Market Reports

Led by Aerospace, Wichita’s Industrial Market Shows No Signs of Slowing Down

by Kristin Harlow May 24, 2018

The industrial sector remains the prime beneficiary of the numerous technological shifts occurring throughout the economy. E-commerce continues to fuel demand for distribution and warehouse space in the national industrial sector. The Wichita market remains focused on the aerospace cluster, advanced manufacturing and the growing advanced materials sector to sustain and grow the industrial segment. The current supply pipeline is to remain about the same as it has over the past couple of years, with over 726,000 square feet under construction at the end of the first quarter and many new large developments announced. Net absorption is expected to occur at a steady pace, resulting in lower vacancies around 6 to 7 percent. Average asking rental rates grew to $4.38 per square foot for general industrial space and $10.26 per square foot for flex space as of the end of the first quarter. This growth will accelerate further as the market continues to tighten through 2018. Employment growth has not been reflective of renewed vigor in the industrial sector, however, highlighting the influence of other industries such as technology. The industrial sector’s outlook is bright since increased emphasis on aerospace production and advance manufacturing shows no sign of abating. Of …

May 24, 2018

Market Reports Property Type Restaurant Retail Southeast Market Reports

Diverse Population, UAB Help Retail, Restaurants Expand in Birmingham

by John Nelson May 21, 2018

It wasn’t until the last five to seven years that college graduates started looking at Birmingham as a place to live and work. Cities like Nashville and Atlanta were getting too expensive and too congested. Upon discovering how progressive Birmingham has become with the revitalization of the downtown area, it became the new hot place to live, play and work. So what was once an untapped market has started to grow with new retailers and restaurants to meet the growing demand. The addition of Topgolf to downtown Birmingham, for example, would not have happened without the influx of new multifamily projects in the downtown/southside area. Birmingham has also seen a growth of new restaurants to the area because of the diversity of population. The number of medical and undergraduates students studying at the University of Alabama-Birmingham (UAB) Medical complex has contributed to the diversity. As such, restaurants and retailers that cater to this diversity have begun to open in the area. The Pizitz Food Hall is a prime example as it includes two restaurants and 12 food stalls serving cuisines from all over the world, including Italian, Israeli, Ethiopian, Japanese, Vietnamese, Indian and traditional Southern soul food like fried chicken …

May 21, 2018

Market Reports Multifamily Texas Texas Market Reports

Rio Grande Valley Multifamily Market Playing Catch-Up on Class A Product

by Taylor Williams May 18, 2018

Commercial real estate sectors in secondary and tertiary markets often suffer from a lack of current, comprehensive data and metrics. Until a few years ago, the multifamily market of the Rio Grande Valley (RGV) was no exception. Much of the region’s multifamily product consists of “clusters” of fourplexes. In many cases, different investors own different units within these properties, which generally do not have management and leasing offices with hard data. Consequently, for years multifamily developers and brokers in Hidalgo and Cameron counties operated without reliable information on their market, generally ceding to the ideas that it was overbuilt. Turns out they were incorrect. Year-over-year rent growth in this market tends to be flat. Fluctuations are short-lived and back-and-forth in nature. But beginning in 2015 and carrying over into 2016, multifamily players in the RGV began to realize that their market was not overbuilt and that in fact, demand for better product was rising. Volatile Vacancy To better grasp the ebbs and flows of this market, we revert to 2008 and pre-recession data. To simplify our analysis, we use the McAllen-Edinburg-Mission MSA as a proxy for the region. In 2008, multifamily vacancy stood at approximately 6 percent. By 2011, when …

