Friday, January 10, 2025
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GeorgiaMarket ReportsMultifamilySoutheastSoutheast Market Reports

Following Years of Historic Growth, Atlanta’s Multifamily Market Begins to Cool

by John Nelson

In recent years, Atlanta has become a top choice for corporate relocations, causing double-digit multifamily rental rate growth, an increase in pricing and a general benefit to the industry as a whole. In 2021, rental rates rose at an average of 11.7 percent and last year that number reached 16.8 percent. As a result, from 2021 through much of 2022 the metropolitan area experienced a record amount of investment activity, with $20.8 billion and $14.8 billion trading hands, respectively. During the first six months of 2023, however, transaction activity slowed and began returning to more typical levels, dropping approximately 82 percent year-over-year from those highs. Much of the decline in transaction activity experienced today can be accredited to the Federal Reserve’s sizable interest rate hikes over the past 18 months, resulting in a significant expansion in cap rates and a divide between buyer and seller pricing expectations.  During the first half of 2023, approximately 54 transactions occurred, compared to 172 recorded for the same period last year for assets valued at $5 million or more. Much of this activity was driven by smaller deal sizes and private capital as institutional investors embrace a “wait and see” agenda in hopes of …

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Market ReportsNevadaWesternWestern Market Reports

Steady Activity Continues in the Las Vegas Market, Despite 2024 Headwinds

by Jeff Shaw

— By Paul Sweetland, SIOR, Vice Chairman, Colliers Doherty Industrial Group — Throughout 2023 we were often asked if the Las Vegas industrial market had “missed the memo” on the slowdown since other western markets were experiencing a slowdown that we had yet to see. With record under-construction numbers and net absorption numbers being on pace to finish the year with the second highest total of the last five years, Las Vegas didn’t appear to be slowing down. However, there are certain sectors that show initial signs of a pending change.  Land Sales:  Land sale transactions have seen a 75 percent drop from the prior year. Peak land pricing was $36.00 per land square foot in the summer of 2022, and by the fourth quarter of 2023 it had dropped 25 to 35 percent as demonstrated in the limited closings that occurred. Although lease rates continued to increase, developer underwriting had seen significant changes in exit CAP rates along with debt, equity and construction financing due to an unstable interest rate environment with the Feds continued rate increases at the fastest pace in 40 years. Lower land pricing or significant lease rate increases are going to be necessary for the …

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IndustrialKansasMarket ReportsMidwestMidwest Market ReportsMissouri

Kansas City’s Industrial Market Is Positioned for Continued Growth

by Kristin Harlow

By John Faur, Newmark Zimmer The Kansas City industrial real estate market has been on a historical run since 2020 with over 40 million square feet of inventory added in that time frame. This run of new construction has catapulted Kansas City to the 15th largest industrial market in the country by square footage, despite only being the 31st largest MSA by population. During most of this period, the strong market dynamics which exist in Kansas City, such as strategic highway infrastructure, a centralized location, four Class-1 railroads, availability of bulk land sites and an active development community, were further amplified by the low-interest rate climate and record levels of tenant activity. The continued high pace of speculative industrial construction starts in 2022 positioned 2023 to experience a healthy amount of new deliveries, with almost 8 million square feet of speculative industrial space delivering to the market. While the financial markets presented opportunity during this run of growth, continuous rate hikes in 2023 created challenges that resulted in a significant decrease in year-over-year speculative construction starts (3.5 million square feet of speculative construction has occurred year to date in 2023 as compared with more than 13 million square feet in …

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Five-Below
Market ReportsRetailTexasTexas Market Reports

