Market Reports

Reno Multifamily Rent Growth Among Nation’s Highest as Vacancy Remains Low

by Taylor Williams June 19, 2018

Reno’s proximity to the Bay Area is supporting an economy beyond the gaming industry. The area’s lower cost of living is also attractive for Bay Area transplants attempting to further stretch their income. Tesla is the most notable utilizer of the metro’s favorable location and business-friendly environment. The company pulled 112 permits last year to build out internal areas of the factory. The introduction of Tesla’s electric semitruck necessitates a further expansion of production in the coming years. On the supply side, development is ramping up quickly as builders finally move away from primary markets to relieve housing pressure in tertiary metros. Inventory will expand by more than 4 percent this year, representing the largest increase on record. The South Reno submarket contains a majority of the completions slated this year. More than 1,400 units are underway in the submarket, including nearly 1,000 scheduled for delivery in 2019. Builders are also active in the Sparks submarket, where 600 units are underway and scheduled for completion. The introduction of new units has pushed up the percentage of properties offering leasing incentives to 16 percent. Still-tight conditions are limiting the average incentive to just nine days of free rent. An influx of …

June 19, 2018

Florida Industrial Market Reports Property Type Southeast Southeast Market Reports

Miami Industrial Market’s Future Hinges on Infill, Single-User Properties

by John Nelson June 18, 2018

After several years of strong absorption in leasing and robust sales volume, there’s no question that Miami’s industrial real estate market is the desired location for national tenants and institutional investors alike. But many insiders are questioning if sustaining that level of growth is possible and if there are still profitable transactions to be found. The answer is a resounding yes. There is little indication that the Miami industrial real estate market will slow down with vacancy rates hovering in the low 4 percent range. The rise of e-commerce, strong population growth and the region’s role as the gateway to Latin America all bode well for continued leasing growth and have solidified the region as a top-tier industrial real estate market. It’s been exciting to watch Miami earn a rightful place among the nation’s top brass. The keys to staying relevant in Miami’s increasingly competitive and sophisticated market are to search for opportunities that support the demand for large-scale industrial space for single-users, take a closer look at previously passed over deals, get creative about a parcel’s potential and remain focused on infill strategies. Although Miami’s growth will continue, there will likely be fewer buildings to purchase. According to the …

June 18, 2018

Market Reports Retail Texas Texas Market Reports

University Submarket Emerging as Retail Hotspot in Fort Worth

by Taylor Williams June 15, 2018

For the last several years, Fort Worth’s retail market has posted a vacancy rate of 5 to 6 percent, suggesting that absorption is strong yet new construction is still permissible. However, there is a difference between Fort Worth’s vacancy rate and that of comparably sized markets wherein 95 percent of the retail space is occupied. In Fort Worth, occupancy is evenly distributed from submarket to submarket. Because of this balance, the metro’s most thriving retail neighborhood — the university corridor — and the driving forces behind its growth often go overlooked. Perhaps because it has only one campus that is located within a large city and even larger metropolex, Texas Christian University (TCU) doesn’t always get the credit it deserves for driving retail growth in Fort Worth. Rarely in recent history, however, has the connection between the two been more visible. According to the school’s website, its total enrollment was approximately 10,400 students during the academic year ending in May 2017. Three years earlier, that figure stood at roughly 9,700. That difference of 700 or so students may not seem like much at first. But it bears reminding that these are young adults attending a private university. This means that …

