Market Reports

Nashville Industrial Market Will Continue to Ride its Hot Hand Through 2017

by John Nelson April 17, 2017

The Nashville commercial real estate market’s growth is no longer a local secret. In fact, it very well may be one of the most desired areas for investors for an MSA with a population less than 2.5 million people. In case you haven’t heard, read or taken notice, you likely have been living under a rock. Those who call this market “hot” are making an understatement. As the downtown core sees land sites trade in excess of $13 million per acre (and in a few interesting cases eclipse $1,000 per square foot), the multifamily and hospitality markets have moved at a torrid pace. Even office rents have climbed to record highs near $40 per square foot for full service gross rates. Some covering that sector project this number will peak around the $50 per square foot mark due, in part, to the higher land costs driven by the other sectors. Multifamily developers have seized upon this growth by paying record prices for downtown real estate in hopes of capturing the fancy of Millennials as they enter the workforce. Top this off with hotel stays in downtown costing as much as those found on Times Square in Manhattan, some ponder the …

April 17, 2017

Market Reports Texas Market Reports

Massive New Projects, National Retailers Spur Development Explosion In El Paso

by Jeff Shaw April 14, 2017

El Paso in 2017 is a story of growth. Sales tax rebates increased over 10 percent in 2016 — second among the 20 largest cities in Texas. Since 2000, the El Paso-area population has increased by more than 27 percent, and as the longtime adage goes, “retail follows rooftops.” Long under the radar of national concepts, El Paso’s retail sector is changing. Major retail developments in El Paso are gaining national attention. One of the catalysts contributing to this interest is the success of the Fountains at Farah development, a 600,000-square-foot retail center with shops, restaurants and a live music amphitheater. The Fountains has attracted concepts such as Nordstrom Rack, Ruth’s Chris Steak House, Kate Spade, West Elm, Grimald’s, Chuy’s, Kona Grill and Bricktown Tap House & Kitchen, to name a few. The ability of this large-scale center to attract popular national and super-regional concepts that are “new to El Paso” has provided an impetus for other developers to pursue similar developments. Add to the mix the low interest rate environment and a growing population with a stable economy, and you have a development boom. Retail takes city by storm On the west side of the city, major developments include …

April 14, 2017

Indiana Industrial Market Reports Midwest Midwest Market Reports

Greater Indianapolis Industrial Market Shatters Records

by Kristin Harlow April 13, 2017

To say that the greater Indianapolis industrial market experienced a historical year in 2016 almost seems trite. By every measure, the city’s industrial records were shattered. Net absorption in 2016—8.3 million square feet—crushed that of previous years. Additionally, 11.2 million square feet of new leases were signed, which is more than the 2014 and 2015 totals combined. And, the market saw its lowest vacancy rate in 36 years at 3 percent – down from 5.8 percent at the end of 2015. Now that’s historic! The industrial market is on fire, and Indianapolis is among the brightest embers. While the city has always competed well with its peers, Indianapolis outpaced the competition in 2016. The city was ranked in the top 10 for industrial space absorbed last year, and it has a history of being “recession-resilient,” in that it is one of the few industrial markets that actually grew during the last recessionary period. The industrial market was tight heading into 2016 and tightened even further throughout the year as historic leasing demand dramatically outpaced new supply. After no new buildings were delivered in the third quarter of 2016, the fourth quarter produced four newly constructed industrial warehouses totaling 635,000 square …

April 13, 2017

Market Reports Nevada Office Western Western Market Reports

Positive Momentum Keeps Office Construction On Target

by Camren Skelton April 11, 2017

Market Moves There is so much fascinating discussion happening around the Las Vegas office market: what is the future of the suburban office? How does layout truly affect the culture of a company? Is parking a dying amenity? For the Las Vegas office market, it is just as easy to be captivated by imagining the possibilities of tomorrow. The post-recession recovery has seen office as the last product type to get healthy. The resort corridor led the way with a few new developments, like the T-Mobile Arena and Lucky Dragon Hotel, but there were many significant rehabs and upgrades as well. Multifamily and industrial followed closely behind, not surprisingly. What is interesting is that multifamily developers, as well as industrial, have been delivering product classes the valley has not experienced in any previous cycles. These include integrated apartment communities with over-the-top lifestyle amenities, and big bomber industrial buildings with the latest fixings of the day. Office development completions, however, have been limited to niche plays like the 140,000-square-foot Federal Justice Tower, and relic projects like Downtown’s 200,000-square-foot One Summerlin. Some of these projects were carried out by new owners, some with a lower basis. These buildings filled up and are …

