Market Reports

Wave of New Hotel Supply in Metro Detroit Reflects Improved Economic Fortunes

by Kristin Harlow December 7, 2017

The Detroit metropolitan area has experienced significant economic growth in recent years, fueled by a strengthening auto industry as well as the continued diversification of the local employment landscape. The hotel sector is benefitting from existing employers expanding operations locally and new entrants to the market. The Big Three automakers continue to invest in the region, while companies like e-commerce giant Amazon.com Inc. are building large warehouse facilities. Revenue gains for hotels were accordingly robust during the 2010–2016 period. Revenue per available room (RevPAR) during that stretch grew nearly 71 percent, rising from a low of roughly $38 in 2009 at the depths of the Great Recession to over $64 by year-end 2016. Both the average daily rate (ADR) and occupancy have posted consistent gains since 2010. Moreover, hoteliers sold a record number of room nights in the city of Detroit in 2016, according to STR. Occupancy levels approached 70 percent by the end of 2016, with ADRs of nearly $150 in the central business district (CBD). The data for 2017 show a relatively stable occupancy level with robust gains in ADR. The record performance achieved in this expansionary period has spurred tremendous hotel development in the downtown core and …

December 7, 2017

Connecticut Market Reports Northeast Northeast Market Reports Office

Connecticut’s Fairfield County Office Market Displays Healthy Indicators

by Taylor Williams December 6, 2017

Connecticut’s Fairfield County ranks among America’s 40 wealthiest counties with a median household income of $81,268 in 2010. And while some of its current office market data stand at low levels, many indicators point to a bright future. Year-to-date office leasing activity reached 1.7 million square feet as of the third quarter. This amounts to a 21 percent increase relative to the same period one year ago. While this figure stands 3.1 percent below the five-year historical average, overall leasing volume does not take into account a 500,000-square-foot, build-to-suit lease undertaken by Charter Communications at Gateway Harbor Point in Stamford. For the quarter, aggregate office leasing in the county totaled 555,629 square feet. Stamford and Greenwich accounted for more than 77 percent of the total. Major transactions included Bank of America’s 166,000-square-foot lease at 600 Washington Boulevard in Stamford and AQR Capital’s 90,000-square-foot expansion at One Greenwich Plaza. In August, Stamford scored its most impactful corporate attraction of the year when the German-based multinational Henkel moved its North American headquarters from Scottsdale, Arizona, to 155,000 square feet within the BLT Financial Centre at 200 Elm Street. The consumer products firm said its laundry, beauty and home-care divisions are employing approximately …

December 6, 2017

Georgia Market Reports Multifamily Southeast Southeast Market Reports

Demand for Live-Work-Play Fueling Global Interest in Atlanta Multifamily Market

by John Nelson December 4, 2017

With Atlanta’s economy more robust than ever, demand for multifamily housing remains high, driving rent growth and investor interest throughout the market. Since the last cycle — when a reliance on construction hit hard — the city has transformed its economy by building up its IT, healthcare and automotive sectors, among others. The results of strong job growth and the diversification of employment are evident market-wide. In particular, Buckhead and Midtown have seen a substantial increase in multifamily supply over the last three to five years, as spillover activity in East Atlanta and West Midtown will continue. And the rise of two multibillion-dollar sports stadiums (Mercedes-Benz Stadium and SunTrust Park) in the same year — a first for the city — continues to draw national and international attention to intown and metro submarkets. Urban Goes Suburban A seemingly insatiable demand for urban live-work-play settings has inspired developers to replicate the highly-amenitized and high-rent success in the suburbs. Alpharetta’s Avalon was a game changer, spurring destinations in John’s Creek, Gwinnett County’s Peachtree Corners and the mixed-use boon around SunTrust Park in Cobb County. So far, development activity has been steady in the northern submarkets, with little activity on Atlanta’s south side. …