June 15, 2018

Illinois Market Reports Midwest Midwest Market Reports Office

New Chicago Office Markets Shape Perception of the City

by Kristin Harlow June 14, 2018

It’s an exciting time to be part of the action in Chicago’s real estate market. While Illinois remains an “outflow” state, construction cranes dot the Chicago skyline and the city’s inflow numbers remain positive. Large employers are considering Chicago for campus-like headquarters operations and exciting markets are continuing to grow. In particular, west side blight continues to be replaced by residential growth in the West Loop, with retail services finally gaining momentum despite slow adoption by soft goods merchants. The West Loop’s immediate neighbor to the north, Fulton Market, maintains its buzz as the popular new kid in town, demonstrated by its ability to attract office tenants. Yes, office tenants. Transportation for workers, the primary objection to Fulton Market that has previously knocked it out of contention, will continue to be a challenge as public options slowly catch up to the development in the area. Employers will have to be creative in providing alternatives for new talent not within reasonable cycling or ride-sharing range. How did this happen when a decade ago the notion of office space west of the expressway was thought to be an absurd one? Because Chicago is not landlocked to the west by any natural barriers, …

June 14, 2018

Industrial Market Reports Nevada Western Western Market Reports

E-Commerce, Advanced Manufacturing Attract Capital to Reno

by Taylor Williams June 12, 2018

Industrial sales and leasing in the Reno-Sparks area remains one of the best performing sectors in the marketplace, just as it did in 2017. With a record vacancy percentage below 4 percent, combined with new buildings being occupied upon completion, the strong demand for new and existing industrial product is a welcome normality from previous years. The North Valley’s submarket has been the dominant center point for speculative development. It is currently the fastest-growing submarket in Reno, as nearly 50 percent of the transactions containing more than 50,000 square feet were concentrated in this submarket. This is primarily attributed to the abundance of skilled labor in the area and proximity to Interstate 80. Developers continue their hunt for buildable land in the area, though the availability of readily developable parcels is dwindling. Driven by consumer shifts toward internet goods, along with burgeoning advanced manufacturing, capital from institutional and regional investors alike have entered Reno’s industrial market. This has led to the industrial market posting the largest volume and most competitive assets. Last year’s investment volume was up 90 percent year over year, with a 14 percent increase in the total number of sales. The most recent eye-opener was Blockchains’ acquisition …

June 12, 2018

Florida Market Reports Office Property Type Southeast Southeast Market Reports

Miami-Dade County’s Office Market Fueled by Solid Local Economic Fundamentals

by John Nelson June 11, 2018

Driven by population and job growth, Miami-Dade County is one of the strongest and most sought-after commercial real estate markets in the Southeast. As of February 2018, the county’s unemployment rate stood at 4.7 percent, which, while only a 10-basis point decline from the rate in February 2017, represents continued positive movement. The metro’s economic stability and growing employment base are significant factors when analyzing the tightening office market. Miami-Dade County ended the first quarter with an overall office vacancy rate of 9.67 percent, a 106-basis point decline from the previous year. Also, net absorption was positive with suburban areas such as Airport/Doral, Coral Gables and South Gables/South Miami remaining primary contributors to the county’s growing office sector. The trend continued from 2017, as the year ended strong with nearly 1.5 million square feet of total net absorption countywide. As overall vacancy declines and rental rates rise, development in Miami-Dade remains active with 717,000 square feet under construction, 657,000 square feet of which is being developed within the top five most in-demand submarkets for corporate growth. Projects such as Two MiamiCentral, Giralda Place and Mary Street are redefining South Florida’s office landscape as mixed-use environments become more ubiquitous. Record-Low Vacancy …

June 11, 2018

Market Reports Retail Texas Texas Market Reports

Retailers That Cater to Single-Family Homes Find Success in Rio Grande Valley

by Taylor Williams June 8, 2018

As the number of jobs and people in the Rio Grande Valley (RGV) grows, the region’s retail market holds steady. Historically, vacancy in this market tends to hover between 5 and 7 percent. So the current retail vacancy rate in the McAllen-Edinburg-Mission MSA, which according to CoStar Group is 4.5 percent, represents a couple different trends. First, the vacancy figure illustrates positive absorption of newly constructed retail space. In 2016 and 2017, the market added about 770,000 and 675,000 square feet, respectively, its highest supply additions in nearly a decade. Second, the diminished vacancy rate suggests that new retailers are entering the McAllen MSA, which can be a gauge for the rest of the RGV. In actuality, much of the new space is being leased to retailers that already have a presence in the valley. One might think the RGV is too small a market to support healthy same-store operations, but this is not the case. Best Buy, Walmart and Ulta Beauty can attest to this. A Dominant Sector There is a common thread that unites these newcomers, and it involves single-family development. According to the latest HUD data available, single-family home sales increased 3 percent year-over-year in 2017. More …

