Market Reports

Redevelopment Drives Much of the Retail Story in Pittsburgh

by Camren Skelton June 14, 2017

Pittsburgh retail can be summed up in three words: location, location, location — and the original definition of great real estate has never been more pronounced than it is today in the Pittsburgh retail market. According to some publications, retail and retailers appear to be struggling almost everywhere for many different reasons, including online sales, too many stores, market conditions and oversaturation of product. However, as of year-end 2016, CoStar indicated that the overall Pittsburgh retail market occupancy rate was 96.8 percent. Pittsburgh has natural barriers to entry for retail due to its topography, which includes numerous hills and valleys, making it often times impossible to build a “newer, bigger, better” retail property across the street. As a result, many developers have successfully repurposed older centers through adaptive reuse, converting them in keeping with the latest and greatest retail trends. Other older centers have successfully withstood the test of time, replacing outdated retail concepts with today’s current concepts at significantly lower costs than building a new center. Adaptive reuse of Pittsburgh retail started decades ago when the May Company relocated Kaufmann’s Department Stores from four freestanding locations into the dominant regional malls, leaving one- and two-story 200,000-square-foot boxes vacant. Local …

June 14, 2017

Market Reports New Mexico Office Western Western Market Reports

Albuquerque’s Office Market Struggles to Recover

by Camren Skelton June 13, 2017

The New Mexico office market heart is found in Albuquerque. During the first quarter of 2017, the Albuquerque office market has seen an increase in activity from local companies looking for newer and updated spaces, but not necessarily more space. The office market has been the last to see any type of recovery after the recession. The vacancy rate remains steady at about 21 percent. Continuing through 2017, we anticipate moderately positive absorption. Albuquerque remains over-built and under-demolished, with many office buildings being functionally obsolete. Other than two new, build-to-suit medical buildings, one being 43,000 square feet and the other being 90,000 square feet, there are not any planned speculative office buildings. State Farm recently announced it will vacate 35,000 square feet and move its call center operations to Arizona. A multi-market, healthcare administration office has downsized from 67,000 square feet to about 25,000 square feet. These shifts will yield two properties with large contiguous spaces, an excellent opportunity for tenants with large space requirements. However, there are fewer opportunities for those looking for updated spaces. There are currently less than 10 modern office buildings for lease or sale. As such, modern Class A office buildings continue to have high …

June 13, 2017

Alabama Market Reports Office Southeast Southeast Market Reports

Consistency, Young Talent Lead to High Expectations for Birmingham Office Market

by John Nelson June 12, 2017

For the first time in quite a while, the Birmingham office market has experienced a rejuvenation and resurgence, catered around growth, a diversification of the tenant base and an effort to attract and retain bright young minds. Like many markets nationally, the city’s focus on urban renewal has made downtown Birmingham an attractive place to live, work and play, and thus will help companies attract talent to the market. Birmingham has entered a new era of industry and residential growth with one of the Southeast’s most dynamic markets after evolving from a historically steel and manufacturing-focused economy. Driven by a new generation of local leaders who have focused on developing biotechnology, life sciences and automotive sectors as catalysts for growth, Birmingham has witnessed a remarkable economic transformation. A preference for dynamic locations to live, work and play is occurring in Birmingham, as a significant amount of development has taken place in downtown Birmingham. While the bulk of this activity is occurring on the multifamily side, the same factors that draw people to live downtown are expected to positively impact the desire of employees to work downtown. In the long run, it is reasonable to expect office development to take off …