December 4, 2017

Industrial Market Reports Texas Texas Market Reports

Direct Vacancy Reaches 12-Year Low in San Antonio Industrial Market

by Taylor Williams December 1, 2017

As we enter the fourth quarter, fundamentals are strong in San Antonio’s industrial market, with direct vacancy tightening and continuing the hot streak it’s been on the past few years. At the third quarter’s end, the metro’s direct vacancy rate stood at 5.4 percent, down from 6.2 percent during the second quarter and 5.8 percent during 2016. In fact, that 5.4 percent direct vacancy rate represents a 12-year low. The figure is a far cry from the 9.3 percent direct vacancy registered during the third quarter of 2006 — the last time the market posted a rate above 9 percent. This d in direct vacancy is particularly noteworthy given that more than 10 million square feet of inventory has been added to the market since that time. The shrinking rate has also coincided with a slight increase in direct average asking rent, which now stands at $5.99 per square foot following a $0.16 quarter-over-quarter increase. Driving the falling vacancy numbers was an economy that fast-tracked over the summer. The San Antonio Business-Cycle Index increased at its fastest pace since 2016, while the area unemployment rate remained the same and job growth surged. Job growth increased at a 3.6 percent annualized …

December 1, 2017

Market Reports Massachusetts Northeast Northeast Market Reports Retail

Urbanizing the Suburbs: Retail’s Role in Reshaping Boston’s Landscape

by Taylor Williams November 29, 2017

Over the past decade, urbanization has emerged as one of the most impactful trends to hit the real estate industry. This trend, embodied by the live-work-play concept, has been embraced by all demographic cohorts, from millennials to baby boomers and even retirees. While the impact has been most visible in the urban core, Boston’s suburbs are also being transformed, and the inclusion of pedestrian-oriented retail into new and existing projects is playing the integral role. Modernized, high-traffic retail concepts now provide the coveted ability to work, shop, dine and entertain with the same convenience of downtown while being proximate to the region’s top bedroom communities. The Polaroid Site, Waltham Waltham is Boston’s top suburban office market; however, its biggest drawback had been a lack of real amenities. Sam Park & Company acquired Polaroid’s former headquarters and planned a 1.5 million-square-foot, mixed-use development, which includes Market Basket, Not Your Average Joe’s, Flank, Starbucks and Jake n Joes Sports Grille. The existing and improving amenity package at 1265 Main immediately drew the attention of Clarks, which moved its American headquarters to a new 120,000-square-foot building on the site. MarketStreet Lynnfield Once the Colonial Country Club, MarketStreet Lynnfield is now a mixed-use development …

November 29, 2017

Georgia Market Reports Office Southeast Southeast Market Reports

Creative Office Space Fuels Growth in the Already Robust Atlanta Market

by John Nelson November 27, 2017

Although so-called “creative office space” is for now a tiny slice of the overall supply in Atlanta, it represents the most significant change in the use of office space in generations. Tenants and landlords have only begun to use creative design principles to push rents past levels previously thought unreachable, while increasing worker productivity and satisfaction. Trends in this sector will define the American workplace for decades. The largest users of creative office space — also commonly referred to as loft office space — today are in the TAMI sector (tech, advertising, media and information), but law practices, engineering firms and others are also embracing the open office concept. In Atlanta, there is 3 million square feet of creative office space, which is only 1.2 percent of the metro area’s total inventory. But the vacancy rate for creative spaces is just 8.3 percent and the gross asking price is $29.90 per square foot, both considerably outperforming the traditional office arena. Since 2013 the asking rate for traditional office space in Atlanta has grown 17.2 percent. For creative space the asking rate has shot up 62.5 percent. The top end asking rate for creative spaces is more than $6.50 higher than …

November 27, 2017

Industrial Market Reports Massachusetts Northeast Northeast Market Reports

Boston Industrial Market Posts Lowest Vacancy Seen in Decades

by Taylor Williams November 22, 2017

The commercial real estate market in the Greater Boston area continued its torrid pace in the first half of 2017. All sections of the commercial real estate market inside Route 128 are white hot, especially after the announcement that General Electric will move its corporate headquarters to the Seaport District. Recent data indicates that Boston has one of the hottest economies in the United States and ranks as one of the top economies in the world. The 2017 Investment Intensity Index ranks Boston as the fourth market in the U.S. and 14th in the world for commercial real estate investment. In the industrial sector, which includes warehouse/distribution and flex/R&D product, vacancies are at the lowest point seen in decades. At the end of the first quarter the vacancy rate decreased to 5.7 percent. Net absorption totaled 2.24 million square feet for the quarter. The fact that the urban industrial market is continually shrinking as aging industrial properties are redeveloped into “higher and better uses” has caused a tremendous displacement of companies from inside Route 128 to areas outside the coveted Route 95 corridor. A dearth of available institutional-quality industrial product exists in today’s market with just over 13 percent of …

