Market Reports

Why Cleveland’s Thriving Downtown Apartment Market is on Solid Footing

by Christina Cannon May 12, 2016

It’s no longer a secret. Residential housing is one of the biggest stories to hit Cleveland’s central business district in over a quarter century. The only thing more impressive than the long list of residential projects that have been completed over the last five years is an even longer list of residential projects that are either planned or under construction. Despite this prolonged surge in activity, several questions remain, with most centered around the viability and sustainability of this sector. But before we take a look forward, let’s first take a look back. Downtown Cleveland has added approximately 1,700 new rental units over the past five years, with the total residential rental inventory standing at nearly 5,900 units. Last year alone saw 573 new units come on line as the direct result of converting nearly 500,000 square feet of former commercial and office space to residential. But despite this additional inventory, the occupancy rate has increased nearly 2 percent over the last five years, ending 2015 at 97.5 percent. Population surge in CBD The downtown area contains approximately 14,000 residents, a 79 percent increase since 2000, according to a newly released report from the Downtown Cleveland Alliance. The average rent …

May 12, 2016

Industrial Market Reports Southeast Southeast Market Reports Tennessee

The ‘Maker Economy’ Joins Industrial Giants in Nashville Market

by John Nelson May 9, 2016

Beretta, Nissan, General Motors, Electrolux and Hankook Tire are a few manufacturing giants that call Middle Tennessee home. Expanding the manufacturing presence throughout 2015, 29 advanced manufacturing companies announced relocations or expansions in Middle Tennessee. Of that total, six companies revealed plans to create a combined 710 jobs and occupy more than 1 million square feet during the fourth quarter of 2015 alone. Nashville’s central location, skilled workforce and labor cost advantages continue to make the market a magnet for manufacturing companies. Unsurprisingly, in its Emerging Trends in Real Estate 2016 report, Urban Land Institute named Nashville the “No. 7 U.S. Market to Watch for 2016” and an “18-Hour City.” Additionally, Nashville’s low cost of doing business and consistent job and population growth favor the industrial market, and the pipeline for talent across all multiple industries remains full. Nashville’s industrial market is firing on all cylinders — with record low vacancy rates and historically high rents, which is driving robust speculative warehouse development. Interestingly, a new trend is occurring that is breaking the paradigms of traditional industrial space use — the appearance of the maker economy. These “makers” are modern, small-scale manufacturers that “are emerging as a revitalizing force in …

May 9, 2016

Market Reports Office Retail Texas Texas Market Reports

Strong Demand, New Developments in Store for Fort Worth Office & Retail

by Haisten Willis May 6, 2016

In 2016, uncertainty in the oil and gas industry has made a major impact on the Fort Worth commercial real estate market. While each submarket is affected differently, the need for relocations and renovations will lead to a rising demand for quality office and retail spaces across the area. Development of Fort Worth real estate is expected to remain strong in 2016, with growing opportunities that create a strong and healthy market. Office Opportunity Downtown Fort Worth has become a hub for major players in the oil and gas industry, such as Holland Services, Forestar Oil & Gas and FTS International. Within the last 180 days, these tenants have put over 125,000 square feet of office space up on the market for sublease. However, the rest of the office sector has been consistently absorbing large blocks of space, proving healthy despite oil and gas concerns. We have seen at least six transactions totaling over 385,000 square feet within the last six months. Transactions included Charles Schwab’s 130,000-square-foot lease at Circle T in Westlake, and Teague Nall & Perkins’ 42,000-square-foot lease of the former Everest College building at the Mercantile Center in Fort Worth. The consistently strong demand for quality office …