June 12, 2017

Industrial Market Reports Texas Texas Market Reports

Strong Leasing Activity Drives Dallas Industrial Market

by Taylor Williams June 9, 2017

A common baseball analogy that explains where we are in the real estate cycle is “What inning are we in?” Regardless of the inning, in North Texas we’re just hoping it’s the first game of a doubleheader! The first quarter of 2017 was another respectable one for leasing activity in the Dallas-Fort Worth (DFW) industrial market. Total absorption for all properties was 5.5 million square feet, with 6 percent vacancy across 786.5 million square feet of industrial space. New supply totaled 6.6 million square feet for the first quarter. Just over 8 million square feet of new construction is underway in DFW, with 15 million square feet designated “big box,” or more than 200,000 square feet. Big box experienced absorption of 4.6 million square feet in the first quarter, despite having only 3.8 million square feet of new supply. The metroplex has been the beneficiary of some very large lease signings. Amazon alone is responsible for multiple leases totaling several million square feet. UPS recently leased a 1 million-square-foot property in Arlington, and Ashley Furniture announced the purchase of 358 acres in Mesquite for an 850,000-square-foot design/build distribution facility. In addition, a 1.4 million–square-foot, build-to-suit lease by a well-known real …

June 9, 2017

Market Reports Midwest Midwest Market Reports Multifamily Wisconsin

Wisconsin Supreme Court Reaffirms Subsidized Housing Valuation Methods

by Kristin Harlow June 8, 2017

In a major victory for subsidized housing developers and investors, the Wisconsin Supreme Court has reaffirmed longstanding principles governing the assessment of these properties. The Dec. 22, 2016 decision in Regency West Apartments LLC v. City of Racine confirms that the assessment of a subsidized housing project is a property-specific exercise that must take into account the type of federal program involved, specific restrictions on the property, and actual property income and expenses. The decision also affirms that the value of a subsidized property cannot be determined by comparison to conventional apartment properties that have no restrictions and can charge full market rents. Historical context The Wisconsin Supreme Court first upheld these principles in a 1993 case involving a Milwaukee apartment project subject to rental and other restrictions imposed by the U. S. Department of Housing and Urban Development (HUD). The assessor had valued the property based on market rents at conventional apartments, ignoring the property owner’s inability to legally charge market rents. The Supreme Court nullified the assessment, stating that the assessor had illegally assessed the property by “pretend[ing]” that the HUD restrictions did not apply. The new decision In the December 2016 decision, the Supreme Court reaffirmed the …

June 8, 2017

Market Reports Northeast Northeast Market Reports Office Pennsylvania

Office Leasing Down in Pittsburgh, But Tech Sector is Growing

by Camren Skelton June 7, 2017

The Urban Land Institute (ULI) listed Pittsburgh among its top five markets to watch in the 2017 Emerging Trends in Real Estate report due to its low cost to do business; access to talent via four major universities; and its status as an emerging tech hub with the likes of Uber, Google, Facebook and most recently, Amazon, establishing regional research and development centers in the city. Citizens Bank announced that it would remain a tenant in 525 William Penn Place, where it occupies approximately 150,000 square feet, reporting that its management views Pittsburgh as a growth driver for the company. Ford Motor Company inked a $1 billion deal with Argo AI, a Pittsburgh start-up that focuses on artificial intelligence and robotics, to expand its research and development of self-driving cars. Ford now is surveying the Greater Downtown submarket for space to construct a 100,000-square-foot facility to hold the 200 employees it expects to hire over the next 24 months. Despite the region’s growing popularity as a tech hub, leasing activity in first quarter 2017 reported a 23.3 percent drop from the same period 2016, ending the quarter at just less than 600,000 square feet, while overall net absorption dropped an …

June 7, 2017

Market Reports Multifamily New Mexico Western Western Market Reports

Albuquerque Multifamily Prices Rise on Heels of Rental Rate Increases

by Camren Skelton June 6, 2017

The New Mexico multifamily market, more specifically Albuquerque, recorded an impressively strong 2016 with vacancies dropping below 5 percent. Asking rents have increased for three consecutive years, fueling the investment market both in volume and prices. Employment grew by 2,700 jobs in Albuquerque last year. More than 2,000 of those were added in the fourth quarter, making it the strongest employment growth quarter in more than four years. Mining, logging and construction led the way in job creation, growing their sectors by nearly 8 percent. Professional, business services and the hospitality sector also strengthened on the job front. This expansion drove demand for multifamily units, pushing vacancy downward. The vacancy rate in Albuquerque declined 60 basis points in 2016, following a 100 basis point drop in 2015. Rents dropped slightly in the fourth quarter, but year-end 2016 asking rents were up 4 percent over 2015 to an average of $776 per month. Rent growth in the area has averaged 2.7 percent per year since 2014. Developers stepped up to the plate in 2016, answering the demand for more units. The market received 675 new units with about 1,000 more currently under construction. One of the new highly anticipated projects is …

