After finishing 2016 with a bang, 2017 is shaping up to be another great year for retail real estate in Las Vegas. Tourism, construction, population growth, infrastructure improvements and business growth are all cause for excitement. The Strip is once again predicted to dazzle retailers. There are currently more than $9 billion in construction projects underway or scheduled through 2019. The development lineup is dominated by Resort World, Steve Wynn’s Paradise Park and a hopeful sale of Fontainebleau. Alon is another exciting project that is looking to replace a major funding source so it can begin construction. Several other important, but smaller projects are scheduled to come on line later this year and into 2018. These include infrastructure, retail expansion and additional hotel room projects. New retail and food arrivals to the Strip include Skechers, Walburgers, Morimoto, Sugarcane Raw Bar Grill, Giordano’s and John Rich’s Red Neck Riviera. Around 42 million visitors from the U.S. and around the world enjoyed Las Vegas in 2016, and we are anticipating even more in 2017. Las Vegas population growth also continues. The city was ranked the 28th largest in the U.S. in 2016, while housing sales and construction continue to have healthy growth. …
The Nashville multifamily market’s roll continued through the end of 2016 with nearly 6,400 units absorbed, a 10 percent increase compared to 2015, according to Axiometrics. This demand was fueled by steady employment growth of nearly 28,000 new jobs, led by world-class healthcare employers, educational institutions and a burgeoning tech scene. The rate of job growth in Nashville is currently about 50 percent faster than the national level, and as a top destination for young people and the creative class, it’s becoming a cultural and entertainment destination that’s nationally recognized. Rental rates grew on average by 5.6 percent in 2016, buoyed by the fact Nashville had the nation’s second-highest rate of wage growth at 5.3 percent, behind only the Silicon Valley tech hub of San Jose, according to Headlight Data. Average market occupancy remained tight at an average rate of 96 percent, with the Murfreesboro, Southeast Nashville (Antioch) and Sumner County submarkets being the highest performers to end the year. Four submarkets saw rent growth over 7 percent in 2016, including Southeast Nashville, Wilson County/Hermitage, Airport/Briley Parkway and Rivergate/Hendersonville. Submarkets with concentrations of new supply lagged the market average, highlighted by Downtown and Williamson County. Transaction volume set a new …
I am heartened to see that my projections for 2016 in the Midwest hotel marketplace — particularly Chicago, my home market — held up fairly well. In a column that I authored for Heartland Real Estate Business this time last year, I pointed out “the question of whether supply will outpace demand is changing from if to when in many of these markets.” That trend line has continued, although the momentum of it in some markets has, to some extent, delayed the inevitable. The demand side of the equation exceeded expectations in the fourth quarter of 2016 and so far in the first quarter of 2017. This has helped markets absorb the additional supply. I also wrote in last year’s column that “perhaps the single most important factor to watch with regard to the Chicago hotel market in 2016 is whether and to what extent strong leisure demand will continue to offset the influx of new hotel properties.” Sure enough, we saw strong leisure demand during the traditionally busy part of the year, and Chicago welcomed a record number of visitors during the first three quarters of 2016. Strong leisure and group segment performance during this period helped overall demand …
E-commerce and the growth of the digital age have become important factors in the tightening industrial real estate market. With single-digit vacancy rates becoming the norm in nearly all of the Greater Boston submarkets, existing product cannot supply the space necessary to meet current market demand. Consumers’ shopping attitudes have changed, and retailers are having to adjust their strategies to meet their needs. In 2016, the Greater Boston industrial market recorded vacancies averaging 6.8 percent, the lowest in more than 15 years. The thriving e-commerce industry has been a large factor in the spike in demand. Last year, major e-commerce tenants like Amazon, FedEx and Wayfair expanded their presence in the Boston market with new leases on distribution centers, pushing 2016 absorption to almost 6 million square feet, an all-time record. Retailers are now looking to expand their coverage with multiple warehousing locations, pushing for facilities proximate to their specified consumer base. Instead of having one regional warehouse/distribution center, retail giants have zeroed in on infill submarkets surrounding cities to locate multiple warehouses close to the population center. Just last year, Amazon leased a 96,600-square-foot warehouse in Everett, minutes from Downtown Boston, which would become a base for grocery and …
With commercial construction activity up by double digits in 2016 and projected to increase another 5 percent in 2017, the industry continues to keep a keen eye on labor shortages and construction costs. This rings even more true in the face of today’s increasingly stringent financing requirements — a critical project element that can push construction schedules out by months and, in the process, create challenges with accurate pro forma data, true labor schedules and pricing. The balance between schedule shifts and a backlog of work has proven particularly challenging for the entire industry, and presumably shows no sign of relief. For optimal success, teams must diligently focus on cross-functional communication, design-build principles and early strategic planning to protect from the pitfalls of 2017’s momentum. Focusing on this early planning gives clients two of the greatest advantages available in our current building climate: a forum for unearthing issues proactively and time to plan for solutions. In cases where design-build isn’t possible, teams can still capture the benefits of this concept by getting the right knowledge leaders at the table early on, providing significant results to project cost savings, resource management and logistics planning. The Labor Issue While the industry jockeys …