Strong Fundamentals Buoy DFW Retail Market in the Face of Macroeconomic Headwinds

by Taylor Williams

By Ryan Johnson and Tyler Grisham, managing partners and market leaders, SRS Real Estate Partners Those who live and work in Dallas-Fort Worth (DFW) should be grateful for the metroplex’s strong fundamentals. There are a lot of macro-level factors that are out of whack and hurting the commercial real estate business, but there are also a lot of macro factors working in favor of DFW that not many major markets in the United States can claim. Thinking glass half-full, DFW has enjoyed exceptional growth in employment, housing and population over the last decade. According to the U.S. Census Bureau, DFW now boasts nearly 8 million residents, which makes it the nation’s fourth-largest metropolitan area. According to the Dallas Regional Chamber, 14 major companies relocated to North Texas in 2023 — Kelly Moore Paint Co., Inbenta, McAfee Corp., Frontier Communications and West Shore Homes,  among others. Thinking glass half-empty, DFW has sky-high construction costs, the highest interest rates in recent memory, highest exit cap rates/lowest valuations in recent memory and just a general market mentality that causes developers, banks and investors to exercise great caution. Active Segments, Trends Given these challenges, it may be surprising that there are retailers that are …

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IndustrialLouisianaMarket ReportsSoutheastSoutheast Market Reports

New Orleans Industrial Market Remains Subdued, But Two Projects Are Breaking the Ice

by John Nelson

For the past decade, the inventory of industrial space in the Greater New Orleans market has not been large enough to meet demand. Comprising mostly older product that would be considered Class B or C in more populous markets, New Orleans-area warehouses have an overall vacancy rate of less than 2 percent. The demand has resulted in rising rental rates.  Development of new product is warranted, but a combination of factors has prevented new projects from being built. Finally, in 2023, despite increased construction costs, high insurance costs and rising interest rates, projects are underway that will accommodate the demand in a market that is long overdue for new, modern warehouse product. Despite having all the ingredients to be a major industrial market, including one of the country’s largest port systems, warehouse infrastructure in New Orleans is dated, mostly due to a lack of suitable land for development. Institutional ownership and investment here is limited to select groups that, while chasing higher yields, took the time to learn the market’s dynamics and build local relationships.  Historically, as brokers and tenants bemoaned a lack of product, national developers were reluctant to deploy capital to speculate in an unfamiliar and unproven locale. …

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CaliforniaMarket ReportsOfficeWesternWestern Market Reports

Long Beach Office Market Continues Evolving with New Industries, Growth In Suburbs

by Jeff Shaw

— By Jason Fine, Managing Director, JLL — Situated along the Southern California coast between Los Angeles and Orange County, the City of Long Beach continues to be a strong option for businesses and residents. The city has recently delivered low- and median-income housing, in addition to luxury product, with more of each in the planning stages. This has allowed Long Beach to continue experiencing growth from aerospace, port-related businesses, oil and professional services. A few companies that have recently relocated to Long Beach include Blue Shield, Fluor, Relativity Space, SpinLaunch and Vast. Additionally, the city’s economic development department and newly elected mayor have taken a proactive stance, implementing strategies and marketing the city as a business-friendly destination.  While the regional and national office leasing trend is seeing many tenants going to a hybrid model, the Long Beach office market has seen a steady increase in vacancy and rental rates despite no new office building supply being added to the market since the pandemic. For the third quarter, the total Class A and B office vacancy (including sublease space) for downtown Long Beach is at 33 percent, with rents sitting at $2.71 per square foot, per month (full-service gross). Suburban …

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CaliforniaMarket ReportsMultifamilyWesternWestern Market Reports

Multifamily Investors in Long Beach Navigate Opportunities Amidst Market Adjustments, New Developments

by Jeff Shaw

— By Juan Huizar, President, Sage Real Estate — Nationwide, multifamily sales are declining, while interest rates are rising. Buyers are adopting a patient approach, leading to properties lingering on the market for extended periods. This, of course, is accompanied by noticeable price reductions. Buyers are anticipating further price drops, while some sellers are slowly becoming more realistic in their pricing.  Long Beach has perennially attracted multifamily investors with more than 7,500 individual apartment buildings. This is mainly composed of older housing stock, which creates a fertile ground for investors and syndicators. Often regarded as the last affordable beach city, Long Beach — despite being overshadowed by other Southern California communities or grouped with Los Angeles — stands as a significant population and employment hub, ranking as the sixth-largest city in California. Existing apartment sales for properties with five or more units have plummeted by more than 65 percent. Notably, 2021 was an exceptional year due to a confluence of factors, including rising real estate values and a low cost of capital. The current decline is more a reflection of increased capital costs than a trend over the past decade, with some properties selling for less than their 2019 prices. …