May 6, 2016

Industrial Market Reports New Jersey Northeast Northeast Market Reports

E-Commerce, Traditional Sectors Create Momentum for N.J. Industrial Market

by Jaime Lackey May 4, 2016

The continued emergence of the e-commerce sector, and continued healthy deal volume among New Jersey’s “traditional” industrial tenants are generating significant momentum for the state’s industrial market. This includes the food, retail and consumer products industries. Strengthening fundamentals have reinforced this theme consistently over the past 24 months, or longer. During 2015, robust demand for modern warehouse space fueled the markets along the New Jersey Turnpike, pushing the state’s warehouse and distribution vacancy to a 15-year low (6.4 percent). This marks a significant five-year drop from a peak of 11.2 percent at the close of 2010. Additionally, the state’s industrial net absorption reached an all-time annual high (12.5 million square feet). Of this, 84 percent occurred within warehouse/distribution product. Big-box demand continues unabated. Currently, we are tracking multiple 1 million-square-foot requirements — the most we’ve seen in many years. Additionally, and importantly, the heightened focus on last-mile delivery is drawing tenants to small and mid-size infill sites. These range from close-in locations providing immediate access to New York City and Philadelphia, to densely populated hubs all along the New Jersey Turnpike. As vacancy rates approach all-time lows and available inventory tightens, an increasing number of deals involve Class B assets. …

May 4, 2016

Market Reports Multifamily Southeast Southeast Market Reports Tennessee

Job Growth, Desire for Urban Living are Fueling Nashville’s Apartment Boom

by John Nelson May 2, 2016

Ten years ago, the urban Nashville multifamily inventory consisted of a small handful of institutional-sized assets, offering sparse amenities and unit finishes that left much to be desired. Fast forward to 2016 and the seemingly insatiable demand by residents to live in the eclectic, urban enclaves that Nashville offers has resulted in more than 5,000 units delivered over the last few years, with nearly 8,000 additional units set to deliver over the next two years. The standard of the assets being delivered continues to raise the bar, as developers look for a competitive edge and renters have demonstrated their willingness to pay a premium, with rents in top locations flirting with $3.00 per square foot. Demand The absorption pace has accelerated each year, seemingly limited only by the number of units being delivered to the market. When looking at the entire metro area, not just the urban submarkets, absorption topped 6,000 units in 2015, with new supply totaling approximately 5,960 units. A significant portion of this demand is from Millennials, who traditionally prefer to live in urban neighborhoods, and with Nashville ranked as a top 10 destination for Millennial in-migration, this trend is likely to continue. Fueling the urban residential …

May 2, 2016

Market Reports Midwest Midwest Market Reports Office Ohio

Dayton Office Market Continues Steady Recovery Amid Urban Renaissance

by Christina Cannon April 28, 2016

For the Dayton office market, it’s all about timing. In one of Miami Valley’s largest office leases in recent memory, CareSource early this year signed a five-year lease to occupy 50,000 square feet on two floors at the 486,000-square-foot Kettering Tower downtown. The nonprofit managed healthcare plan is the largest Medicaid plan in Ohio and the second largest in the United States. CareSource said it will assess current and future business needs and redistribute business units from corporate headquarters and offices at 40 W. Second St. to Kettering Tower. In addition, some staff hired during the first quarter of this year also will be placed at the new location. The CareSource location at Kettering Tower increases the company’s footprint to nearly 600,000 square feet in downtown Dayton. The four downtown Dayton locations — including CareSource’s corporate headquarters at 230 N. Main St., Ballpark Village at 220 E. Monument Ave., offices at 40 W. Second St. and Kettering Tower will support 2,200 staff. The $6 million build-out of the multi-tenant Kettering Tower is specifically designed to accommodate CareSource. Tower Partners LLC, an entity whose investors include New York businessman Albert Macanian, owns the building. But the deal bringing 300 new jobs …

April 28, 2016

Market Reports Midwest Midwest Market Reports Multifamily Nebraska

Why Omaha Apartment Owners Should Expect Another Banner Year

by Christina Cannon April 21, 2016

With a three-year average occupancy of 96 percent, Omaha’s apartment market has displayed strong fundamentals that we expect to continue this year and beyond. Given the strong tailwinds created by Omaha’s healthy economy — the local unemployment rate stood at 3.6 percent in January compared with 4.9 percent nationally — it is not surprising that occupancy is high, rents and revenues are rising and new developments continue. According to the recently released IREM fall 2015 Omaha Metropolitan Area Apartment Survey, the year-end market occupancy rate was a strong 96 percent, with the lowest submarket at 94 percent and the highest at an outstanding 98 percent. On a 10-year historical basis, the Omaha market’s occupancy rate has ranged from a low of 92 percent in 2008 to a high of 96 percent in both 2013 and 2015. Any owner will tell you a solid two percent gain in occupancy over a multi-year period has a significant impact on net operating income. Both rents and revenues continue to grow within the Omaha market. Most owners have been raising rents between 2 and 4 percent a year, and in some cases 5 percent. The general expectation is that rents and revenues will both …

