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 …
Speaking to a panel of real estate professionals in the 1980s on the dangers of overbuilding during a period of economic expansion, Dallas real estate magnate Trammell Crow offered lenders in the crowd a simple proposition: “If you stop lending, I’ll stop developing.” Thirty-one years later, the nature of that relationship has manifested in the Texas self-storage market. After minimal delivery of self-storage properties in 2012 and 2013, development began to surge in 2014. The Texas Self Storage Association (TSSA) estimates that there are now roughly 6,500 facilities statewide, and local sources concur that unit growth from 2014 to the present has been somewhere in the neighborhood of 350 new facilities per year. This development boom has occurred in the face of rising land prices, high property taxes and a constricting pool of skilled labor that has driven up construction costs. Overall economic growth is contributing to the concern as well. Lenders are still lending, thus developers are still developing, betting that the pent-up demand for self-storage properties in Texas still has some gas left in the tank. The bullish perspective on self-storage appears to go beyond the Lone Star State. Tennessee-based hotel data and research firm STR, which has …
Like other metros, Chicago is in the midst of an apartment boom where the hum of multifamily construction has become commonplace. In fact, approximately 8,000 new rental units are slated to deliver by the end of next year, according to Appraisal Research Counselors. Nearly 4,000 units are expected to deliver in 2019. The majority of this multifamily construction is concentrated on Class A rental high-rises. SixForty (640 N. Wells St.) by JDL Development and 8 E. Huron by CA Ventures — both of which The Habitat Co. will be managing — aim to meet the demand of those looking to be closer to the influx of new businesses moving downtown, as well as an urban lifestyle with robust dining and entertainment options. Like its metro counterparts, Chicago has become a city of renters. According to Harvard University’s Joint Center for Housing Studies, the U.S. homeownership rate hovered at just 64 percent at the start of 2017, following 12 years of decline, while the number of renters continued its upswing. In the past five years, an average of 1 million new renter households were formed every year, per the National Multifamily Housing Council. Indeed, these have been good years for those …
The housing market remains hot in Charlotte with sustained growth in both sales activity and sales price. Affordable prices, a strong market and robust salaries are driving first-time buyers to take the plunge and purchase their first home and there’s no better place to live in Charlotte than in the 28277 zip code, otherwise known as Ballantyne. The Ballantyne area is nationally known for not only a place to work with more than 5 million square feet of Class A office space, but also a desirable place to live with housing opportunities ranging from $145,000 to over $4 million. The 28277 zip code has top-rated schools, an abundance of restaurant and shopping options, private and public golf courses, and the area’s only Four-Star recognized hotel, spa and restaurant. The office sector remains hot with continued employment growth attributing to falling vacancy rates, new construction and rising rents. Charlotte has an overall vacancy rate of 10.4 percent and the overall weighted average asking rent for Class A space in Charlotte is $25.98 per square foot. There is currently over 2.3 million square feet of office product under construction in Charlotte and close to 7 million square feet planned or proposed. The …
The need for storage and distribution space for the variety of fruits and vegetables imported from Mexico has long been a driver of industrial demand in the Rio Grande Valley (RGV). Overall industrial occupancy is on the rise throughout the region — about 92 percent in the Greater McAllen Area — and the role of agriculture is becoming a major part of it. The agriculture industry has fueled rapid growth in the RGV city of Pharr and continues to bolster its economic prosperity today. As a global agricultural powerhouse, Pharr is home to a variety of thriving businesses in the agriculture industry. The Pharr-Reynosa International Bridge represents the sixth-largest land (in the United States and currently processes more than $30 billion in international trade on an annual basis. The most influential element behind this uptick has not been agrarian, financial or demographic, but rather infrastructural and on the Mexico side of the region. The Baluarte Bicentennial Bridge, a 3,700-foot cable-stayed bridge completed in late 2013, provides direct access from the Pacific coast city of Mazatlan to the inland metro area of Durango. From Durango, product can be transported directly to the Mexico border city of Reynosa, which has a thriving …
The Charlotte economy has created jobs at a faster rate than the national average throughout this cycle. With 34,900 new jobs over the last 12 months and more than 110,000 over the last three years, the regional job market has created a new demand for the luxury multifamily inventory throughout infill and select suburban submarkets. Four of the MSA’s top five employers — Wells Fargo, Bank of America, Carolinas HealthCare System and Novant Health — each have a combined 1,000-plus job openings in Charlotte, while AXA, Red Ventures, Dimensional Fund Advisors and CompuCom have begun major expansions across the metro area. This has created a need for additional multifamily inventory, which has expanded by 7,700 units over the last 12 months, while absorption was just shy of 7,000. The modest downtick in occupancy was more than offset by a 4 percent same-store rent growth (30 basis points higher than the five-year trailing average of 3.7 percent). Two marquee high-rise projects are nearing completion in the central business district’s Third Ward: Greystar’s Ascent and Childress Klein’s Museum Tower. The early returns show unprecedented per square foot rents for the metro area. In most infill locations, developers are offering one month free …