Market Reports

How the Omaha Retail Market Is Adapting to Big Box Store Closures

by Kristin Harlow April 19, 2018

The pace of evolution in the retail sector is accelerating in a manner that few would have anticipated even five years ago. E-commerce has proven to be a very powerful disruptor, affecting both retailers and property owners alike. For some who have had the foresight and financial resources to adapt to this change, the disruption has brought opportunities for growth and increased market share. Clearly, not all have been able to adapt — some due to lack of execution and others seemingly caught in circumstances beyond their control. Despite the turbulence within the retail category, overall U.S. retail sales grew a very respectable 4.2 percent during 2017, according to the U.S. Department of Commerce. The growth is attributed to continuing gains in employment and a marked improvement in economic growth during the second half of the year. On the local level, the Omaha retail market exhibited moderate improvement during 2017, following a year of weak performance in 2016. The market absorbed just over 364,000 square feet during the year (see chart), slightly under the average annual rate of 378,000 square feet for the past five years. The overall vacancy rate decreased from 11.2 percent to 10.5 percent during the year as …

April 19, 2018

Market Reports New York Northeast Northeast Market Reports Retail

Manhattan Retail: 2018’s Challenges and Opportunities

by David Cohen April 18, 2018

Real estate experts continue to keep a close eye on the Manhattan retail market in 2018. Having wrapped up 2017 with challenges and opportunities for landlords and tenants alike, it appears the biggest strides toward adjusting to new conditions are behind us, though further rent adjustments are never out of the mix. At year-end 2017, average asking rents across Manhattan’s 16 main retail corridors declined by 18.4 percent, compared to those from year-end 2016, while availabilities ticked up slightly. Leasing velocity was strong in 2017 with 2.6 million square feet of transactions closing during the year, posting a year-over-year increase of 8.2 percent. Food and beverage tenants dominated the market in terms of deal volume, inking 172 leases (the most in Manhattan) at year-end 2017, which encompassed nearly 556,000 square feet. The apparel industry also posted strong numbers in 2017, leasing 459,200 square feet of space across 91 deals. 2017 data shows that SoHo was the most active neighborhood in terms of square footage leased (approximately 227,000 square feet) and the number of closed deals (43). The neighborhood outpaced the runner up, Midtown West, by more than 60,000 square feet. After suffering from consistently high vacancy rates, SoHo is …

April 18, 2018

Market Reports Multifamily Property Type Southeast Southeast Market Reports Tennessee

Stability Will Be Defining Characteristic of Memphis Multifamily Market in 2018

by John Nelson April 16, 2018

Consistency is key, and that’s exactly why investors find Memphis more attractive than ever: the Grind City’s financial and commercial real estate stability. The area has grown into a hub for both the distribution and transportation industries. As the largest economic driver in the state, Memphis International Airport alone injects over $20 billion a year into the region’s economy. Thanks in large part to FedEx, the airport has become the second-busiest cargo airport in the world. FedEx’s presence creates a secondary demand from all retailers as they want to have a large distribution presence in the market. Going High-Tech Marketable growth in the Memphis economy extends beyond the distribution and transportation industries. Sizable expansions at University of Tennessee’s Medical School, St. Jude Children’s Research Hospital, Methodist University Hospital and LeBonehur Children’s Medical Center, as well as the migration of medical device manufacturers such as Smith & Nephew and Medtronic, show how Memphis is not only the Home of the Blues and global shipping, but also a high-tech healthcare hub for the Mid-South region. All this growth has helped propel Memphis’ millennial population, especially 20- to 34-year-olds who make up a high percentage of the city’s workforce. Last year, Memphis marked …

