Market Reports

Texas’ RGV Multifamily Market Attracts More Diverse Pool of Buyers

by Taylor Williams August 25, 2017

These days, first-time investors in the Rio Grande Valley (RGV) multifamily market are in for a bit of education. Misconceptions about the RGV are common due to the market’s actual proximity to the Mexican border and lack of proximity to other major metros, as well as the Trump administration’s dicey relationship with our neighbor to the south. In reality, the area is an attractive, stand-alone market filled with growth potential. Education, healthcare, retail, international trade, agriculture, oil & gas, port activity — the RGV has it all. Hidalgo and Cameron counties make up the fifth- and ninth-largest MSAs in Texas with a combined population in excess of 1.2 million. As a result, numerous investors from larger Texas MSAs, as well as out-of-state investors, are targeting multifamily opportunities in the RGV. ARA Newmark is currently marketing an 84-unit asset at a high-density intersection in the South Texas market. This metro is awash with high-end retail, healthcare and single-family developments and is thus attracting residents from a variety of backgrounds. Within the first two weeks of marketing, the asset drew six preemptive offers from a diverse buyer base that included two out-of-state buyers. The volume of retail growth in the Rio Grande Valley in recent …

August 25, 2017

Market Reports Midwest Midwest Market Reports Missouri Office

Dramatic Rise in Tech Jobs Propels Growth in St. Louis Office Market

by Kristin Harlow August 24, 2017

Rapid growth in the tech sector is dramatically impacting the St. Louis office market. The city boasted an increase of 6,220 high-tech jobs during the last four years, over 2,000 of which were generated in the past year alone. Given the total number of tech jobs in St. Louis is 57,300, this amounts to a healthy growth rate of 10.9 percent. From well-known companies like Square Inc., Yurbuds and Answers.com to newer ones such as LockerDome, Aisle411 Inc. and MediBeacon Inc., the St. Louis region is a growing hot spot for innovative, new and expanding companies. These companies include leaders in the areas of plant and life sciences as well as financial services, information technology, advanced manufacturing and even rapidly growing pet care industries. Significant healthcare and biotechnology institutions in the region include Pfizer, Donald Danforth Plant Science Center, Solae Co. and Sigma-Aldrich. As capital injections slow in the coastal markets, St. Louis’ startup scene is thriving, attracting talent, new companies and investors from across the globe. According to Forbes, the city was named the fastest-growing metropolis for startups in 2016. Analytical website fivethirtyeight.com reaffirmed St. Louis’ increased appetite for startups, attributing the uptick in part to a combination of …

August 24, 2017

California Market Reports Multifamily Western Western Market Reports

Apartment Values Continue to Climb in Orange County

by Camren Skelton August 22, 2017

Orange County’s well-diversified and growing economy, coupled with its high quality of life, attract residents nationally and internationally to the region. Prohibitive home pricing also intensifies the high barrier to home ownership, further supporting overall apartment fundamentals in the Orange County market. Developers are targeting urban centers where they can transform the areas with Class A rentals. Anaheim’s Platinum Triangle, the Disney Resort, Convention Center Complex and surrounding area are undergoing an infusion of more than $5 billion that is redefining the area as a highly urbanized residential, entertainment and business hub. A similar transformation is happening at the Irvine Business Complex (IBC). In addition to these clusters, about 19,000 units are scheduled to come online over the next few years, particularly in the Class A product category. Rents in Orange County rose 4.8 percent year-over-year through January, outpacing the 4.6 percent national growth rate. Renter demand remains elevated, fueled by a rapidly expanding economy and population gains. Large companies and startups alike are drawn to the market’s highly educated workforce as nearly 25 percent of residents have at least a bachelor’s degree. This reinforces the foundation for the multifamily sector’s rent growth in both “renter by necessity” (students/young professionals/blue-collar/subsidized …

