Market Reports

Apartment Construction Boom Will Test the Resilience of the Chicago Market

by Kristin Harlow February 16, 2017

Solid employment growth and the attractiveness of an urban lifestyle led to improvements in the multifamily market across metro Chicago in 2016. Although there was positive movement in the performance of key indices in both the city and the suburbs, corporate migration from the suburbs to the city brought young professionals and high-paying job opportunities, especially to the core. Millennials overwhelmingly favored renting over homeownership in 2016 and sought residence in urban centers offering walkability and a live-work-play lifestyle. In 2017, these trends are expected to continue. Job growth acts as catalyst Last year, Chicago employers hired 65,000 workers, representing a 1.4 percent workforce expansion metrowide. This healthy job growth helped boost the median household income to around $67,168 per year at the end of 2016. In 2017, job growth is expected to continue at a similar rate, and it is anticipated that Chicagoland employers will hire 70,000 new workers for a 1.5 percent employment gain over the course of this year. Employment gains last year were led by the professional and business services sectors, which expanded headcount by 2.6 percent with the creation of nearly 21,200 positions over the yearlong period that ended in September 2016. During the same …

February 16, 2017

Industrial Market Reports Northeast Northeast Market Reports Pennsylvania

Robust Philadelphia Retail Market Generates High Competition for Space

by Taylor Williams February 15, 2017

When it comes to the Philadelphia real estate market, the retail industry is the hot topic for many commercial real estate agents. Per a Center City district report released in early December of 2016, the city has experienced a $1 billion surge in retail spending. Subsequently, prime retail rents in Philadelphia have risen by almost 90 percent in the past five years — second to only Miami when compared to cities across the nation. Sales of retail centers in center city peaked in late 2016 at over 18 percent higher than their former top-most numbers, seen in 2008. Popular Philadelphia areas such as Walnut and Chestnut streets have been subject to high-end retail rush. The retail spending increase is thought to be a direct result of the Philadelphia metropolitan area’s new job positions. Going into the fourth quarter, the city increased its jobs by 2.2 percent compared to the previous year’s numbers. Philadelphia’s local rate of employment stood at over half a percent higher than the national employment rate in late 2016. Many of the new positions — created in well- paying, upper-echelon employment sectors — have facilitated a rise in the median household income, and subsequently the disposable income, …

February 15, 2017

California Market Reports Office Western Western Market Reports

Los Angeles Office Market Points to Steady Demand, Further Growth in 2017

by Camren Skelton February 14, 2017

The Los Angeles office market continues to experience steady demand and accelerated rent growth as we enter 2017. The market is heading into its sixth consecutive year of expansion, after seeing a sharp contraction between 2008 and 2011. The Los Angeles office market has witnessed vacancy rates steadily decline from 16.3 percent to 13.7 percent since 2011, all the while absorbing more than 10.5 million square feet of occupied space. The market only added 4.5 million square feet of new construction during that same period, allowing vacancy to steadily decline back into the low teens, while average full-service gross asking rents have increased from $29.28 per square foot to $35.76 per square foot, up 22.1 percent. More importantly is the accelerated rent growth during this period. Rents increased 1.6 percent in 2012; 2.8 percent in 2013; 3.9 percent in 2014; 5.3 percent in 2015; and 6.8-percent to date in 2016. On the demand side, net absorption growth rates have been trending higher since 2012, averaging 0.8 percent during the past five years. They will finish above 1 percent for the second consecutive year. This remains below the growth rates experienced from 2003 to 2007, which averaged an annual growth of …

February 14, 2017

District of Columbia Market Reports Multifamily Southeast Southeast Market Reports