April 16, 2018

Market Reports Multifamily Student Housing Texas Texas Market Reports

Student Housing Developers Infiltrate Secondary Markets

by Taylor Williams April 13, 2018

The National Center for Education Statistics (NCES) reports that about 20.4 million students attended American colleges and universities in 2017. That figure represents an increase of 5.1 million students from 2000 and is expected to exceed 22 million by 2023. As this enrollment growth carries forward, developers of student housing properties have been holding steady volumes of new product on their books. According to CoStar Group, developers have added about 22,000 new units each year since 2010. During that stretch, vacancy for all unit types has not risen above 10 percent and rents have maintained positive growth rates, save for the 12-month period from mid-2013 to mid-2014. Asking rents for studio and one-bedroom units have appreciated the most during this cycle. This suggests that more graduate students, who are more likely to live alone, are clamoring for student housing residences. Larger schools often have limited enrollment, forcing graduate students to consider smaller institutions. As such, secondary markets are gradually beginning to see heavier waves of student housing development. In Texas, this trend appears to still be in its infancy. As for the state’s biggest markets, the University of Texas at Austin is located within a very tight development grid. Lubbock …

April 13, 2018

Market Reports Midwest Midwest Market Reports Multifamily Ohio

Strong Fundamentals Are in Place for Cincinnati’s Multifamily Market

by Kristin Harlow April 12, 2018

The strength of the national multifamily market has been driven by a number of factors, especially job and wage growth. Nationally, annual job growth has been 1.5 percent and annual wage growth has been 2.9 percent, according to the U.S. Bureau of Labor Statistics. Another factor affecting the multifamily market is homeownership. In the United States, homeownership reached 65 percent in 2008, dropped to 60 percent in 2015 and rebounded to 65 percent at the end of 2017, according to the U.S. Census Bureau. Strong demand, low vacancies, good rental growth and a vibrant sales market have characterized the market. During the last 10 years, the millennial population has primarily rented housing and baby boomers have been downsizing to apartments or condos. These trends have contributed to the multifamily market’s strength. We see the millennial sector housing choices changing with much of the generation getting married and starting families. Last year represented the third-best year in history for multifamily property sales volume, according to Dave Lockard, senior vice president in the multifamily brokerage division of CBRE. Another factor affecting multifamily markets is a slowdown in new construction. Higher construction costs and more conservative commercial bank construction financing have led to …

April 12, 2018

Market Reports Multifamily New York Northeast Northeast Market Reports

Manhattan Multifamily Building Sales Slow in 2017 after 2016 Surge

by David Cohen April 11, 2018

In 2017, the multifamily investment sales market in New York City followed the trends seen within the broader market with sales volumes dropping while property values were mixed. The year ended on a high note with regard to contract execution activity, which bodes well for sales volume in 2018. This year, we expect volumes to rise while values bottom out and start to climb by the end of the year as positive movements in fundamentals start to exert upward pressure on property values. With regard to the number of properties sold, there were 1,215 apartment buildings sold last year, down 19 percent from the 1,507 that were sold in 2016. The elevator building sector, which we differentiate from walk-up buildings as a separate asset class, performed better with 235 sales, down 14 percent from the 273 elevator buildings that were sold in 2016. In the walk-up sector, there were 980 sales, down 21 percent from the 1,234 walk-up buildings that were sold in 2016. If we compare the Manhattan submarket to the outer boroughs, we see that activity in the outer boroughs held up much better than in Manhattan. In the outer boroughs, elevator building sales dropped by 13 percent …

April 11, 2018

Industrial Market Reports Property Type Southeast Southeast Market Reports Tennessee

Memphis Industrial Market Closes Out 2017 With Strong Wave of Absorption

by John Nelson April 9, 2018

The positive momentum for the Memphis industrial market continues. For the previous three years, the market has had positive absorption every quarter. This momentum continued through 2017, where we saw an annual net gain of 6.6 million square feet of positive absorption. Memphis has not seen this type of multi-year, record-breaking performance since the early 2000s. Achieving year-over-year absorption volume at this level proves Memphis can continue to attract both new developers and investors. Given ideal geographical positioning, Memphis is known as America’s Distribution Center, boasting unparalleled expertise in distribution and logistics. The Memphis International Airport houses the second-busiest cargo airport in the world. Companies recognize that the Memphis MSA offers reliable, cost-effective distribution, with the ability to reach 70 percent of the U.S. population within 24 hours. Moreover, Memphis is one of only three cities with five Class I Rail Systems, and has the fifth-largest inland port, as well as 10 major trucking companies utilizing Interstates 40 and 55. It’s no wonder that FedEx World Hub makes Memphis its home, and UPS chose it to house a major hub. Southeast Submarket The Memphis market continues to see nearly all of its growth to the southeast into Fayette County, Tennessee, …