May 18, 2018

Market Reports Michigan Midwest Midwest Market Reports Retail

In Detroit, the Retail Market Continues Upward Trajectory on Several Fronts

by Kristin Harlow May 17, 2018

Detroit’s economy is reinventing itself and slowly gaining its footing after the Great Recession and the city’s bankruptcy. Low interest rates supported record auto sales in 2016 and another strong showing last year, adding some stability to the metro area’s bellwether industry. A rejuvenated downtown and new, growing industries are invigorating the retail market. The story of retail in Detroit closely follows the overall narrative of the market — out with the old and in with the new. Because of this, well-known national retailers such as John Varvatos and Lululemon have made their way into downtown, while international retailer Zara established a presence in Troy, reiterating the market’s strengthened retail sector. Job growth is closely aligned with retail sales, and payrolls in the Motor City have been expanding, on and off, since mid-2009. At times, the snail’s pace of growth has proven frustrating for a market that bore an above- average burden due to population declines and the auto industry’s collapse. The outlook is positive, however, and total nonfarm payroll employment in metro Detroit eclipsed the 2 million mark last year for the first time since 2006. Manufacturing and professional and business services have provided the foundation for the local …

May 17, 2018

Alabama Market Reports Multifamily Southeast Southeast Market Reports

Birmingham’s Multifamily Market Sees a Turnaround in Highway 280 Corridor

by John Nelson May 14, 2018

Birmingham’s multifamily market closed out 2017 with an average 7 percent vacancy rate and effective rents that flirted with the $900 per unit ceiling. On the investment side, multifamily assets in the market demonstrated some notable pricing trends through year-end 2017. The market outperformed the region and the nation in terms of value appreciation on a per unit basis. The average price per unit in Birmingham increased by more than 20 percent from fourth-quarter 2016 to fourth-quarter 2017. And, among these assets, garden-style properties stood out with a 36 percent increase in average price per unit. One explanation for this trend is the combination of value-add upgrades to garden-style properties in the market, as well as new construction that is lifting values in the market. To that end, Birmingham’s Highway 280 Corridor makes for a great case study. Stabilization of 280 Corridor What was a soft submarket in 2017, the Highway 280 Corridor in Birmingham has now rapidly tightened up in the first quarter of 2018. This one corridor spans various Birmingham submarkets ranging from urban Central City and Southside to Birmingham’s southeastern suburbs of Meadowbrook and Lake Purdy. According to Alabama Traffic Data (ATD), the average annual daily traffic …

May 14, 2018

Market Reports Office Texas Texas Market Reports

Texas Office Markets: Who’s Hot, Who’s Not

by Taylor Williams May 11, 2018

From Dallas-Fort Worth’s (DFW) explosive rate of corporate relocations and expansions to Houston’s reliance on oil prices to Austin’s strong supply of tech talent, there’s very little common ground among the office sectors of Texas’ biggest cities. And whereas the pace of sales, development and absorption for certain property types — industrial, multifamily, self-storage — are strong across DFW, Houston, Austin and San Antonio, it’s the office sectors of these metros that truly capture their differences. The office markets of the Lone Star State’s four major metros each have a different story to tell — a narrative that speaks to their core demand drivers, as well as their projected performances for the rest of the year. In this piece, we take a closer look at the crucial factors underlying each of the Big Four’s office markets. DFW: Slowing But Stable The DFW office market isn’t as hot as its multifamily or industrial sectors, which are seeing record volumes of new construction and absorption, respectively. But the metro’s ability to create 100,000-plus jobs per year ensures that its strong office fundamentals can be maintained. The metro posted year-over-year rent growth of 2.2 percent, according to CoStar Group, right on par with …

May 11, 2018

Market Reports Michigan Midwest Midwest Market Reports Office

Investors Take Notice of Office Rebound in Detroit’s CBD and Suburbs

by Kristin Harlow May 10, 2018

Metro Detroit’s office recovery continues to steadily march forward. Local and national commercial real estate investors are showing a renewed appetite for buying and renovating existing buildings, and even developing new product. The City of Detroit has experienced the quickest recovery, going from near stagnant activity with a vacancy rate of 21.5 percent to a single-digit vacancy of 8 percent with multiple new developments in the past eight years, according to CoStar Group. Dan Gilbert, founder of Quicken Loans and Rock Ventures, invested in about 90 Detroit properties, totaling 15 million square feet, which kicked off Detroit’s rehabilitation. This prompted several other companies to stake an interest in Detroit’s Central Business District. The resurgence continues, and today numerous projects are in development that appeal to millennials and empty nesters alike. Most of these projects are situated on Woodward Avenue, which has been the center of the area’s rebirth. Within a few blocks of this avenue reside most of the renovated office buildings, the stadium district, new shops, restaurants, entertainment venues and cultural institutions like the Detroit Institute of Arts, Charles H. Wright Museum and The Detroit Opera House. Currently, there are several multifamily projects in downtown Detroit such as Midtown …