Rent Growth, Leasing Activity to Remain Robust in D.C.’s Apartment Market

by John Nelson February 13, 2017

There are many things to be optimistic about in metropolitan Washington, D.C.’s multifamily market. Here are some facts to consider: — The D.C. metro multifamily vacancy averages 3.4 percent compared to the national average of 4.5 percent. — The D.C. region has seen $3.174 billion in multifamily sales activity year-to-date with an average cap rate of 5.2 percent. — Private investors are leading multifamily sales activity in the D.C. metro region and responsible for 64 percent of the deal flow. — Multifamily investment sales are up by 4.5 percent compared to the first half of 2015. — An influx of new workers to fill the 92,500 new jobs added in the last year has heightened demand for multifamily units despite an abundance of new supply. With a low unemployment rate of just 4.1 percent and job growth far exceeding the national average, and at its highest point since December 2000, the Nation’s Capital is humming with activity. Last year, D.C.’s multifamily market saw staggering amounts of new construction deliver with net absorption levels that surpassed all expectations. Many of the young workers are interested in an urban live-work-play environment ripe with amenities and relish the opportunity to decrease commute times …

February 13, 2017

Illinois Market Reports Midwest Midwest Market Reports Retail

Economic Incentives Combat Problem of ‘Grocery Deserts’ in South Suburban Chicago

by Kristin Harlow February 9, 2017

At a time when the development of new retail power centers across metro Chicago has been at a record low since chain store proliferation first started back in the early 1980s, south suburban Cook County has suddenly seen a turnaround with the addition of two new freestanding Walmart stores and one new Meijer store. These three openings occurred within months of each other in 2016 and represent approximately 560,000 square feet of the 1.36 million square feet of new retail construction that opened across the greater Chicago market last year. The historical challenges for retailers attempting to operate stores in south suburban Cook County are no secret: out of control property taxes, often double or triple that of locations in DuPage or Will counties; a high sales tax; a shrinking population base; and a shift in retail spending to other markets. The cumulative effect was the January of 2015 closure of the Lincoln Mall in Matteson, located about 30 miles south of downtown Chicago, and increased retail vacancy rates in the area. Full-service grocery stores in the Matteson area also have been on the decline following the closure of Jewel, Dominick’s, Cub Foods and Walmart all within five years starting …

February 9, 2017

California Industrial Market Reports Western Western Market Reports

Downtown LA’s Industrial Supply Gives Way to Other Uses

by Camren Skelton February 7, 2017

When you visit Los Angeles, the sight of the cranes looming in the sky in all directions shows a city undergoing significant revitalization and redevelopment. Not so long ago, the Downtown area of Los Angeles went “dark.” This occurred after the hustle and bustle of the normal workday was done and the streets were mostly empty, businesses closed. Fortunately, Los Angeles has seen significant construction and redevelopment over the past few years. According to the Downtown Center Business Improvement District (DCBID), the population of Downtown Los Angeles was 18,000 people in 1999. Today, the population is estimated at 63,208, with a daytime population of 500,000. The residential inventory consists of 36,964 units with 11,868 under construction and 19,054 proposed for a total of 48,832 units as of the third quarter of 2016. There are 8,163 hotel rooms with 2,765 more under construction and 3,636 proposed for a total of 14,564. Retail has 2 million square feet under construction and an additional 1.5 million square feet proposed. Major industrial activity includes the announcement of Warner Music Group relocating from Burbank to the Arts District where it will occupy 257,000 square feet at the former Ford Factory, which was constructed in 1912. …

February 7, 2017

District of Columbia Industrial Market Reports Southeast Southeast Market Reports

In the Nation’s Capital, Retail Always Follows Where New Residential Rises

by John Nelson February 6, 2017

The building height restriction — enacted in Washington, D.C. to preserve picturesque views of the United States Capitol Building and the Washington Monument — helps provide clear and exceedingly stunning views of the multitude of construction cranes that currently dot the vertical landscape of the District of Columbia. The majority of these yellow-steeled economic generators are being used to develop new residential and mixed-use projects, ranging from the NoMa district to the southeast Waterfront area and weaving through the neighboring suburbs, including Loudoun, Va., and Bethesda, Md. And, where new residential goes, supporting retail always follows, including the trendiest grocery store chains and hottest fast-casual and dine-in restaurant concepts. In addition, the area’s ever-expanding transportation network that provides a daily lifeline to D.C. and suburban workers is also paving the way for new retail opportunities as our Nation’s Capital continues to retain its reputation as among the most prolific retail locations in the country. Downtown Core Residential-only or mixed-use projects currently underway in the District are too numerous to mention, but here is a glimpse into the frenetic activity as there appears to be a bottomless appetite for new housing, particularly among Millennials. MRP Realty is developing the 1,600-unit Rhode …