April 9, 2018

Industrial Market Reports Texas Texas Market Reports

Texas Ports Invest in Infrastructure

by Taylor Williams April 6, 2018

Seaports are often considered the economic engines of the markets they occupy. So when a port is increasing its business and handling more product, that growth is usually accompanied by a spike in industrial development in the surrounding metro areas. Such is the case in Texas, a state where port activity encompasses more than 1.5 million jobs and $360 billion in economic impact, according to the Texas Ports Association. The organization also states that the value of product passing through Texas ports currently represents approximately 25 percent of the gross domestic product (GDP) of Texas and 6.4 percent of GDP for the United States. Overall volumes of maritime commerce are also on the rise following the completion of the Panama Canal expansion, a $5.4 billion project that wrapped in 2016. Ships and their cargoes are getting larger while the logistics of distribution are calling for faster delivery. Times are changing, and Texas ports are changing with them. The passing of the Water Resources and Development Act in 2016 has cleared the way for major improvements and expansion projects to occur on America’s rivers and harbors. And while industrial development is on the rise at and around the Ports of Beaumont, …

April 6, 2018

Market Reports Midwest Midwest Market Reports Office Ohio

Cincinnati’s Over-the-Rhine District Makes Way for Larger Office Developments

by Kristin Harlow April 5, 2018

Cincinnati’s Over-the-Rhine (OTR) neighborhood has come a long way since it served as the location for gritty scenes in movie director Steven Soderbergh’s 2000 film Traffic. Gone are the 500 vacant buildings and 700 vacant lots. The disadvantage of having the highest crime rate in the city is no more. Thanks to efforts by prominent Cincinnati companies such as Kroger Co. and Procter & Gamble, as well as the Cincinnati Center City Development Corp. (3CDC), efforts to revive the historic neighborhood have exceeded expectations. Located just north of downtown Cincinnati, OTR is one of the largest urban historic districts in the United States and is known for its abundance of architecturally significant buildings and homes. The area has a rich cultural scene due to its proximity to the Art Academy of Cincinnati, the Cincinnati Symphony Orchestra, the Cincinnati Opera, the School for Creative and Performing Arts, Memorial Hall and other artistic points of interest. OTR was named one of the top 15 “cool streets” in Cushman & Wakefield’s Cool Streets of North America report. A new breed of urban, experiential and independent mid-market retailers catering to millennial consumers has led to the rise of 100 Cool Streets across the United …

April 5, 2018

Market Reports Maryland Office Southeast Southeast Market Reports

Sustained Job Creation Translates to Excellent Health of Baltimore Office Market

by John Nelson April 2, 2018

It is a simple formula: No metropolitan region can achieve extended economic growth without a healthy job market that is sustainable over the long-term. The greater Baltimore region has been able to accomplish just that — especially over the past two years, starting when a new governor was installed in Maryland. The State of Maryland’s rallying cry “We’re open for business” is putting its money where its mouth is with the generation of more than 135,000 new jobs since the start of 2015, and the state unemployment rate dipping to 3.8 percent, which makes it substantially lower than the national average of 4.4 percent. As an official with the Maryland Department of Commerce so accurately stated at our company’s year-end market update, Baltimore is known for having three famous birds: the Ravens, Orioles and — with all the construction underway — cranes. Momentum has been achieved with the continued distancing of the state’s previous “business unfriendly” reputation, the influx of institutional money targeting the region, its immediate proximity to the Nation’s Capital, a highly educated labor base and a diverse business economy led by the medical, high-technology and educational institution sectors. And, the most telling barometer of all is where …

April 2, 2018

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