August 22, 2017

Industrial Market Reports North Carolina Southeast Southeast Market Reports

Charlotte Industrial Market’s Absorption, Rent Growth Spur Optimism

by John Nelson August 21, 2017

The industrial market in Charlotte is healthy, with trends pointing to another solid year of net absorption and rent growth. The market continues to attract institutional capital, as cap rates hover slightly below 6 percent for Class A product in the metro’s primary submarkets. Charlotte’s job growth continues to drive population migration into the market. More than 37,000 new jobs have been added in the past 12 months, dropping the unemployment rate from 5.2 percent to 4.9 percent. North Carolina has a young, educated workforce and boasts 53 universities and colleges. The state is nationally recognized for its labor climate. Major employers span the gamut of the business world, from financial and energy stalwarts such as Bank of America and Wells Fargo, Duke Energy and Siemen’s Energy Inc., to more industrial players such as Daimler Trucks North America, Lowe’s, FedEx and Snyder’s-Lance Inc. Charlotte is a logistically sound market, with the city’s airport ranking as the eighth busiest in the U.S., according to the Federal Aviation Administration. A relatively new intermodal rail facility and continued investment in road infrastructure projects are also helping to foster an optimistic environment. The HB2 legislation, which proved a major obstacle to attracting new companies …

August 21, 2017

Market Reports Retail Texas Texas Market Reports

Demand for Freestanding Emergency Rooms, Cold Storage Facilities Surges in Texas’ RGV

by Taylor Williams August 18, 2017

South Texas is in the midst of a growth spurt in the commercial real estate industry. Within the area’s retail sector, demand for freestanding emergency rooms and cold storage facilities is growing rapidly. Though atypical, requests for such spaces are becoming increasingly common in the Rio Grande Valley (RGV). An estimated 1.3 million people call the RGV home. Both Hidalgo and Cameron counties are equipped with multiple hospitals to meet the healthcare needs of residents. There are three freestanding emergency rooms in Hidalgo County and two in Cameron County, with several more currently in the pipeline. Three of the larger healthcare providers within the RGV — Doctor’s Hospital at Renaissance in Edinburg (the largest hospital in the area), South Texas Health System, which has five hospitals in cities McAllen and Edinburg and HCA Hospital in McAllen — all have plenty of emergency rooms to cover the cities they serve. Between Harlingen and Brownsville, both the longstanding Valley Baptist Health System and the newer Harlingen Medical Center have plenty of emergency rooms to handle residents’ healthcare needs. Despite having this many established players in the market, new operators of healthcare real estate like Neighbors Health System, which owns and operates Neighbors …

August 18, 2017

Market Reports Midwest Midwest Market Reports Office Ohio

Cleveland Office Market Sees String of New Projects

by Kristin Harlow August 17, 2017

Cleveland’s central business district (CBD) continues to make headlines as events like the Republican National Convention, the 2016 and 2017 NBA Championships and the 2016 World Series earned national attention. Within the office market, trends such as “flight to quality” and office-to-residential conversions, which are driven by a hot apartment market, have reduced surplus supply and lowered vacancies. This has shaped metrics positively, and has put Cleveland in a position of strength for the upcoming years. The news of the year has been the purchase of Key Tower by Millennia Cos., a local real estate developer known mostly for multifamily. The company moved its headquarters from a property in Valley View to two entire floors spanning approximately 40,000 square feet in Cleveland’s signature office tower. Almost immediately after, Forest City announced its headquarters move from the historic Terminal Tower to the Key Tower, backfilling almost 150,000 square feet of space that KeyCorp gave back in a downsizing strategy. By the first quarter of 2018, Key Tower will benefit from lobby and building amenity upgrades, and should see a vacancy rate of less than 10 percent. Another story on the horizon is the potential move of Medical Mutual of Ohio, now …

