Miami is coming into its own as an increasingly international city that continues to attract new residents, visitors and investment and development activity. The city’s urban core is flourishing, with residents gravitating toward a downtown area that allows them to live, work and play in the same neighborhood. The Miami retail market is experiencing a development surge to accommodate the city’s growth. Through the end of the first quarter of 2016, about 2.3 million square feet of retail space was under construction, according to CoStar. The developments are bringing a new class of retailers to the market. Major projects include Brickell City Centre, a 500,000-square-foot shopping center with a roster of tenants that includes Armani Collezioni, anchor tenant Saks Fifth Avenue and Valentino. North of downtown Miami, the $1.7 billion Miami Worldcenter project will introduce a high-street retail concept that is similar to the popular Lincoln Road open-air mall in Miami Beach. In Miami’s Design District, the $1 billion redevelopment of the neighborhood is attracting luxury retailers like Hermès, Louis Vuitton and Cartier. Downtown residents will have easy access to all of these retail destinations. Retail operating fundamentals remain strong in the Miami market. Vacancies closed the first quarter of …
Chances are you have read the stories in the news lately about the challenges facing Michigan, the City of Detroit, or more recently the state’s seventh largest city, Flint. Between the chronicles of a once ailing automotive industry, the Chapter 9 bankruptcy filing by the City of Detroit in 2013 — the largest municipal bankruptcy in history — and most recently lead-tainted city water in Flint, there have been dozens of national headlines, sharp sound bites, and a litany of negative press coverage over the past few years. In short, over the past decade we have witnessed a roller coaster of economic events that have created a rather palpable investor stigma for Detroit and the State of Michigan as a whole. Despite the negative tone surrounding investment opportunities in Michigan, the state’s strong commercial real estate market is creating value for investors acquiring retail assets. Historically, Michigan shopping centers have traded at cap rates 50 to 100 basis below their national peers. Is this discount still warranted? Tide turns in Great Lakes As a brokerage firm dedicated to the sale of investment properties and retail tenant representation, Landmark Investment Sales and its parent company, Landmark Commercial Real Estate Services Inc., …
Given a handful of macro-factors in the Miami industrial market including the Panama Canal expansion nearing completion, PortMiami expansion, strong American dollar, and improving relations with Cuba coupled with the country’s new mega-port project, it is a unique time to be an industrial real estate service provider. To succeed in this environment, it takes deep local knowledge and a global understanding of how Miami, the Caribbean and Latin American economies and infrastructure are intertwined into global commerce. The first macro-factor is the Panama Canal expansion, its first major renovation since the 1914 opening. The expansion is set to have a major impact on global trade; specifically, the way cargo will be handled and transported throughout the Western Hemisphere. The larger canal will accommodate the new line of Post-Panamax vessels — supertankers, container and passenger ships too large to previously pass through the canal. Miami is a prime location for these vessels and offers a tremendous expansion opportunity for the local industrial market provided the vessels have a port to dock. In response to the Panama Canal expansion, PortMiami completed a deep dredge project to allow the Post-Panamax vessels full access, which is the second macro-factor affecting Miami’s industrial market. The …
The downturn in the upstream oil and gas industry, caused by the low prices of these commodities, has been the subject of continuous examination and prognostication since its onset in late 2014, particularly in the Houston region. Though it has diversified its economy somewhat since the 1980s, when its overdependence on that industry brought ruin to its economy, Houston remains the large Texas metro most economically tied to oil and gas. Houston benefited from those ties from 2011 to 2014, during the period of surging fortunes in that sector, by adding 380,000 jobs. However, because this tremendous boom in employment was less economically diversified than the region’s overall economy, when upstream oil and gas abruptly switched from growth to contraction, so did the region’s growth prospects. Houston’s other economic sectors at this point are not growing substantially enough to keep net growth strongly positive in terms of jobs. So far they are merely keeping the region in an essentially stagnant condition. The Push for Amenities All sectors of Houston-area real estate have felt an impact from this reversal, but to varying extents. The apartment market, which is traditionally among the sectors most directly tied to current employment levels, is receiving …
Favorable hiring trends in metro Detroit have driven household formation to its highest point since the start of the new millennium. As a result, multifamily asset performance and operations have shown marked improvement with respect to demand, occupancy, rents and prices. In the first quarter of the year, local employers created 14,500 jobs for a year-over-year gain of 2.3 percent, which brought Detroit’s unemployment level to its lowest level since 2001. Employment advances were led by the professional and business services sector as well as the leisure and hospitality sector, which added 16,100 and 6,000 workers, respectively. Total employment at the end of 2016 is projected to be 1.9 percent higher than it was at the end of 2015. The generally higher paying professional and business services jobs will lead to broad-based employment growth through the rest of the year, and gains in this segment are expected to support growing demand for luxury rentals. In any event, rental demand in Detroit is on the rise for the foreseeable future. Construction takes off Encouraged by positive employment trends, economic indicators and a recovering automotive industry, new construction, renovation and conversion are thriving. Developers have new multifamily projects underway in more than …
