Nashville’s office market, frequently heralded as up and coming, continues to see a great deal of interest from both local and outside investors, and the region’s rapid population growth and low vacancy rates continue to sustain a construction boom. Even with a high influx of new projects highlighting local news, the Nashville area still maintains the lowest vacancy rates of any market in the United States, according to CoStar. Compared to the rest of the country, Nashville has the second highest employment growth and the highest office employment growth, combined with one of the lowest unemployment rates of any major metro area. These encouraging demographics lead most to believe that Nashville will continue its growth rate, especially in the urban core. Since the 1990s the Nashville market followed national trends, seeing most office market growth creep from the central business district (CBD) to the suburban submarkets. After the Great Recession began to subside, which around here was in 2011, an optimistic focus was placed on the growth of the CBD. This local storyline was buttressed by a national narrative of a return to urbanism. This growth, which really began its current unprecedented run late in 2011 and early 2012, is …
San Antonio is a testament to the old proverb that slow and steady wins the race. Instead of becoming overheated in response to the benefits of strong employment and population growth, the metro’s retail market continues to take a measured approach to growth. That approach has enabled an exceptional occupancy rate for its brick-and-mortar retail inventory. Development vs. Occupancy Measured, demand-based construction is one of the key reasons that San Antonio’s current retail market enjoys a near-record balance of supply and demand. Currently, the market’s overall occupancy is a healthy 94 percent. We expect this rate to be maintained as retail demand continues during a time of very limited construction of new retail product. The market’s limited retail construction of only 360,000 square feet this past year was dominated by H-E-B, which opened two new stores in 2017. The locations came on line either freestanding or with limited peripheral small-shop space, further tightening the market for available space. To illustrate exactly how low new construction is, we compared the current market to a decade ago, when the economy was in a similar cycle. The market’s occupancy at year-end 2007 was 91.2 percent, healthy but notably below the current 94 percent …
If you happen to read or listen to Freddie Mac officials, the key economic factor driving housing demand is the labor market. In 2017, the Indiana Economic Development Corp. (IEDC) secured 293 commitments from companies across the country to locate or grow in Indiana. Collectively, this will make for more than $7 billion in new investments and 30,158 new jobs in the coming years, marking the highest annual commitment in IEDC history. Companies currently expanding and adding thousands of jobs throughout the region have been contributing greatly to the growth of the multihousing market in central Indiana. More than 2,380 market-rate apartment units were completed in 2017. Construction doesn’t appear to be slowing down either, as over 2,200 units were under construction at the beginning of 2018. Apartment deliveries soar Central Indiana has experienced a marked increase in overall multifamily deliveries. Between 2014 and 2017, developers delivered approximately 15,000 new units, compared with 13,500 units over the previous 14 years combined. A large majority of the projects are greater than 100 units, particularly the market-rate developments. Lately, most of these projects have contained pockets of amenities or are located near amenities. Downtown Indianapolis was home to one of the more …
In 2017, newly signed bulk space deals in the greater Indianapolis industrial market totaled 10.2 million square feet. Of that total, over 50 percent had some affiliation with e-commerce. With 26 new buildings and another 5.7 million square feet under construction, the Indianapolis industrial market will clearly become increasingly linked to the performance of e-commerce as the total share of online retail sales remains in a significant growth mode. Projections by Cushman & Wakefield show that by 2020 nearly 12 percent of all retail sales will be associated with e-commerce — three times what it was 10 years ago. Stronger growth will be driven by the onset of e-grocery and e-pharma. Additionally, e-commerce will continue to be a driving force in these industrial deals because the online industry is getting better at what it does. Coming off the strongest holiday season since the Great Recession, companies are now focused on the cost of package returns and are re-examining the value of brick-and-mortar stores. When it comes to package returns, not only is the processing time significantly slower, but it is six times costlier to return a package using regular shipping methods. Returning items to physical store locations is the cheapest …
Nashville has set several notable records in recent years for job growth, rent growth, population growth, tourism and tax revenue, among others. But for the multifamily industry, the most notable benchmarks lately have been related to the amount of inventory that has been delivered. However, the more interesting and less obvious data point is the record level of renter demand that Nashville is currently experiencing. As of third-quarter 2017, Nashville led the country in relative net absorption, with 4.9 percent of the existing inventory being absorbed. This equates to approximately 6,300 units. This demand is fueled by incredibly resilient job creation, as Nashville has increased its employed labor force by 20 percent over the last five years — more than 160,000 jobs. With that as the backdrop, the big question on everyone’s mind is the impact of new supply. In short, yes, there are pockets of oversupply, with approximately 8,500 units delivered in 2017 compared with net renter demand of roughly 6,300. However, with urban deliveries projected to drop off 40 percent in 2018, and 80 percent in 2019, and no slowdown in renter demand on the horizon, the current imbalance is likely to correct itself in relatively short order. …