August 17, 2017

Hawaii Market Reports Office Western Western Market Reports

Competition Increases for Hawaii’s Office Space

by Camren Skelton August 15, 2017

Hawaii’s office market is dominated by Honolulu, which is home to 70 percent of the state’s population and commerce. More than 90 percent of the state’s 12 million square feet of multi-tenant Class A and B office space is located in Honolulu, with nearly 80 percent of Honolulu’s inventory situated in the four-mile stretch between the Central Business District and Waikiki. Hawaii’s office tenants are primarily in industries that support tourism, military, construction and government – Hawaii’s economic drivers. These include FIRE (Finance, Insurance, Real Estate), plus legal, CPAs, architects, engineers and contractors. Hawaii also has a small but growing innovation economy that has spawned several co-working centers, incubators and impact investment firms backed by the University of Hawaii. These names include Lauren Powell Jobs (widow of Steve Jobs), Pierre Omidyar (founder of eBay) and Henk Rogers (Tetris). Larry Ellison purchased 97 percent of the Island of Lanai in 2012 for $300 million and could join the list of tech billionaires interested in supporting Hawaii’s innovation economy. Hawaii has seen slow but steady job growth in office-using businesses, but the drive to reduce square feet per office worker and the related cost savings has resulted in a net loss of …

August 15, 2017

Florida Market Reports Multifamily Southeast Southeast Market Reports

Miami Multifamily Market Remains Strong, But Where are the Deals?

by John Nelson August 14, 2017

The multifamily market in South Florida is gaining strength but not sales velocity due to converging market and demographic forces. Sales topped $400 million for the third year in a row in 2016, largely because the average price per unit jumped 13 percent to $185,300 per unit. The vacancy rate fell below 4 percent at the end of last year, and rents climbed almost 4 percent on all types of units to an effective rate of $1,351 per month. It’s clear the current upcycle will continue beyond the usual period as immense demand from investors is causing an incredible scarcity of Class A product, and the lifestyle preferences of millennials are intersecting with the luxury condo boom. Opportunities, Challenges In 2005 and 2006, adequate inventory kept the multifamily market in balance. Today, buyers are plentiful, capital is available and interest rates are affordable. What we don’t have is product, a phenomenon not exclusive to Miami and Fort Lauderdale. Why? Sellers have few options. They’re thinking, “If I sell at a premium and I want to stay in a similar market, I’m going to pay a premium. So, what’s the point of selling?” Therefore, owners are putting properties on the market …

August 14, 2017

Market Reports Office Texas Texas Market Reports

Houston’s Office Market Rides Out Oil Downturn, Poised For Stability

by Taylor Williams August 11, 2017

Over the past few years, Houston’s diverse economy has proven resilient. This diversity helped the city weather a major drop in oil and gas prices that, during previous downturns, severely affected the office market. While Houston has taken its share of recent hits, it appears poised to move forward into a period of stability and steady growth. While most of Houston seems to be in recovery mode, the local office market historically trails the oil and gas industry and usually takes additional time to reflect the current economic recovery. Houston’s office market was hit hard by the downturn when oil prices plummeted at the end of 2014. Submarkets like the Central Business District and the Energy Corridor — where roughly half of the workforce belongs to the energy sector — were hardest hit. Firms in these submarkets suffered big layoffs and created large swaths of available sublease and direct office space. However, according to CoStar, tenants still spent more than $7 billion (larger than the GDP of 55 sovereign nations) on office space during the past year. What does this all mean for the office market? At the end of the first quarter of 2017, Houston’s direct vacancy rate was …

August 11, 2017

Iowa Market Reports Midwest Midwest Market Reports

Increased Development Activity in Cedar Rapids Flows Across Property Types

by Kristin Harlow August 10, 2017

These are momentous times for the Cedar Rapids economy. On the jobs front, the unemployment rate for the Cedar Rapids area stood at 3.2 percent in May, even tighter than the national unemployment rate of 4.3 percent for the same period. Meanwhile, the housing market recorded its lowest inventory of housing on the market in two years with 1,482 active listings in June 2017, 540 less than June 2015. On average, the number of days that houses were on the market dropped from 87 to 62 in the last year-and-a-half, while the median house price increased to $166,646. The city has seen dramatic housing, commercial and industrial growth in the last several years. Municipal and business leaders are addressing several issues, including: • affordable housing for entry-level workers and those earning 30 to 50 percent of the area median income; • recruitment of workers to fill an abundance of job openings; • more recreational, retail and cultural opportunities to attract Millennials to the city to fill the job openings; • completion of the flood protection system to reinforce the confidence of developers in creating projects along the Cedar River. What follows is an update on the performance of the major …

August 10, 2017

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