Market Reports

Orlando: The ‘Happiest Place on Earth’ for Industrial Real Estate

by John Nelson November 21, 2016

Orlando likely resides in the minds of children and children at heart as “The Happiest Place on Earth,” and those involved in its industrial market today couldn’t agree more. Over the past five years, the Central Florida industrial market has been transformed from its prior position as a spoke in the wheel of distribution to the hub. To service consumers located in the country’s third most populous state, companies are locating large distribution centers in Central Florida (hub) with smaller distribution centers in Tampa, South Florida and Jacksonville (spokes). From a distribution standpoint, Central Florida has become the statewide distribution center for Florida. Warehouse is the New Retail The world of e-commerce began with the birth of the internet in the early 90s, made a big milestone with the first secure online transaction in 1994, and today Amazon is no longer first thought of as a rainforest in South America. In fact, Amazon is so prolific that recent reports from Consumer Intelligence Research Partners estimate that Amazon Prime now reaches nearly half of U.S. households. That translates to 54 million people, just in the United States, who have paid $99 for an annual membership that enables each consumer access to …

November 21, 2016

Hospitality Market Reports Texas Texas Market Reports

San Antonio: Hospitality on the Rise

by Haisten Willis November 18, 2016

San Antonio evokes many positive images: the River Walk, the Alamo, Fiesta, the Mission Trail, Texas Hill Country and more. All of these images have one thing in common: hospitality. San Antonio is known for its warmth and hospitality. It is a fun place to visit for the many conventioneers and tourists that are attracted to the city year after year. It is also a good place to do business and a great place to live. Strength of the Market San Antonio boasts a strong economy. Overall employment grew at 3.5 percent over the past year, including an above-average growth of 3.2 percent for hospitality, retail and healthcare employment. Unemployment declined to 3.6 percent in July 2016, with strong increases in the labor force, according to Moody’s Analytics. Tourism and convention activity drive the economy, strengthened by a large military and cybersecurity presence. Manufacturing, healthcare and energy round out San Antonio’s strong, stable economy. The San Antonio lodging industry has also maintained a strong and steady pattern. While other Texas markets are adding a lot of new supply, San Antonio has kept the number of new hotel rooms to a minimum, adding only about 1,000 rooms over the past five …

November 18, 2016

Industrial Market Reports New York Northeast Northeast Market Reports

New York’s Capital Region Industrial Market Continues to Thrive

by Jaime Lackey November 18, 2016

The Capital Region continues to experience low vacancy rates across the industrial sector. The region’s growth over the last decade has primarily been driven by multibillion-dollar investments by GlobalFoundries, a semiconductor foundry, and State University of New York Polytechnic Institute (known as SUNY Poly). With limited new construction and virtually no spec-built facilities, the rates on existing spaces have finally experienced some rental appreciation after remaining relatively flat over the decade from 2005 to 2015. For the most part, the region has seen existing tenants shifting to new locations within the marketplace as opposed to companies entering to the marketplace for the first time. Generally, new entrants to the market that have some technology component to their business are locating at the SUNY Poly campus or related facilities. One of the most notable recent transactions was the $57 million sale of The Beltrone Portfolio to The Rosenblum Companies. The portfolio totaled 23 buildings made up of a mix of office and industrial properties. The industrial assets included 10 buildings that would be classified as Class A and B product. Historically the entire portfolio maintained a low vacancy status and at the time of sale it was approximately 5 percent vacant. …

