From its near-perfect weather, parks and beaches to its commerce-friendly environment and well-educated workforce, Orange County has plenty of attractions to offer residents, businesses and multifamily investors. Add to that list well-paying jobs in the expanding professional and business services, and tech and healthcare sectors, and you can see why demand for housing in the county is on the rise. Job growth has pushed the unemployment rate to below 3 percent, a level not seen since the fourth quarter of 1999. The strengthening economy has created a tremendous tailwind for apartment demand in a metro where the cost of a single-family home is out of reach for most households. As a result, Orange County’s multifamily vacancy rate stood at the extremely low level of 3.8 percent at the end of the third quarter. The low level of apartment vacancy has also been positively affected by a change in the rate of new construction. After several years of increased supply, the amount of new housing in the pipeline has begun to decrease, having reached the apex of the current cycle in 2017. This year and next, the county will receive about 4,000 new apartments, down from the more than 4,800 units …
When real estate professionals think of the New Orleans industrial market, oil companies, the Port of New Orleans (recently rebranded Port NOLA) and distribution companies come to mind. That thought is currently undergoing an evolution. The historically industrial areas of New Orleans are being absorbed seemingly daily by an insurgence of retail and entertainment-based business. As traditional retail in American shopping and strip malls is on the decline, developers are rushing to buy warehouses for physical entertainment and non-traditional uses. Port NOLA used to be home strictly to cargo ships and tankers, but is now expanding to fill the need of cruise ships. Norwegian, Carnival and the newly announced Viking Cruise lines all now use it as a docking port. The $2 billion port master plan encompasses the growth needs of the cruise ships, as well as the recently announced deepening of the Mississippi River’s main channel to 50 feet. However, Tchoupitoulas Street warehouses that once served the port are being turned into cross-training gyms and breweries. High-profile industrial properties are in huge demand. Drive Shack, a competitor of popular Topgolf, is developing a $29 million venue at the old Times-Picayune newspaper site owned by Howard Investors LLC, which is …
Retail real estate in Dallas-Fort Worth (DFW) is nearing its cyclical peak, and users that want to continue expanding in the metroplex are being hamstrung by a lack of quality space and surging rents. According to CoStar Group, DFW’s retail vacancy rate currently stands at 4.4 percent, a record low that the research firm expects to hold steady or even improve in the coming years. Rents have grown by more than 3 percent annually over the last five years, and are now 15 percent higher than their pre-recession peaks. Put simply, DFW is a landlord’s market. As such, retailers that have had success in the metroplex over the last decade and want to keep opening new stores should be considering other markets. One of the ideal landing spots for these users lies a mere 200 miles up Interstate 35 in Oklahoma City. According to CoStar, Oklahoma City’s retail vacancy has grown by approximately 100 basis points over the last two years, currently clocking in at 6.1 percent. There is very little new product under construction — less than half a million square feet — but asking rents in Oklahoma City average $14.40 per square foot, compared to $18.89 per square …
For those of you not familiar with Overland Park, Kansas, and its progressive office market, below are a few key points to help illustrate the relative size and economic strength of one of Kansas City’s most dynamic suburbs. • Incorporated in 1960, Overland Park is the second-most populous city in Kansas. • As of 2017, the unemployment rate was 3.1 percent. • It contains 17 percent +/- of metro Kansas City’s total office inventory. • $69,888 per capita income in 2017 • AAA bond rating status from the nation’s top three bond rating agencies, received by only a small handful of municipalities The Overland Park office market has led the metro in new office deliveries, occupancy and rent growth for much of the past two decades. It is the headquarters location of choice for a host of large corporations, such as Sprint, AMC Theaters, Black and Veatch, Waddell & Reed and YRC, to name a few. Access to a highly educated workforce, affordable housing, top-rated public schools and healthcare is a sampling of the reasons companies are attracted to the area. However, large corporations are not the only companies interested in locating here. Overland Park has a deep and …
Adaptive reuse and redevelopment projects along with a robust job market—particularly in the financial and professional services sectors—are the linchpins driving New Jersey’s office market growth. The availability rate, which is at its lowest point in nine years, has improved thanks to the repurposing of obsolete office product. Last year, 12 properties totaling 2.3 million square feet were marked for redevelopment, taking them out of inventory. Through the first half of 2018, 20 office properties totaling 2.7 million square feet are slated for redevelopment, which will further lower the availability rate. The redevelopment of these spaces has also steadily driven up Class A asking rents over the past three years by 6.1 percent to 29.62 per square foot. The positive momentum in the market can also be attributed to the 4.2 percent unemployment rate, a 10-year low, and incentive programs, like Grow NJ, that have attracted and retained businesses in the Garden State, sustaining demand. The most significant adaptive reuse project currently under way is at 110 Edison Place in Newark. Also known as Ironside, the 22-acre project will transform a historic obsolete building at the corner of Edison Place and McCarter Highway into a 450,000-square-foot state-of-the-art office and retail …
