advancements have changed many aspects of human behavior, from the way we interact with one another to how we get around and how we purchase products. …
There is a lot of buzz in the Las Vegas market a full 10 years after the Great Recession. Much of this buzz surrounds sports with the new Golden Knights hockey team; the Las Vegas Lights professional United Soccer League team; Las Vegas Aces WNBA team; and the NFL Raiders team. The new Raiders stadium is under construction now and is widely considered the most talked-about major development happening in Vegas. In a city that offers unmatched access to world-class gaming, shopping, tradeshows and conventions, the NFL coming to town creates yet another reason for people to visit Las Vegas. As you can imagine, many retailers and investors are trying to position themselves to take advantage of this entry. The overall vacancy rate for retail in the Las Vegas metro area was 8.7 percent. Rents for new developments range from $2.50 per square foot, triple-net to $4 per square foot, triple-net. Existing neighborhood centers, power centers and strip centers average $1.75 per square foot to $2.25 per square foot. Anchor and mid-box leases average $0.75 per square foot to $1.25 per square foot for both gross and triple-net-structured leases. Ground lease and build-to-suit are averaging $120,000 to $225,000 in annual …
For years, others have considered Baltimore a second-tier market on the Interstate 95 Corridor, lacking the excitement that cities like Philadelphia and Washington, D.C., offer. Not so any more. Baltimore has evolved into a top-tier housing market that is nationally recognized by the investment community. No longer a collection of relics from the “rust belt” banking town that it was decades ago, Baltimore is now a mosaic of adaptive reuses and a hot-bed for tech jobs. The Charm City is an incubator for creativity and entrepreneurship that sprouts from the world-renowned medical and educational institutions such as Johns Hop-kins and the University of Maryland Baltimore. As a result, net absorption for new multifamily units in 2017 surpassed city records and continues to grow at unprecedented rates. There are many factors that contribute to strong levels of demand in a market, such as job growth, affordability and developers creating attractive space targeting all demographics. Baltimore’s evolving job market continues its rapid expansion, driven primarily by “eds and meds.” The sector experienced 19 percent growth over the 10-year average and expand-ed 2.5 percent in 2017. Residents specifically target areas where they can live, work and play, and with an expanding job market, …