November 18, 2016

Market Reports Michigan Midwest Midwest Market Reports Multifamily

Michigan’s Second Largest City Keeps Pace with Multifamily Housing Demand

by Jeff Shaw November 17, 2016

Many of the national trends unfolding in the multifamily sector are playing out in Grand Rapids, the second largest city in Michigan, with a population estimated at 195,000 and slightly more than 1 million metrowide. A combination of demographic, economic and lifestyle trends are leading to the creation of more renter households. This includes Baby Boomers, Millennials and renters by choice across all income levels. In addition, Grand Rapids is experiencing an urban renaissance that is bringing new commerce, housing and amenities into the downtown area. During the 2016 National Multifamily Housing Council conference in Orlando, Grand Rapids was recognized as one of the top three small to mid-sized markets in the country for multifamily investment. Annualized apartment rent growth in Grand Rapids has been running at a robust 7 to 8 percent for the past two years, but some momentum has been lost in the wake of a large number of units that have come on line. The annual rent growth slipped to 4.6 percent during the four-quarter period that ended Sept. 30. The average occupancy rate remains above 97 percent, but is gradually coming off a peak of 98.6 percent in the third and fourth quarters of 2013. …

November 17, 2016

California Market Reports Multifamily Western Western Market Reports

The Bay’s Multifamily Market Experiences Some Transition

by Camren Skelton November 15, 2016

Financial markets worldwide have seen dramatic volatility in this past 12 months. The Bay Area economy and new hiring have cooled, while the San Francisco housing and condo markets have started to normalize after four feverishly overheated years. We are hearing about a big jump in apartment vacancy rates, with more apartments for rent than we’ve seen in many years just as rental rates begin to decline from recent all-time peaks. As would be expected, preliminary indicators show a transition to a cooler market when it comes to apartment building sales activity. However, as illustrated in the charts below, we haven’t seen any significant changes in the statistics. The second half of 2016 will undoubtedly provide more insight regarding the speed and scale of any market condition changes. San Francisco multifamily assets that contained more than five units experienced a plateau in cap rates year over year between 2015 and 2016. However, this same product experienced an increase in dollars per square foot, price per unit and average sale prices. The politics of new home development in San Francisco are not for the weak of heart. There are vocal disagreements between neighborhood and homeowner associations, developers, affordable housing advocates, tenant’s …

November 15, 2016

Florida Market Reports Office Southeast Southeast Market Reports

Demand for Orlando’s Class A Office Space is Outpacing Supply

by John Nelson November 14, 2016

The Orlando office market is strong and continues to grow stronger. Vacancy rates are declining, rents are increasing and new developments are in the works. While many large office markets around the country seem to have reached or are approaching the peak of this real estate cycle, the market in the Orlando area still has great potential for expansion. According to the Orlando Economic Development Commission (EDC), there is currently an unprecedented level of office, multifamily and mixed-use development planned for downtown Orlando. This is largely thanks to Tremont Plaza, a 28-story mixed-use development being built by Lincoln Property Co. and Tremont Realty Capital. The $81 million development will have seven floors of office space totaling over 200,000 square feet, along with a 180-room hotel, making it the first large-scale Class A office project for Orlando in 10 years. With several other major multi-use commercial projects on the drawing board, the EDC calculates that more than 1 million additional square feet of construction is planned for Orlando’s downtown business district. There are several factors contributing to the office market’s prosperity, including Florida’s improving economy and business-friendly atmosphere. The state offers a favorable business tax structure, pro-business legislature and access to …

November 14, 2016

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Market Reports Retail Texas Texas Market Reports

Alamo City Retail Market in Expansion Mode

by Haisten Willis November 11, 2016

As we near the end of 2016, we also mark another strong year for the San Antonio retail market. In fact, the market is strong enough that we can retire the word recovery and replace it with expansion. Expansion, in a nutshell, means that the retail market has not only matched the pre-recession occupancy level of 92 percent, it has exceeded it. San Antonio currently boasts a healthy occupancy rate of 94 percent, even as key vacancies from Sports Authority came onto the market during the past year. The Alamo City is able to maintain the balance due to the fact that vacancy added by the sporting goods retailer was offset by fully leased construction and the backfilling of major retail box spaces. The Weitzman Group currently reviews approximately 45 million square feet of retail inventory in San Antonio centers with 25,000 square feet or more. Like the retail market, San Antonio’s economy also continues to grow, based on solid population and job growth. The metro area market, as of September 2016, reports an unemployment rate of 4.1 percent. This is well below the country’s rate of 4.8 percent, according to the Texas Workforce Commission. The metro area also ranks …