The Atlanta retail market continues to be robust, with vacancy tightening in key submarkets and rents trending upward. Overall vacancy fell slightly from 7.1 percent during the fourth quarter of 2015 to 7 percent in the first quarter of 2016, according to CoStar. However, the decline is greater in hot submarkets such as Buckhead and Central Perimeter that boasted vacancy rates as low as 2.8 percent and 3.2 percent, respectively, in the first quarter. Demand Up, Supply Tightens There is still a disconnect between supply and demand, especially in strong trade areas, and many retailers that wish to enter or expand in the market are finding it difficult to do so. Rents are escalating by 10 percent to 15 percent because of the increased competition for space and the high cost to build new developments is attributable to escalating land costs. During the first quarter, 21 buildings totaling 300,174 square feet were delivered, according to CoStar, and at the end of the first quarter, 1.73 million square feet of retail space was under development. As Atlanta can deliver more of the space that’s under construction and open up availability, rent is expected to continue to climb. Health and Fitness Food …
Even as hotel operators continue to report steady gains in revenue per available room (RevPAR) nationally, Wall Street execs have begun to downgrade the lodging outlook, painting an entirely different picture. This disconnect is rooted in fears that the year-over-year growth in RevPAR is not sustainable in the current climate and that a spate of high-profile mergers and acquisitions among national operators must dictate a lower assessment of the industry. In spite of these concerns, demand continues to outpace new supply, both of which are occurring at a strong clip. Though industry observers may point to tepid occupancy as a concern, robust increases in average daily rates are leading to continued growth in RevPAR nationwide. How does Detroit stack up? Similar to the national hotel industry, Detroit is registering these same trends. On one hand, the market has recorded an increase in supply and a decrease in occupancy. On the other hand, average daily rates are steadily rising and RevPAR is growing overall, a sign of a strong hotel market. STR’s April 2016 report on the U.S. hotel pipeline indicated 1,046 rooms under construction in metro Detroit, or approximately 2 percent of the existing supply. This supply increase is at …
There has been a seismic shift in the way that companies throughout America make their relocation decisions, and it applies to Atlanta as well as its competitors. Companies are driven to locations that can provide a robust pipeline of talent and tight-knit innovative communities. This focus has created new demands on cities that want to build and sustain competitive economies. Companies have always taken talent into consideration but ultimately there was a belief that the talent would follow the company. This is no longer true. Millennials first choose where they want to live and then where they want to work. Today’s sought-after talent is closely tied to a city’s ability to provide a high quality of life. This means a connected transportation system, plenty of entertainment activities and accessible, affordable housing. All of this can be found in Atlanta. Companies that have recently chosen to call Atlanta home are a testament to this. From NCR (3,600 employees) to Kaiser Permanente (900 employees) to Worldpay (1,266 employees), all of these prestigious business newcomers have emphasized the critical role that access to highly qualified talent played in their decision to relocate here. Tight-knit, innovative communities do not just appear and cannot be …
Outsiders looking at the Houston industrial real estate market may automatically presume doom and gloom for all commercial real estate segments due to the significant downturn in the oil and gas industry during 2015 and 2016. When it comes to the Houston industrial sector, we caution not to jump to that conclusion too fast! In 2016, the Houston regional economy has much more going for it that creates industrial real estate demand than simply oil and gas. Momentum from economic drivers not dependent upon the oil and gas industry are stabilizing industrial real estate. They are also helping counter the drag on the area’s economy that may be attributed to excess inventory and price deflation in oil and gas. Through the end of the year, we expect activity in industrial leasing to remain relatively stable and to offer rental rates that are comparable to early 2016. Our confidence in the stability of industrial real estate is partially based on our fundamental understanding about segmentation in the energy industry that directly impacts Houston’s industrial real estate utilization. Oil and gas is not a simple, homogenous industry with all segments moving in lock step. Clearly, the energy downturn has hit oil and …
Growth in the Indianapolis downtown multifamily market is as dynamic as the city itself. Since 2013, 3,000 units have been delivered and leased up rapidly. The vacancy rate registers 4.5 percent in a submarket that historically has seen vacancy rates of around 8 percent. Demand is healthy and growth continues, with another 283 units scheduled for delivery by the end of this year. A unique contributor to this multifamily construction boom is the downtown campus of Indiana University-Purdue University Indianapolis (IUPUI), the IU Law School and the IU Medical School. A sudden building spree of more than $100 million of student-focused projects is occurring downtown near IUPUI. With more than 1,000 units currently under construction or in the works, these new deliveries signal a real change for IUPUI from a commuter orientation to that of a residential campus. These off-campus locations will likely appeal to young professionals as well, and savvy developers are making certain to provide conventional units as part of their mix. The largest such development currently under construction is Trinitas Ventures’ 193-unit, 669-bed project at the northeast corner of Michigan Street and Capitol Avenue. Known as Lux On Capitol, the student housing development is due to open …