April 21, 2016

Market Reports North Carolina Office Southeast Southeast Market Reports

Absorption, Job Growth in Raleigh Have Led to Office Space ‘Crunch’

by John Nelson April 18, 2016

Raleigh’s office market is the strongest it’s been in years, with employment and corporate investments continuing to climb throughout the Triangle region. A current lull in the delivery of new construction and the market’s increased popularity have created a space crunch for Class A office space, especially for tenants seeking large blocks. While a good amount of new construction started or continued in 2015, there’s still a gap in “move-in ready” space. Vacancy fell from 11.7 percent in the second quarter to 11.2 percent in the third quarter, causing rent growth for Class A space. Direct asking rent increased from $23.81 per square foot in the second quarter to $24.14 per square foot in the third quarter and is expected to continue to increase until delivery of new construction picks up, which will likely be mid-2016/early 2017. The market has definitely shifted in favor of the landlord, and concessions that were made during the recession have fallen off as owners no longer have to offer them to secure tenants. Desire for Class A space in the Triangle has pushed pre-leasing rental rates to a historic high north of $33 per square foot — and they are likely go higher before …

April 18, 2016

Industrial Market Reports Michigan Midwest Midwest Market Reports Multifamily Office Retail

Strong Demand, Limited Inventory Spur New Construction in West Michigan

by Christina Cannon April 15, 2016

The commercial real estate market in West Michigan was quite active in 2015 across all property sectors, including one massive data center deal that is expected to spur billions of dollars in investment. Both new development and transactions involving existing facilities drove deal volume in 2015. Consequently, vacancy rates dropped while leasing rates generally rose. We expect a high level of commercial real estate activity this year as well. A lack of inventory for existing product will continue to drive new development in 2016. Industrial Strength The industrial market, in particular, has experienced a shortage of quality product to satisfy the demands of distribution companies from across the area. The greater Grand Rapids industrial market consists of approximately 115 million square feet. At the end of 2015, the vacancy rate was 4.1 percent. This marks a significant improvement compared with the depths of the Great Recession when the vacancy rate approached 10 percent. For the first time in years, we are seeing speculative development across all sizes of industrial properties. Lease rates for these speculative buildings are significantly higher than what we have experienced in the recent past due to the relatively high cost of construction. The good news for …

April 15, 2016

Industrial Market Reports North Carolina Southeast Southeast Market Reports

Raleigh’s Industrial Market Experiences Fifth Consecutive Year of Growth

by John Nelson April 11, 2016

A rebounding economy and robust population growth are driving strong fundamentals across all segments of Raleigh-Durham’s commercial real estate industry. The region added 30,105 jobs during the 12 months ending September 2015, a growth rate of 3.1 percent. Users of all product types are facing rising occupancy costs and fierce competition for quality space. The Raleigh-Durham industrial market experienced positive net absorption of 721,185 square feet through the first three quarters of 2015, marking the sector’s fifth consecutive year of expansion. Increased tenant demand, combined with a lack of new construction, has driven vacancy back to pre-recession levels. Overall vacancy for warehouse and flex space ended the third quarter at 7.5 percent, down by 130 basis points year-over-year. Warehouse vacancy fell by 160 basis points to 6 percent during the same period and is down from a cyclical high of 10.2 percent. Flex vacancy ended the third quarter at 11 percent, down by 60 basis points year-over-year and from a cyclical high of 16.5 percent. Leasing activity has been broad based, driven primarily by organic growth in the region’s existing tenant base. Among the industries fueling the largest transactions are third-party logistics, e-commerce, manufacturing and housing and construction. Finally back …

April 11, 2016

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