November 11, 2016

Market Reports Office Washington Western Western Market Reports

Seattle’s Office Market Remains Healthy

by Camren Skelton November 8, 2016

Seattle is on the rise, and companies are thriving in the downtown core and surrounding submarkets. Seattle’s office market is one of the healthiest in the country. Leasing continues to be led by a robust technology sector that’s fueled by both the expansion of homegrown companies and the addition of engineering offices from mostly California-based companies. These companies have established significant footprints in Seattle as they have been able to attract, hire and retain workers from a talented employee pool. Institutions like the University of Washington continue to produce additional engineering graduates from an expanding computer science program, and companies have had great success recruiting talent eager to move from across the country and internationally to the Puget Sound region. Traditional brick-and-mortar companies like Sears, Best Buy and Starbucks are all working in Seattle to monetize the use of electronic devices. Many new companies to the market like Snapchat, Airbnb and, most recently, Pinterest, have opened their first Seattle locations in co-working spaces. The collaborative nature of the co-working environment is also popular among startups. These companies are often created by former employees of some of the region’s longstanding heavyweights. Amazon has had a significant ripple effect on the region, …

November 8, 2016

Florida Market Reports Multifamily Southeast Southeast Market Reports

Orlando’s Job Growth Allows Multifamily Sector to Continue Strong Performance

by John Nelson November 7, 2016

To those outside Orlando, the Central Florida metro of just over 2.3 million residents has long been a vacation destination with its major theme parks and top attractions including Walt Disney World, Universal Orlando, SeaWorld and the I-Drive corridor, home to the new Orlando Eye. In fact, Orlando welcomed over 66 million visitors who spent more than $60 billion in 2015, a new all-time local and U.S. travel industry high. However, tourism is just one piece of the puzzle when it comes to Orlando’s emergence as a top target for multifamily investment. The metro is experiencing exceptional growth across multiple sectors of the economy, and in 2015, the Orlando MSA led the nation in employment gains, coming in at 4.6 percent. According to the U.S. Department of Labor, the metro added 52,200 new jobs. Of these new jobs, the highest percentage was in professional business services, medical, transportation and general services. Looking forward, data from CBRE-Econometric Advisors projects that Orlando will lead the U.S. in employment growth over the next five years by a wide margin (2.3 percent compared to 0.8 percent for the nation overall). The rapid employment growth driven by numerous corporate relocations and expansions including Verizon, Mitsubishi-Hitachi, …

November 7, 2016

Industrial Market Reports Multifamily Office Retail Texas Texas Market Reports

The Case for West Houston — A Long-Term View

by Haisten Willis November 4, 2016

In spite of the “noise” created by headlines about low oil prices and energy industry layoffs, west Houston, home to several of the world’s largest energy companies, continues to have strong fundamentals based on decades of phenomenal growth and high-quality development. At Wolff Companies, we have been investing in West Houston for over 45 years. From this long-term perspective, we remain bullish on Houston and, in particular, West Houston, where continuing favorable demographic and economic trends tell a different story than the current headlines. West Houston is a city unto itself. With a population of 1.7 million, it would rank as the fifth largest city in the United States — ahead of Philadelphia, Phoenix or Dallas. It has its own downtown, or central business district (CBD), comprised of four major activity centers: CityCentre/Memorial City, Westchase, The Energy Corridor and Westway Park. All of these are within a few minutes of the intersection of Interstate 10 and the Sam Houston Tollway/Beltway 8. This intersection is also the current statistical center of Houston’s population distribution, a focal point which is expected to continue to move westward to the intersection of I-10 and Barker Cypress Road by 2025. High-Quality Growth Despite the cyclical …

November 4, 2016

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