Would you believe that San Antonio is the second most sought-after city for millennials? According to local media pundits and reports from Forbes, San Antonio is attracting the greatest number of millennials of any city in Texas, even beating out Austin, the original yuppie capital of the state. San Antonio, which had taken a back seat to Austin in terms of creating tech jobs and drawing millennial workers, has surged ahead in recent years. The metro has begun to appeal to a different breed of people born between 1980 and 1999. We refer to members of this group as the “logical millennials.” While entrepreneurial in spirit, the San Antonio millennial differs from the standard millennial through his or her understanding of the need for affordable housing and a lower cost of living. The influx of this sub-type of millennials has created growth in urban areas, most notably the Pearl District, which is situated adjacent to the downtown area. The popularity of this mixed-use shopping and community destination has spurred the development of a number of new urban lifestyle projects. Frost Tower, Rising Rents Another indicator of San Antonio’s success at attracting a younger demographic is embodied in the most significant …
Office developers in Chicago are thinking outside the box — and outside the central business district — in order to cater to tenants in search of creative office space. While there will always be companies that want the cachet that a business address in the Loop offers, others realize the strategic advantages of urban, non-CBD locations as a recruiting tool. Live/work/play neighborhoods like River North and the West Loop are growing because high-profile employers want to attract a younger workforce that is drawn to the loft-style offices these neighborhoods can provide. This can be achieved either through ground-up development projects like McDonald’s soon-to-open headquarters at 1035 W. Randolph St., or adaptive reuse projects such as 1K Fulton, a former cold-storage facility that now counts Google among its tenants. Yet as rents in these submarkets continue to climb, office users are starting to ask whether they can get the same space for less money in equally desirable locations. For many, the answer is a resounding “yes.” New opportunities While neighborhoods near the CBD such as River West and Pilsen have benefitted from this office “ripple effect,” Chicago’s recently rezoned North Branch Industrial Corridor is perhaps the most alluring and uncharted territory …
Simply put, Boston is — and will continue to be — a top destination for tenants and capital alike. With strong market fundamentals and key drivers (education, finance, healthcare, life sciences and technology), 2018 is likely to be another terrific year for the commercial real estate sector. Market Metrics Boston’s urban core comprises four major submarkets: Downtown, Back Bay, Seaport and Cambridge. Together, these submarkets total more than 96.1 million square feet of office and lab space. This sector of the market features a vacancy rate of approximately 8.8 percent, positive net absorption of more than 300,000 square feet in 2017, and rental rates that are on the rise. Boston’s urban office market is largely driven by the region’s high concentration of educational institutions, financial and professional services, healthcare, life sciences and, perhaps most important, technology. These industries excel in the Boston area due to its high concentration of knowledge workers and its spirit of innovation and entrepreneurship. Tenant In-Migration The biggest trend impacting Boston recently has been the large-scale relocations of tenants into the urban core — both from within and outside of the market. This is a trend that shows little signs of slowing down. • GE — …
Everyone is familiar with the expression “Rome wasn’t built in a day.” However, what most people do not know is that the second half of that phrase is, “but they were laying bricks every hour.” Bricklayers in Nashville are busy people these days, accommodating the demand for new commercial development. That’s not just a metaphor for the developers of record — the utility contractors, dirt movers, pavers, framers and roofers are all busy trying to keep up with the constant stream of construction. With record levels of construction comes the high demand for a skilled workforce to complete the necessary work. We constantly hear that approximately 30,000 people are moving to Nashville per year. However, a large amount of this new workforce via this in-migration are millennials looking to work in the IT or healthcare fields rather than skilled labor. If you were to ask any “bricklayer” what concerns them the most, almost assuredly the recruitment and retention of qualified labor will be at the forefront of the conversation. With the younger generation less likely to enter the blue collar workforce, why in 2017 did we see 6 million square feet of industrial warehouse space delivered? Make no mistake, that …
Among professionals in the major sectors of commercial real estate, retailers are often the first to spot, understand and respond to emerging trends in human behavior. Those trends have shifted dramatically the past few years, and retail real estate in Austin has certainly felt the ripple effects, from downtown to the suburbs and across the emerging “nodes” in between. For some time now, American consumers in general have been clearly indicating their preference for more “experiential” ways to shop or receive services. That said, smart developers know that the experience begins well before shoppers enter a retailer’s doors. And understanding how to best cater to emerging demands helps breed success, not only for tenants, but also for the project as a whole. The following three trends represent key ways in which consumer demand is driving change in Austin’s retail landscape and illustrate how the market is responding. Seamless Integration Consumers want retail options located within close proximity to where they work and live — all the better if the property housing these needs can be one and the same. Just as Austin has grown regionally, so has demand for retail space, giving rise to mixed-use projects throughout the city. In …