February 6, 2017

Market Reports Midwest Midwest Market Reports Ohio

Cincinnati, Dayton Closing the Gap: Why the Push to Merge the MSAs is a Winning Strategy

by Kristin Harlow February 2, 2017

The tale of two Ohio cities — Cincinnati and Dayton — is a story of growth. It takes less than an hour to travel between Cincinnati and Dayton. The two metros sit about 55 miles apart along Interstate 75, and that distance is slowly getting shorter. Since 2000, the cities have been growing together along the I-75 corridor, with significant growth over the past five years. The northern suburbs of Cincinnati have experienced exponential growth over the last 20 years stemming from the development of Union Centre Boulevard in 2000 in West Chester Township. Now, West Chester is the second largest community in the Cincinnati metropolitan statistical area (MSA). Only the City of Cincinnati is larger. Suburban growth is catalyst New developments continue to spur Cincinnati’s northern growth along I-75. In 2015, Liberty Center, a mixed-use retail, office and housing development, opened in Liberty Township north of the fast-expanding West Chester. The development is another example of a growing trend to bring urban-style amenities, such as live, work and play environments to the suburbs. Although much of the I-75 corridor is industrial, the growing suburbs led to the significant increase in the amount of office and retail space in the …

February 2, 2017

District of Columbia Industrial Market Reports Southeast Southeast Market Reports

Demand is Outpacing Supply in Metropolitan D.C.’s Industrial Market

by John Nelson January 30, 2017

The Washington, D.C., metropolitan industrial market, spreading from Frederick County, Maryland to the north, Prince William County, Virginia to the south and as far west as Loudoun County, Virginia is ideally situated between I-95 and I-81 — major transportation corridors that allow shipments to easily reach much of the country. The industrial market has improved more quickly than other sectors and fairly dramatically to the point where much of the region can be described as land-constrained and under-supplied. Certain industrial sub-segments, such as data centers, have impacted the availability of warehouse and distribution space in key locations for optimal supply chain design. As of the third quarter of 2016, the area’s industrial market totaled 190 million square feet (inclusive of flex space), divided almost equally between the markets of Suburban Maryland (90.6 million square feet) and Northern Virginia (90.2 million square feet). The District of Columbia comprised 9.2 million square feet, and 1.5 million square feet was under construction region-wide. Approximately 4.2 million square feet has been absorbed year-to-date, and vacancy was 7.9 percent — a 250-basis point decrease from 10.4 percent reported as recently as year-end 2013. In comparison, the office market has ranged from 14 to 14.9 percent …

January 30, 2017

Market Reports Midwest Midwest Market Reports Missouri Multifamily

Vibrant Economy Underpins Healthy Apartment Market in Kansas City

by Kristin Harlow January 26, 2017

Without a doubt, 2016 was a year to remember for the Kansas City apartment market. Employers, builders, operators and investors all had an eye on the flourishing metropolitan area and contributed to its ongoing strength, leading to a 20-year high for apartment occupancy. But in order to assess if 2017 will be as fruitful, a review of how each of these groups fared in 2016 and an analysis of the current economic climate should be taken into account. Employers A healthy economy underscored by an active employment market generates a cyclical effect whereby employers seek talent, talent seeks housing, and developers seek residents. According to Moody’s Analytics, total nonfarm payroll employment in the Kansas City metropolitan area in 2016 expanded by 1.5 percent following a 1.3 percent increase in 2015. Virgin Mobile USA, to name one active area employer, relocated its corporate headquarters from Warren, N.J., to downtown Kansas City as part of the company’s re-launch of its new brand under Sprint. The long-term location for the new headquarters is undetermined, but temporarily at least 50 new employees now work out of the One Kansas City Place building at 12th and Main streets. By year-end 2017, Berkadia Research projects total …

January 26, 2017

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