May 10, 2018

Alabama Market Reports Property Type Retail Southeast Southeast Market Reports

Multifamily Projects, Experiences Redefining Birmingham’s Growing Retail Market

by John Nelson May 7, 2018

It’s no longer a secret that Birmingham and its surrounding communities are confidently moving forward, bursting with festivals, arts, concerts, parks, reimagined spaces and a red-hot local dining scene. These revitalized spaces represent opportunities to find affordable housing, a vibrant social life and a place where all can participate in the community’s ongoing progress. Tourism is also on the rise, with a 50 percent increase in expenditures over the past 10 years as visitors flock to the region to dine at the restaurants of culinary legends, cheer on Minor League Baseball teams in a downtown stadium, attend the Sidewalk Film Festival, watch IndyCar racing at the Barber Motorsports Park, visit the historic Civil Rights Museum and enjoy live music venues throughout the area. With all of its history, charm and new amenities, Birmingham is no longer a pass-through; it is the destination. The greater downtown Birmingham area experienced a 40 percent increase in its multifamily inventory in 2017, which is nearly three times the amount added in 2015. These spaces are filling up quickly as the submarket’s occupancy rate is currently at 92.5 percent and climbing. Everyone from millennials who are marrying later and waiting longer to buy homes to …

May 7, 2018

Market Reports Multifamily Office Texas Texas Market Reports

Downtown Renaissance Drives El Paso Office Market, Multifamily Growth

by Taylor Williams May 4, 2018

For decades, El Paso was a big, sleepy town nestled on the banks of the Rio Grande that relied on a slow-paced, but consistent economy. In those days, housing was always affordable. Pricing levels for single- and multifamily properties were below national averages, but so too were wages. The city’s office market, which has traditionally served as a leading indicator for multifamily growth, hummed along without ever experiencing strong asset appreciation or interest from outside investors. Taken at face value, this activity would suggest that there was a firm ceiling for new development and rent growth for both of these markets. In recent years, however, El Paso natives have seen their city experience enormous growth fueled by exceptionally low crime rates and expanding population at Fort Bliss Army base. Development of both single- and multifamily product really took off between 2011 and 2014, causing rent growth to subside and vacancies to rise from 5 percent a few years ago to roughly 9 percent today. The market returned to a more sustainable pace of new development in subsequent years. Looking ahead, the metro’s job growth should remain a factor of its population of military personnel and federal employees. As El Paso …

May 4, 2018

Market Reports Michigan Midwest Midwest Market Reports Multifamily

Surging Demand for Apartments in Downtown Detroit Is Testament to the City

by Kristin Harlow May 3, 2018

At a time when downtown Detroit is in the midst of a civic renaissance, the state of the city’s multifamily real estate market is both a reflection of larger trends and a sign of what might be in store for the Motor City in the years ahead. To keep a pulse on the market, Broder & Sachse Real Estate compiles a market study twice a year to evaluate the rental and occupancy rates of all multifamily properties downtown. Through this research, the continued strength of Detroit’s multifamily market is abundantly clear, with an average occupancy rate of 95.6 percent across downtown in winter 2018. This occupancy rate indicates demand is high, especially coupled by the findings in the Downtown Detroit Partnership’s third Greater Downtown Residential Market Study released in 2017. The study estimated that an additional 10,000 units will be needed over the next five years. The need for these additional 10,000 units means supply — or a relative lack thereof — is also part of the equation. While the number of residential units in Detroit has increased by a great deal on a percentage basis, in relative terms the volume of quality residential product is still somewhat limited. Today, …

May 3, 2018

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