June 8, 2018

Illinois Market Reports Midwest Midwest Market Reports Multifamily

Deconversions, Adaptive Reuse Drive Chicago Multifamily Investment

by Kristin Harlow June 7, 2018

Resilience in the Chicago apartment market amid a historic construction boom is creating opportunities for multifamily investors, particularly those who are willing to go the extra mile — sometimes literally — to capitalize on rent growth outside the downtown core. Across the city in outlying neighborhoods like Uptown, Rogers Park and Pilsen, value is being discovered in vintage buildings due to their high appreciation potential. In addition to circumventing rising material and labor costs, buyers of existing buildings are benefiting from their ability to collect rents now, while there’s still room for growth, rather than going through the time-consuming development process that has cast a shadow over some pipeline projects. Wave of deconversions Condo deconversions have been a popular choice among investors in recent years, with nearly 2,000 units deconverted at a combined market value of approximately $437 million since late 2016 in Chicago, according to data from CoStar Group and Interra Realty. When executed well, these transactions create a win-win for both parties involved. Condo owners, some of whom are still trying to recover value lost during the recession, can usually sell their units at a higher price than they would have achieved on their own, particularly in older …

June 7, 2018

Industrial Market Reports Northeast Northeast Market Reports Pennsylvania

Pent-Up Demand Spurs Growth in Pittsburgh’s Industrial Sector

by David Cohen June 6, 2018

The Pittsburgh industrial market has historically been a relatively small property sector due to several limiting factors, including difficult topography, infrastructure constraints and Pittsburgh’s location between two major industrial markets (Columbus to the west and Pennsylvania’s Central Valley to the east). However, with the emergence of e-commerce fulfillment centers, the growth of the Pittsburgh economy and major infrastructure improvements, we are starting to see strong demand for well-located industrial properties in the region. The size of the industrial market for the greater Pittsburgh metro is 185 million square feet. of which, 23.6 million square feet is flex and 161.1 million square feet is warehouse. Flex vacancy rate is currently 9.4 percent with 98,000 square feet under construction while warehouse vacancy is 5.8 percent with 263,000 square feet under construction. Based upon the tight vacancy and limited new construction in the warehouse space, there is believed to be significant pent-up demand, particularly for Class A users requiring 250,000 to 500,000 square feet. Accordingly, there are a number of planned speculative projects in this size range in the Airport, Butler County and Beaver County submarkets breaking ground in 2018. Lenders in the region are also bullish on the strength of the Pittsburgh …

June 6, 2018

Market Reports Nevada Office Western Western Market Reports

Reno’s Office Market Successfully Rebounds From The Great Recession

by Taylor Williams June 5, 2018

I have had the pleasure of selling commercial office space in Northern Nevada for nearly 15 years. During this time, I saw the peak of the market from 2003 to 2008 wherein construction was at an all-time high, lease rates were reaching unseen heights and absorption was setting records. Then we all got to experience the Great Recession from 2008 through 2012. This saw nearly half of the buildings that were constructed during the previous peak become empty. Vacancy rates hit 20 percent, lease rates dropped to levels well below where they were in 2003, and construction came to a screeching halt. Then, magically, at the beginning of 2013 the economy took a turn and the Northern Nevada office market began its recovery. This was expedited in 2014 with Tesla making its announcement of the Gigafactory in the Tahoe Reno Industrial Center and the Tesla Effect created a national buzz that hasn’t slowed. Unfortunately, this has created a new problem. The Reno office market sits at 10.1 percent vacancy, down from 20.7 percent during the recession, as net absorption has been positive year over year since 2012. The absorption has been primarily in second-generation space as there has been relatively …

June 5, 2018

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