Just like the hit show, “Nashville,” Nashville’s retail market has more than one storyline in play and all of them intertwine to create a tapestry that showcases the retail development in our city. You don’t have to look too hard around downtown Nashville to see the redevelopment surge that is bringing retail as part of mixed-use and traditional developments to this market. Greenfield development in suburban nodes is also capturing the spotlight, albeit a smaller one, as a direct result of the intown growth that is driving up land and construction costs to a level that puts available space out of reach for many retailers. Those that can’t absorb the risk or afford the rent in downtown are looking to Nashville’s most popular suburbs for reasonable storefront alternatives. Mixed-Use Downtown Downtown Nashville redevelopment is a hit right now with no end in sight, which is welcomed news for well-capitalized, specialty retailers. Because of the continually rising costs of land and construction, redevelopment and mixed-use projects are the only feasible entry points for retailers in this market. One of the most significant projects highlighting downtown’s potential is the 6.2-acre redevelopment of the Nashville Convention Center: Fifth + Broadway. A high-quality, mixed-use …
Following the recession, demand for multifamily development took off in many areas of the country. We predicted it as significant economic and demographic changes were happening, spurring a shift from homeownership to renting. As a result, the multifamily sector experienced a resurgence that hadn’t been seen in decades. In some cities where an abundance of multifamily projects have been delivered, there is discussion of potential saturation. That’s not the case in the Twin Cities of Minneapolis and St. Paul, where demand for multifamily developments remains strong and the vacancy rate is an extremely low 2.6 percent. Based on data from the U.S. Census Bureau, at the end of 2016 the vacancy rate in the Twin Cities compared quite favorably with other metropolitan areas such as San Antonio, Texas (13.6 percent); Tampa, Fla., (11.6 percent); and Tulsa, Okla. (10.2 percent). Keep in mind that a 5 percent vacancy rate is considered to be a stabilized market. Healthy job growth Several economic factors continue to drive apartment demand in the Twin Cities, including job growth, low unemployment and a strong base for business expansion. Minnesota ranks third in the nation for number of Fortune 500 companies per capita. Prominent corporations with headquarters …
Greater Boston’s office market is continuing a very strong streak, closing 2016 and the fourth quarter on a good note. The year saw 1.4 million square feet positively absorbed with 789,000 square feet absorbed in the fourth quarter. The current vacancy rate is 12.7 percent, slightly lower than the market average over the last five years of 13.6 percent. Average Class A asking rents are $43.12 per square foot, which has appreciated 9.1 percent in the last three years. Neither the quarter nor the year are aberrations. The market is on an extended run of positive returns. Office space in the Greater Boston market has now seen positive absorption in 14 of the last 15 quarters, accumulating 12 million square feet positively absorbed over that period. The Boston CBD contributed 59,000 square feet of positive absorption in the fourth quarter, decreasing the vacancy rate 0.1 percentage points to 9.6 percent. The most absorption of the CBD submarkets occurred in the Financial District, which saw 69,000 square feet positively absorbed. Average Class A asking rents are currently $55.09 per square foot in the CBD, led by Back Bay, which has an average asking rate of $62.51 per square foot. Across the …
There was a big shake-up in the big box world with long-time sporting goods staples Sports Chalet and Sports Authority shuttering stores across the county. Macy’s in Mission Valley is also closing, while Nordstrom is shutting down in downtown. Interestingly, Hobby Lobby and the large pet stores seem to be buffered by the big box epidemic. In Chula Vista, two long-time vacant big boxes were finally chopped up into four spaces to accommodate the mid-sized box users. The good news is that big, “boring” boxes are being replaced by big “experiences.” Experiences, whether in a larger property or within a specific business, continue to be important for retailers and restaurants. Landlords across the county are making large investments to create experiences that will attract consumers. At the top end of the spectrum we have seen Westfield finally pulling the trigger on a massive remodel of the UTC mall, which will include more than 100 new stores and restaurants. Rouse purchased the Carlsbad mall from Westfield and has seemed to follow a similar business plan with its revamp, adding an exciting lineup of restaurants along the outside of the property. Liberty Station in Point Loma is coming into its prime with, …
The Raleigh and overall Triangle retail markets ended 2016 in a very healthy position. The Triangle vacancy rate is currently at 6.09 percent, nearing 10-year lows dating back pre-recession and includes retail absorption nearing 900,000 square feet over the past four quarters. The region’s diverse economic engine driven by technology, university systems, heathcare and Raleigh as a state capital, combined with a relatively low cost of living and temperate climate, continue to push population growth and related retail expansion. With fierce grocery competition, a natural evolution of inward growth and urbanization and several large mixed-use development projects, the Triangle retail market is thriving. However, e-commerce, rightsizing and store closures continue to challenge the broader U.S. retail market and the Triangle has not been spared. Grocery Competition With several homegrown grocery brands, North Carolina and the Triangle region have historically been one of the most competitive areas for grocers in the United States. Regional players like Harris Teeter (now owned by Kroger), Lowes Foods, Food Lion, The Fresh Market, Ingles and Earth Fare (all based in North Carolina) have competed for years with out-of-state supermarkets Kroger, Whole Foods Market, Trader Joe’s and even Walmart. This year brought a new level of …