Market Reports

Make it a Double: Entertainment, Hospitality Firms Invest Heavily in Louisville

by John Nelson November 26, 2018

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 …

November 26, 2018

Kentucky Market Reports Multifamily Southeast Southeast Market Reports

Louisville Renters Absorb Cycle-High Development, Pushing Vacancy Rate Down

by John Nelson November 19, 2018

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 …

November 19, 2018

Market Reports Multifamily Texas Texas Market Reports

Industrial Development Erupts Overnight in Plano, McKinney

by Taylor Williams November 16, 2018

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 …

November 16, 2018

Healthcare Market Reports Midwest Midwest Market Reports Wisconsin

How Healthcare Adds Value to Mixed-Use Developments in Milwaukee and Beyond

by Kristin Harlow November 15, 2018

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 …

November 15, 2018

Market Reports Nevada Office Western Western Market Reports

Reno Office Market Tightens With Lack of New Supply

by Taylor Williams November 13, 2018

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 …

November 13, 2018

Kentucky Market Reports Office Southeast Southeast Market Reports

Louisville’s CBD, Suburbs Offer Good Landing Spots for Office Tenants

by John Nelson November 12, 2018

Louisville’s office landscape can be described as a tale of two distinct submarkets woven together by a common thread of consistency. In the central business district (CBD), Class A vacancy rate stands at approximately 13 percent while the suburban Class A vacancy rate hovers around 8.5 percent. As can be noted, there is a substantial gap in occupancy between the two submarkets — 450 basis points. The thread of consistency in the Louisville office market lies in the fact that both are within 100 basis points of those vacancy rates for the same quarter of last year. The suburban office market continues to see healthy rental rate increases driven by the low rate of delivery for new product, coupled with consistently lower vacancy rates. Newer projects are advertising rates in the range of $24 to $28 per square foot, while second-generation, Class A product has quoted rates in the high teens and low 20s. Many companies such as Thornton Oil, BrightSpring Health Services (formerly ResCare) and V-Soft have chosen to grow their headquarters presence in Louisville, which is helping maintain stability in the suburban market. As in most markets, Class B and C product continues to struggle as functional obsolescence, …

November 12, 2018

Market Reports Retail Texas Texas Market Reports

Retail Growth in Plano-Frisco-McKinney Comes Full Circle

by Taylor Williams November 9, 2018

Twenty-five years ago, the Plano-Frisco-McKinney area was replete with open fields, cows and dirt roads. Today, the intersection of State Highway 121 and the Dallas North Tollway is central to Dallas-Fort Worth’s (DFW) development activity. Every red light within a three-mile radius of that intersection has cars stacked 10 deep. The entire area is a metropolitan buzz of noise and activity. The key to understanding how real estate markets — not just retail —in these cities changed so dramatically in less than 20 years lies in geography. The (DFW) metroplex consists of about 9,286 square miles, which is roughly double the size of the Los Angeles metro area, not to mention bigger than the combined size of Rhode Island and Connecticut. The sheer mass of land in DFW and diverse city development policies ensure population densities and characters vary tremendously from one submarket to another. Consequently, retail real estate in the metroplex exists and thrives in pockets. Given the benefit of the expanded infrastructure that the Plano-Frisco-McKinney area has enjoyed over the last two decades, it comes as little surprise that the region would eventually be a magnet for rooftops — and associated retail activity. Basic Numbers CoStar Group identifies …

November 9, 2018

Indiana Market Reports Midwest Midwest Market Reports Office

Don’t Nap on Naptown: Indianapolis Office Market Is Actively Transforming

by Kristin Harlow November 8, 2018

You would be hard pressed to find another city more excited about transformation than Indianapolis right now. Previously known as “Naptown” by outsiders due to the sleepy feel the city exuded, those days are long gone. Indy has experienced incredible transformative activity in the past decade, and that extends to the commercial real estate office sector. For the 18th consecutive quarter, this sector has experienced positive net occupancy gains, and 14 of those quarters have fallen below the 10-year average vacancy rate of 18 percent. Average asking rental rates have experienced healthy growth, with five-year rental rate growth at nearly 14.3 percent. Changing ownership According to colleague Bennett Williams, director, the office landscape is really about change right now. “Long-term Indianapolis owners, such as Duke Realty, historically have developed and held their assets, but now that they are selling off their product, national and international firms are entering the market,” he says. “These new firms have been pushing all facets of the deal to maximize the return for their investors.” Within the past five years, Indy has experienced many ownership changes of large office assets both in the suburban markets and the central business district (CBD). Cushman and Wakefield research …

November 8, 2018

Market Reports Northeast Northeast Market Reports Office Pennsylvania

Lehigh Valley Office Market Continues to Grow

by David Cohen November 7, 2018

From large publicly traded companies to mid-size tech companies and small professional services firms, companies are taking notice of the office development and vibrant live-work communities being built in the Lehigh Valley. Located one hour north of Philadelphia and 90 minutes west of New York City, the Lehigh Valley is a two-county region in eastern Pennsylvania consisting of 62 municipalities and the cities of Allentown, Bethlehem, and Easton. It is the 69th largest metropolitan region in the United States, with a $39.1 billion GDP larger than that of both Wyoming and Vermont. The Lehigh Valley’s total office market inventory currently stands at 26.8 million square feet. There have been 281,250 square feet of office market deliveries in 2018 so far, and another 329,000 are currently under construction. A total of 669,832 square feet of office space was under construction in the Lehigh Valley as of the first quarter of 2018, with the majority of that development in the region’s urban centers. Ninety-six percent of the office buildings constructed in the Lehigh Valley so far this year have been built in either Allentown, Bethlehem, or Easton and all of the 329,000 square feet of office space currently under construction are in …

November 7, 2018

Market Reports Nevada Retail Western Western Market Reports

Big Box Absorption Leads to Market Stabilization in Reno

by Taylor Williams November 6, 2018

The retail market in Reno/Sparks continues to improve with big box retailers moving to the market and a steady decrease in the vacancy rate. The retail market in Reno/Sparks has seen an overall decrease in vacancy for the fifth consecutive quarter with the current vacancy rate hovering just under 7 percent. Average market rent is currently $1.50 per square foot, triple net, and appears to be slowly climbing as we continue to experience positive net absorption. Tenants moving and expanding in the area include Big Lots leasing 30,112 square feet in Spanish Springs, and Harbor Freight and Tractor Supply Company leasing 16,016 square feet and 38,326 square feet, respectively, in Sparks. Sprouts Farmers Market has opened two new locations in Reno and Sparks over the past 12 months, absorbing roughly 60,000 square feet. Grocery Outlet, Tuesday Morning, Marshall’s Home Goods, Burlington and Raley’s Supermarkets have also expanded in northern Nevada. The Reno/Sparks market has seen increased activity in the finance services and fast-casual restaurant industries. New fast-casual restaurants in the area include Mod Pizza, California Pizza Kitchen, Burrito Bandito, Sizzle Pie, Pine State Biscuits and Habit Burger. Chase Bank and United Federal Credit Union have opened several locations in Northern …

November 6, 2018

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