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Market ReportsMidwest Market ReportsMultifamily

If You Build It: How to Maximize Multifamily Returns in 2024

by Kristin Harlow

By John Bogdasarian, Promanas At a time when the multifamily marketplace is experiencing some turbulence after an extended period of strong growth, some developers, owners and investors are rethinking, repositioning and reworking their approach to a commercial real estate sector that has historically been one of the most reliable investments and dependable asset classes. Current market conditions, however, are not as favorable. A report by The Motley Fool this summer highlighted a 21 percent decline in apartment value. Overbuilding has saturated some markets, contributing to an increase in vacancy rates to around 7 percent and helping push rent growth down to 0.8 percent. In conjunction with persistently high interest rates and increasing delinquency issues with renters, the result is that building a traditional apartment product is a very tricky proposition. Even though the apartment market is somewhat dysfunctional at the moment, there are still plenty of opportunities in multifamily. For thought leaders and forward-thinking commercial real estate investors and professionals, the key is to understand the market, be flexible in your development and investment strategies, and be able to execute an approach that does work in the current marketplace.  For those looking to maximize multifamily returns in 2024, there are …

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LouisianaMarket ReportsRestaurantRetailSoutheastSoutheast Market Reports

Retailers in New Orleans Leverage Unique Experiences, Both In-Town and Suburbs

by John Nelson

The New Orleans retail market is in a state of flux like other markets across the country. The retail experience is changing for the end user, with an increase in online shopping, “try before you buy” customers and quicker walkthroughs. Retailers are left in an odd position, caught between experiential interactions with customers and trying to have them remember to purchase later at home.  While the retail market is changing, the Greater New Orleans area is different due to the scarcity of space available for new construction and a stable flow of stores closing or relocating. Our market creates a streamlined experience where consumers have “retail corners” they can visit to shop — such as downtown New Orleans, especially the iconic streets of Canal and Magazine — but also the suburbs that include Metairie, Elmwood and the Westbank.  With the concentrated shopping setup of the market, customers can shop more efficiently, and retail investors see the New Orleans market as a more demanding and creative place to build and open stores. Submarket by submarket The retail customer in New Orleans detests spending unneeded time in the car, so when customers can shop locally, get what they need and get it …

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CaliforniaMarket ReportsRetailWesternWestern Market Reports

Long Beach Sees Retail Challenges in Downtown, Success on Second Street

by Jeff Shaw

— By Jason DuFault, Regional Managing Director – Southern California, KW Commercial — With a population of about 440,000, the City of Long Beach has grown substantially over the past two decades. This is due, in part, to the draw of its coastal location, public spaces, dining and nightlife, employment, the ports of Los Angeles and Long Beach, and its many tourist attractions, including the Queen Mary and the Aquarium of the Pacific. This all bodes well for the retail sector. However, over the past 18 months, the retail market has been inconsistent for success based on location.  The city’s overall vacancy rate is currently around 4.3 percent, with the most challenged market being downtown Long Beach, which is currently at 4.6 percent. While the vacancy is still low by most standards, I believe it will likely increase before it gets better. Like many CBDs across the nation, Long Beach’s office vacancy has been high. The decline in the daytime population has retailers struggling. The most challenging projects to rent out retail-wise seem to be the newer vintage mixed-use properties. On the other hand, smaller submarkets in east Long Beach, such as Second Street and Naples, have been strong, giving …

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