The Orange County retail real estate market remains resilient despite continued pressure from growing ecommerce sales and a new tranche of retailer bankruptcies. Sears is the latest retailer to file for bankruptcy in the Amazon era. Toys“R”Us, Fallas Paredes and Mattress Firm have all declared bankruptcy, while Lowe’s announced it would close all Orchard Supply Hardware stores. In comparison, ecommerce sales continue to experience double-digit increases year-over-year and analysts are quick to conclude the so-called “retail apocalypse” is imminent. Does this mean it’s time to panic if you are in the retail real estate business? Definitely not, but it does mean the edge belongs to those who are proactive and adaptable in their decision making. We are also seeing many retailers and developers step up their game in the wake of ecommerce popularity. Retailers like Walmart and Ralph’s/Kroger are offering free same-day delivery and, in the case of groceries, food delivery in as little as one hour. Retailers like Best Buy are not only price matching but offering better product education and experience via what the company calls a “stickier” relationship. Developers are getting better at placemaking, the multi-faceted approach to planning, design and management of space, giving people more …
Driven by continued job and population growth, metro Atlanta’s multifamily market remains strong. Rarely a week goes by without an announcement of another corporate relocation or expansion somewhere throughout the metro area. This, in addition to an increasing population seeking the region’s quality of life, relative affordability and dynamic economy, has sustained the current cycle of development in the multifamily market. Investors appear to share this conclusion and have made Atlanta a top destination for acquisitions over the past several years. Despite some potential challenges on the horizon, namely rising construction costs, metro Atlanta’s apartment market is poised to continue its expansion over the near term. Market Fundamentals While new supply has outpaced absorption, most data providers still show metro Atlanta’s overall occupancy rate above 94 percent. Many market observers estimate that the multifamily market is on the cusp of, or has just moved past, its short-term peak of deliveries. Spiraling land and construction costs, coupled with the current labor shortage being felt across the economy, are acting governors of future supply expansion. These increases in costs are also translating into much higher required rents, which are testing the size of the renter pool capable of affording them. Despite concerns …
When we last reported on the health of Hawaii’s industrial market in 2018, we offered rationale for a then 2.02 percent Oahu industrial vacancy rate. This rate was fueled by the completion of many large residential high rises in urban Honolulu, the ongoing construction of a $9.2 billion light rail system (voter approved at less than $5 billion), and booming tourism and military sectors, our two biggest economic drivers. Oahu’s small, 41 million-square-foot industrial market was under further compression as industrial product was either being taken — or functionally interrupted — by the state to support light rail construction or lost to high-rise residential construction and the expansion of our main Honolulu harbor. A prohibitive industrial construction cost scale, which generally exceeds $125 per square foot for metal skin shell warehouse, had also slowed spec and build-to-suit construction. Fast forward to late 2019, and our market reflects an Oahu industrial vacancy rate of just 2.13 percent, a monthly industrial base rent average of $1.24 per square foot and monthly operating expenses of $0.41 per square foot. Much of this rate is composed of property taxes, which have increased more than 30 percent year over year in some areas, and 50 …
The vitality of Downtown Atlanta is exciting. In response to a wave of revitalization efforts and substantial investment from corporations, universities and the public sector, the submarket’s fundamentals are rapidly strengthening. As tenants have reprioritized their desires for office locations to include access to public transportation, walkable retail and proximity to cultural attractions and an educated workforce, Downtown has gained tremendous traction in demand and re-emerged as an affordable and authentic urban work setting. Model Project: 100 Peachtree While new development activity is primarily focused on housing, much of the bustle in Downtown Atlanta’s office market is focused on redevelopment, renovations and repositioning. For instance, our team is transforming 100 Peachtree, a 32-story office tower, into a modern, transportation-oriented workplace destination with upgraded amenities, enhanced connectivity with Woodruff Park and new community activations. 100 Peachtree’s timeless Meisian design functionality provides a workplace for tenants ranging from traditional corporate headquarters to tech startups. Changes at 100 Peachtree reflect a broader story about shifting expectations for workplace environments. Employees increasingly desire to work at a “go-to” office building with access to transit in an amenity-rich setting. Office amenities have evolved from providing convenience like a café or sundry shop to blurring the …
Industrial space throughout the Houston continues to be absorbed at an astonishing clip, pushing vacancy levels to some of their lowest points this cycle. According to Stream’s data, the overall industrial vacancy rate in Houston closed the third quarter at 4.9 percent. Vacancy rates in the six major Houston submarkets are all below 7 percent for the first time since Stream entered the Houston market in 2006. The low vacancy rate across the market has triggered waves of new development. Stream estimates that across Houston, there is approximately 14 million square feet of institutional-quality space under construction, with another 25 million square feet already having delivered since 2014. To put that in perspective, Stream tracked the overall market at 260 million square feet in 2014 compared to 285 million square feet today – a 9% market growth over that four-year period. If you layer in the product under construction today, that takes that growth to over 13 percent. Despite a hefty volume of development hitting the Houston market, leasing velocity continues to outpace new deliveries, keeping market fundamentals in check. This strength is attributable to many macro-economic factors but strong population growth, e-commerce, Hurricane Harvey recovery and the boom in …