November 22, 2017

Georgia Market Reports Retail Southeast Southeast Market Reports

Atlanta’s Disciplined Retail Market Ready to Face Headwinds from REITs, Amazon

by John Nelson November 20, 2017

A decade ago, the Atlanta retail market was a house of cards. It was clear to see this if you were in the industry at the time, and possibly even if you weren’t. Based on the intense overbuilding that had taken place, it wouldn’t have taken a worldwide economic meltdown to wreck it, though that didn’t help. Literally hundreds of unanchored retail centers had cropped up all over suburbia, fitting directly into everything that people consider to be negative about shopping centers. The formula for developers was to scrape every tree from a piece of land, cover it with asphalt and an inexpensively constructed building, then fill it with whatever tenants they could find. The result was largely a glut of properties with poor intrinsic values: mid-block sites, odd shaped layouts, challenging access, uninspired, non-credit tenants with high rents. This would, of course, turn out to be unsustainable. To be fair, not every property was developed in this fashion. Atlanta was and still is home to many excellent retail developers that know how to create amazing projects. But many look back to the 2000s in Atlanta as a time of cookie cutter development with inexperienced builders playing a game of …

November 20, 2017

Industrial Market Reports Texas Texas Market Reports

Spec Developments Growing Quickly in Fort Worth Industrial Market

by Taylor Williams November 17, 2017

In the greater Fort Worth commercial real estate market, there was a scarcity of industrial speculative development until 2007-2008. A number of submarkets saw projects go vertical at this time, including Alliance, North Fort Worth and South Fort Worth. The results were mixed. While there were some successes, a number of developers found themselves at the mercy of unfortunate timing. Deal velocity slowed, leaving well-positioned buildings competing for the same tenants. This resulted in unanticipated, extended vacancy time frames and generous tenant concessions. Fast forward to 2017 — 10 years after the last cycle — and we are in the midst of an even more ambitious round of speculative development. Although many would say we are in the late innings of this real estate upswing, the number of new starts under construction or announced across Fort Worth paints a different picture. Is the continued construction justified, or is this another example of developers falling in love with the market fundamentals and not paying enough attention to market-specific deal velocity? According to the U.S. Census Bureau, Fort Worth’s population has grown 60 percent since 2000, making it the 16th-largest city in the country and the fastest-growing among the 20 largest cities …

November 17, 2017

Market Reports Michigan Midwest Midwest Market Reports Retail

Retailers, Investors Find Detroit’s Improving Economy Inviting

by Kristin Harlow November 16, 2017

Steady employment gains and new households in metro Detroit have boosted optimism in the retail sector. The local economy added 36,500 nonfarm payroll jobs in the 12-month period that ended September 30, 2017, an expansion of 1.8 percent and in line with employment growth nationally. Job gains were led by the professional and business services sector, which filled more than 12,400 positions. This segment includes many well-paying tech jobs as companies such as Penske Logistics and Lear Corp. increase staffing. As of August, Detroit’s seasonally adjusted unemployment rate stood at 3.2 percent, down from 5.3 percent a year earlier, according to the Bureau of Labor Statistics. Amazon.com is rapidly expanding in the metro area. Amazon opened a fulfillment center in Livonia this fall, creating 1,000 positions, and has additional facilities planned in 2018 for Romulus and Shelby Township that will create a combined 2,600 jobs when fully staffed. The combination of job creation and increasing wages is boosting household incomes and contributing to rising retail sales. The median household income in the third quarter stood at $59,600 per year, slightly higher than the U.S. level. The gain in spending power is benefiting existing retail operations and attracting new businesses such …

November 16, 2017

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