June 6, 2017

Market Reports Multifamily Texas Texas Market Reports

Fort Worth Multifamily Market: Boom Town for the Foreseeable Future

by Taylor Williams June 2, 2017

To many people, Dallas and Fort Worth are one and the same. But to local Texans, they are two distinctly different cities in which to work, live and play. And to investors, the fundamental strategies are drastically different. Many consider Fort Worth to be the region’s cultural center and the “cooler” place to live. In terms of job growth, both cities are booming and are magnets for young, talented professionals. With this job growth comes a burgeoning multifamily market with future potential that is sure to remain strong. Here’s why. Job growth in the region continues to outpace the national average by more than 50 percent, and the Dallas-Fort Worth metropolitan area is ranked among the highest-growth metro territories in the country. More than 100,000 jobs have been added over the past year, thanks in large part to major corporate relocations and expansions. Toyota and Liberty Mutual are examples of two major companies committed to growth in the local market. In addition, over the next five years, the demographic of 20- to 34-year-olds is projected to increase by close to 100,000 people – one of fastest rates in the country. These millennials typically prefer to rent and are less likely …

June 2, 2017

Kansas Market Reports Midwest Midwest Market Reports Retail

A Growing Number of National Retailers Have Wichita on Their Radar Screen

by Kristin Harlow June 1, 2017

The pace of retail construction remains brisk in Wichita with national retailers showing an increased interest in the market. In the first quarter, developers started construction on nine buildings totaling 112,961 square feet, reports brokerage firm NAI Martens. Completions during the first quarter totaled 117,300 square feet. Notable store openings included Sprouts Farmers Market at Central Avenue and Rock Road; Save-A-Lot grocery store at 1640 S. Broadway; Cavender’s western wear store in Greenwich Place at K-96 and Greenwich Road; Andy’s Frozen Custard at NewMarket Square along 21st Street; and a freestanding Starbucks at Wichita State University on the school’s innovation campus. In short, developers in Wichita appear to be making up for lost time. As a result of the Great Recession, the local economy shed 30,000 jobs between 2009 and 2011, many of them related to the aviation industry, according to the Wichita Metro Chamber of Commerce. Commercial real estate activity ground to a halt at that point. “Between 2008 and 2012 and maybe into 2014, we just didn’t have much development at all. There were some plans on the drawing boards, but nothing really reached fruition,” recalls Thomas Johnson, president of NAI Martens. But consumer confidence gradually began to …

June 1, 2017

Alabama Market Reports Retail Southeast Southeast Market Reports

Retail Activity Leads the Way in Birmingham’s Revitalization

by John Nelson May 30, 2017

The Birmingham retail market had an explosive 2016. Several large projects were announced or completed, while traditional indicators of market health also showed promising signs of growth. TopGolf will soon be coming to the Uptown District, while Regions Field, home of the Birmingham Barons minor league baseball team, continues to attract surrounding development. Breweries remain a mainstay in Birmingham’s social scene, and they have demonstrated a capability to revive entire neighborhoods. As the natural beauty of Alabama becomes more important to residents and newcomers, the Red Rock Trail System’s green space bicycle system, which encompasses over 200 miles of green space trails and over 600 miles of street-based paths connecting all corners of the Birmingham area, will continue to grow in importance and recognition. By the fourth quarter of 2016, retail vacancy had decreased to 5.4 percent, down from 6.1 percent at the beginning of 2016, while market rents for major submarkets held steady around $12.37 per square foot. Downtown Birmingham, which hasn’t been viewed as a major retail area for decades, is the site of resurgent interest and accompanying capital. Some of the revitalization is occurring due to a renewed interest in public greenspaces, such as the recently developed …

May 30, 2017

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