The office market in 2017 has rebounded from the slowdown of 2016 — suggesting that Manhattan market conditions remain stronger than some might have imagined at the end of last year. Growth in office-using employment has picked up steam this year, and New York’s Gross City Product expanded at a faster rate than in 2016. Buoyed by large transactions in the financial services and government sectors, leasing activity also expanded in the first half of 2017, outpacing 2016’s mid-year leasing activity by 19 percent. Asking rents continued their trajectory of modest growth, though tenant improvement allowances have grown at a far faster rate, suggesting tenants are paying lower net effective rent; meanwhile, the number of upward repricings on existing listings fell off considerably in the first half of 2017, while downward repricings continue unabated from last year. Despite the increase in both leasing activity and velocity in the first half of 2017, Manhattan continues to see negative net absorption this year, largely due to the delivery of new office product in Midtown South and Downtown. This has pushed up the availability rate to 12.0 percent — suggesting increasingly tenant-favorable conditions in the market. New York City Employment After a relatively …
The Central Florida market continues to be a bright ray in the Sunshine State with 68 million plus tourists in 2016, and over $10 billion currently invested in major projects either recently completed or underway. Area theme parks, such as Disney World, Universal Studios and Sea World, continue investments in new rides and attractions, drawing even more visitors to Orlando, and setting record attendance numbers on an annual basis. Tourism isn’t the whole story in Central Florida, though. Notable projects in the urban core include the University of Central Florida’s downtown campus at Creative Village for 10,000 students, the 650,000-square foot Orlando Magic mixed-use entertainment complex adjacent to the Amway Center, and the new $450 million second phase expansion to the Dr. Phillips Center for the Performing Arts. All of these new urban core projects are creating a true live-work-play dynamic in downtown Orlando. The suburban market is also seeing significant activity. For example, the Health & Wellness cluster at Lake Nona; the $3.1 billion redevelopment at Orlando International Airport; the $43 million improvement of the Orlando Sanford International Airport; and the $1 billion West Orange County mixed-use community all showcase that new investment is not centered in one part …
The terms “experiential retail” and “mixed-use development” are both thrown around heavily in the context of 21st century commercial real estate. As buzzwords for the changing landscape of retail real estate and encapsulations of the preferences of millennials, the terms are as popular in their usage as they are arbitrary in their application. Is an apartment building with a ground-floor restaurant or coffee shop really considered mixed-use? Is it actually legitimate to think of buying shoes or jewelry as an experience? The answer varies depending on who’s asked. But the fact remains that dividing lines between certain property classes are beginning to blur. Increasingly, office and multifamily projects are designed to include food, drink and entertainment options, which have become the only real common denominators among mixed-use projects. Given that those three facets of retail involve spending on one-time, consumable products and services, they have become the face of experiential shopping and spending. Integrating retail development into mixed-use projects, as opposed to standalone shopping centers or pad sites, comes with its own unique challenges: parking, noise restrictions and sourcing contractors that specialize in build-outs for multiple property types, to name a few. But developers realize that no matter how much …
The greater Kansas City area retail market remains solid as a rock, despite CoStar Group’s mid-year report showing a slight decline in the average asking rental rate and a slight increase in vacancy. The retail vacancy rate in the second quarter of 2017 stood at 5.7 percent, up slightly from the previous quarter’s 5.5 percent. The average asking rental rate for retail is $13.05 per square foot, down from $13.07 in the previous quarter. Local, regional and national restaurant chains continue to expand with strong success throughout all areas of the Kansas City market, and “new-to-market” users continue to open their doors. Currently, there is approximately 570,000 square feet of retail space under construction in the Kansas City area and various mixed-use projects under development. Additionally, several new shopping center projects have recently been announced and are quickly gaining traction with restaurant and retail users. One of the major catalysts for the widespread retail and mixed-use boom throughout greater Kansas City is the various incentives that have been made available to developers including tax increment financing, community improvement districts, transportation development districts, tax abatement and other incentives. On both sides of the state line, as sites become more expensive and …
Orlando’s retail market is experiencing renewed vigor. Construction cranes are rising in key areas due to increasingly high demand, and low vacancies are fueling rental rate growth, which has been somewhat stagnant over the last several years. There is also demand for larger vacated boxes as a result of the downsizing and bankruptcies of retailers. Spaces once occupied by Sears, Sports Authority and hhgregg, for example, are being filled by retailers entering or expanding their presence in the market, such as Luckys Market, Earth Fare, Orchard Supply, Ollie’s, 24 Hour Fitness and At Home. The activity is both resulting in and benefitting from exciting new developments and infrastructure improvements in the market. Development, Infrastructure Current development activity in Orlando is in direct response to considerable consumer demand, with many major retail projects recently completed or under construction. Lake Nona Landings, a 53-acre development in Tavistock’s master-planned Lake Nona community, opened in early 2017 with the area’s first Walmart Supercenter and Sam’s Club, and will serve as an anchor for the growing Narcoossee corridor south of State Road 417. Horizons West/Four Corners is a thriving residential area encompassing parts of western Orange and north Osceola counties where retail, restaurant and multifamily …