April 11, 2017

Market Reports Office Southeast Southeast Market Reports Tennessee

Nashville’s Tight CBD Benefits the Metro’s Satellite Office Submarkets

by John Nelson April 10, 2017

Robust population and job growth are fueling a resurgence across all sectors of Nashville’s commercial real estate market, pushing vacancies lower, boosting rental rates and attracting strong interest from investors. With increasing demand for office space in the central business district (CBD), a rush of both in- and out-of-state developers and equity have descended on Nashville to deliver Class A product. That delivery timeline has subsequently pushed the demand for existing space to the adjacent Midtown, Wedgewood-Houston and MetroCenter submarkets. These satellite areas are benefiting from the positive absorption with existing space back-filled in record time, and some deliveries of conversions of older warehouses to hip office and retail space. CBD Construction Perhaps predictably, after the city climbed higher among the nation’s top job markets, (ranking third on NerdWallet’s list based on top cities’ unemployment rates and increase in working-age population between 2010- 2015), Nashville ranked sixth among the nation’s top cities for real estate investing in 2017, one spot higher than last year, in the annual Emerging Trends in Real Estate report put together by PricewaterhouseCooper and the Urban Land Institute. These accolades are a testament to Nashville’s crane-filled skyline, confirming that new construction is the dominant force in …

April 10, 2017

Illinois Industrial Market Reports Midwest Midwest Market Reports

2017 Poised to Be Another Great Year for Chicagoland Industrial

by Kristin Harlow April 6, 2017

The Chicagoland industrial market has started 2017 with a full head of steam and doesn’t appear ready to cool down anytime soon. With historically low vacancy rates, high net absorption and strong tenant demand, the outlook is positive for new construction in the pipeline, even with the recent uptick in interest rates. Net absorption of industrial space topped 19.3 million square feet in 2016, outpacing the 18.2 million square feet of new product delivered, according to CoStar Group. The metro Chicago vacancy rate at the end of the year was 6.5 percent, a drop of about 50 basis points over the previous 12 months. As for 2017, we see increasing competition for well-located land sites, especially from speculative developers who see opportunity in the rising demand for state-of-the-art facilities equipped for today’s sophisticated users. The jungle effect We have seen strong activity from tenants ranging from global logistics providers to regional distributors. However, a large share of the total net absorption in 2016 came from one well-known and much sought-after tenant — Amazon. The retailing giant has been leasing warehouse/distribution space at a rapid pace, and it seems as though every other week we are reading about a new distribution method, business …

April 6, 2017

Market Reports Massachusetts Northeast Northeast Market Reports Retail

E-commerce Impacts Retail Market in Eastern Massachusetts

by Taylor Williams April 5, 2017

Retail vacancy levels declined in 2012 and 2013 in Eastern Massachusetts following several years of rising vacancy rates during the Great Recession. But since 2013, vacancy rates have been on the rise as shopping habits continue to tilt toward online options. In 2016, retail inventory gained modestly, reaching 194.2 million square feet, an increase of 0.5 percent, although no major center opened during the year. The region added 488,800 square feet of vacant retail space, and the vacancy rate increased to 9 percent. Big box closings — notably Sam’s Club, JCPenney, and Kmart — and the departures of Citibank and City Sports, were the primary cause of increasing vacancy. Nonetheless, the region experienced positive absorption, netting 573,600 square feet. As reported in The KeyPoint Report: Eastern Massachusetts/Greater Boston, Boston and Cambridge ranked one and two in the list of top 10 towns by retail square footage. Abington tops the rankings for lowest vacancy rate. Eight of the top 10 towns with the highest vacancy rates are repeats from the previous year; new additions include Wrentham, site of the 135,000-square-foot Wrentham Crossing, which is vacant and currently for sale. The under-2,500-square-foot size classification remains the largest segment of the market, and …

April 5, 2017

Market Reports Nevada Retail Western Western Market Reports

New Projects, Offerings Keep Las Vegas’ Retail Market Exciting

by Camren Skelton April 4, 2017

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. …

April 4, 2017

Market Reports Multifamily Southeast Southeast Market Reports Tennessee

Accelerating Demand, Deliveries Set the Tone for Nashville’s Apartment Market

by John Nelson April 3, 2017

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 …

April 3, 2017

Hospitality Illinois Market Reports Midwest Midwest Market Reports

Hotel Sector is on ‘Glidepath to Oversupply,’ But Chicago Could See a Soft Landing

by Kristin Harlow March 30, 2017

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 …

March 30, 2017

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