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

Market Reports Retail Southeast Southeast Market Reports Virginia

No Sign of Retail Apocalypse in Sight as Grocers, Restaurants Help Richmond Thrive

by John Nelson November 5, 2018

If you mention the phrase “retail apocalypse” to anyone in the Richmond market, you will immediately receive a puzzled look back. The Richmond retail market is about as far away from a retail apocalypse as any market in the country. Yes, we have seen the Toys ‘R’ Us, Sears, Macy’s and Kmart closures, but with close to 83 million square feet of retail space in the Richmond MSA, the current retail vacancy rate is below 5 percent. The vacancy rate is at, or near, a record low and demand for more space remains robust. New retail development projects are leasing quickly and several noteworthy redevelopment projects are in the works. In May 2016, Wegmans opened its first 120,000-square-foot Richmond store at Stonehenge Village along Midlothian Turnpike. In August of that same year, Wegmans opened its second store at West Broad Marketplace in Short Pump. Since those two openings, Richmond has received new attention from many national tenants, developers, and investors looking to enter the market. Market activity has been driven by the likes of Wegmans, Kroger, Publix, Aldi, Lidl and Whole Foods Market, as well as Gold’s Gym, Planet Fitness and Crunch Fitness. In 2016, Ahold announced it would sell …

November 5, 2018

Market Reports Multifamily Texas Texas Market Reports

In Terms of Multifamily Demand, Far Northeast DFW Has It All

by Taylor Williams November 2, 2018

In the world of multifamily development, it’s rare to find a market that quite literally checks every box. But in Dallas-Fort Worth’s (DFW) Far Northeast submarket, which encompasses Plano, Frisco, Allen and McKinney, that’s precisely the case. In terms of fundamental demand drivers, Collin County is growing by about 80 new residents per day, one of the fastest rates in the country. The county’s population is expected to increase by nearly 800,000 over the next two decades, and to add more than 300,000 new jobs during that stretch as well. The region also epitomizes the corporate relocations for which DFW has become renowned. The arrivals of Toyota North America, JPMorgan Chase, Liberty Mutual and FedEx have already brought thousands of high-paying jobs to the Far Northeast submarket. Just as important, these companies have established precedents for medium-sized companies to follow suit and keep the job growth train rolling. The impacts of those demand drivers on multifamily growth in the region has been tremendous. But there’s more to the story of this area’s multifamily explosion than the increase in jobs and population. Lesser-Known Factors While corporate relocations have brought swaths of millennials to the area — in Frisco, that group comprises …

November 2, 2018

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