As America’s brick-and-mortar retail sector continues to come to grips with the impact of e-commerce on its long-term future, it is worthwhile to track the progress of the growing number of retailers who have chosen to step away from a web-only platform. These retailers are establishing an omni-channel presence by setting up operations in physical stores, and many are showing signs of success. Many such retailers are choosing to set up shop along the streets of New York City, with its massive and steadily growing population and its broad demographic mix. Despite the recent, well-publicized increase in the city’s available inventory of retail space, New York City remains the preferred market to launch a brand with aspirations of building a meaningful national profile. Considering the more-youthful and trendy profile of a large proportion of online shoppers, these “adding-bricks-to-our-clicks” companies are gravitating toward New York City submarkets that deliver this coveted, younger demographic. Moreover, e-commerce players possess a ton of data profiling their customers — including their buying behavior and their browsing interests and habits — and retailers tap this intelligence when making decisions about where to locate stores as well as how they should be merchandised to best cater to …
For the past several quarters, the headlines of most CRE publications in Texas and beyond have proclaimed the end of retail as we know it. By now, we’ve all heard the stories and seen the writing on the wall: e-commerce will kill the shopping mall; large anchors that landlords have counted on for decades are shuttering and Amazon will be the end of the retail storefront. It’s a familiar tale as of late. But amid the doom and gloom of store closings, Houston seems to be staying on top of the trends, as its retail market remains healthy and appears to be moving ahead. In fact, despite losing over 70,000 oil-related jobs since 2015, Houston’s retail market remains one of the strongest in the country, posting an average occupancy rate of 95 percent. In addition, employment growth in the retail sector grew 5.1 percent in 2016 amidst the oil bust. Despite these strong retail indicators in Houston, the aforementioned market changes do have an effect on the retail environment. And while retailers themselves need to make the biggest adjustments, developers and landlords are not without their own challenges. Like the rest of the country, Houston retailers must figure out ways …
The Kansas City office market is poised for increasing rental rates and decreasing vacancy rates for the remainder of 2017 and into 2018. Kansas City has realized its 14th consecutive quarter of increased rental rates (through March 2017), while vacancy has decreased in the overall metro area due to lack of new office construction and a steady pace of absorption. Several factors contribute to the complexity of why the market is good but not great, steady but not dynamic, with no one factor driving the steady upward climb. It has been like a plane taking off but never reaching full altitude. A contradiction of sorts is contributing to the rental rate increases and vacancy decline, while there is still a lack of newly constructed space. Bread-and-butter leasing absorption and a lack of new speculative development have been the main ingredients in the overall solid market for office activity. The velocity in the market is doing its job of generating positive absorption each quarter while rates inch up. The lack of large blocks of space has created a few new construction projects, but not as many as experts had predicted and hoped for. Costs on the rise Higher construction costs and …
Eastern Pennsylvania’s industrial markets continue to thrive due to low vacancy rates, increased barriers to entry, demand by occupiers and the institutional capital community’s ever-increasing appetite for industrial product. While the specific submarkets have unique nuances associated with the local economic drivers, highway networks, taxation, and labor base, the overall demand by tenants and the capital community alike is driven by elementary economic rules of supply versus demand met by supply chain demand drivers. In a world that is buying a higher percentage of its goods online each and every year, this geography offers the unique ability to reach almost half of the U.S. population within a one-day truck drive and better one-day or two-day delivery service from the two major providers, UPS and FedEx. This thriving market is technically four distinct submarkets inclusive of the Lehigh Valley, Northeastern, Central and Southeastern Pennsylvania. For those less familiar with the nomenclature of this geography, it’s easiest to think of the Lehigh Valley as the general vicinity of Easton through Bethlehem and Allentown and along I-78 past Hamburg. Central Pennsylvania is the region inclusive of Harrisburg, York, Carlisle, Chambersburg, Greencastle and Lancaster. Northeastern Pennsylvania is the combination of the MSAs including Pottsville, …
Anxiety and hand-wringing about the future of retail were evident at this year’s ICSC RECon event, as developers, retailers and restaurant operators continue trying to make sense of the persistent march of online buying, while also looking to inject new enthusiasm into the bricks-and-mortar shopping experience. In the greater Baltimore metropolitan region, we are experiencing many of same issues as the balance of the country. But, like always, we believe this region has several built-in advantages that will continue to buoy the retail environment, including a diversified business climate, proximity to Washington, D.C., and presence of defense contractors. While “caution ahead” signs seem to be lurking around every corner, there are numerous developments in Baltimore that are screaming “full steam ahead.” Darwinism is in full effect locally, as shopping centers embedded within planned-unit developments or retail destinations offering e-commerce-resistant experiences are the venues with the brightest futures. The developers and retailers that are willing to accept and adapt to changing trends, such as millennials’ preference for experiences rather than ownership, are the entities that will be left standing after this latest seismic shift. Here is a quick look around the Baltimore area landscape, with a focus on the various starts …