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

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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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Seattle’s Retail Market Continues to Grow

by Camren Skelton November 1, 2016

The Puget Sound region may be home to the growing online retail giant of Amazon, but bricks and mortar retail development is in the best shape it’s been in since the beginning of the Great Recession. After five consecutive years of strong employment growth and resultant in-migration of highly paid tech workers, the Seattle market is continuing to enjoy gains in retail sales volumes, which are projected to grow 4.5 percent in 2016. Demand for retail space has pushed overall vacancy rates to 3.7 percent throughout the metro area. For the 12 months ending on June 30, 2016, there were only 500,000 square feet of new space built. This is in contrast to the recent annual absorption that has exceeded 1 million square feet. Overall vacancy rates reflect the demand for new space and asking rents have climbed correspondingly. The majority of new retail construction is occurring in mixed-use projects, such as ground-floor spaces at new residential developments. The largest chunk of retail space currently under construction, however, is within the $1.2 billion expansion of Kemper Freeman’s Bellevue Collection in Downtown Bellevue. In all, the project will add 375,000 square feet of new retail, which is 85 percent pre-leased. The …

November 1, 2016

Florida Market Reports Office Southeast Southeast Market Reports

Broward County’s Office Sector is Operating at Peak Performance

by John Nelson October 31, 2016

Broward County’s office market continues to heat up like the South Florida summer. Vacancy is decreasing while office rental rates in the market increase. Broward County added 32,100 jobs in the past year, the 4 percent nonagricultural employment growth leading to a second quarter unemployment rate of 4.2 percent, outpacing the state (4.5 percent) and national (5.0) averages. “Many factors drive Broward County’s strong economy, including a talented and diverse workforce, our proximity to Latin America and the Caribbean, and access to three international airports and three seaports,” says Bob Swindell, president and CEO of the Greater Fort Lauderdale Alliance, the county’s public/private partnership for economic development. Broward County’s office sector performance is a big story in an area of very positive commercial real estate headlines. It can be argued that South Florida trails only the two Bay Area bellwethers, San Francisco and the Silicon Valley, in property performance nationwide. Office rental rates in the county — CoStar reported that the market’s average rate increased 1.4 percent during first quarter to $25.14 per square foot — are most likely reaching the top of the arc in the present economic cycle. “Some of our strongest job growth has been in high-wage …

October 31, 2016

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Transit-Oriented Developments Are Transforming Chicago’s Urban Core

by Jeff Shaw October 27, 2016

Mixed-use projects are booming, and for good reason: the city as we know it is fundamentally changing. Millennials are flocking away from the suburbs and into the city center, driving development in walkable urban cores that incorporate everything consumers need to live, work and play. In Chicago, a dramatic increase in mixed-use development since the last recession has completely recast the way we think about how retail concepts fit into our unique urban landscape. Mixed-use buildings anchored by residential projects are well supported by the city’s political class because they increase density in a city that’s already bursting at the seams. Changes in the way the City of Chicago approaches zoning has led to an uptick in transit-oriented development, which allows for lower parking requirements in projects centered around mass transit hubs. The city’s transit-oriented development (TOD) ordinance, which was approved in 2013 and revised in 2015, has been the driver behind the massive influx of new mixed-use projects over the last four years. Mixed-use advantages From a purely economic standpoint, mixed-use projects boast a diverse tenant roster, which typically means less risk for investors. Land prices in Chicago have reached a point where in some cases standalone retail is …

October 27, 2016

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Tech Takes Hold in Phoenix

by Camren Skelton October 25, 2016

One of the newest trends in Phoenix office leasing is the spur in technology and creative space requirements, especially for tenants moving in from Northern and Southern California. These companies are searching for a more favorable market — one with lower labor costs and rental rates, more affordable housing, an educated workforce from which to draw, less traffic and an overall higher quality of life — and the Phoenix area fares well comparatively. I expect this trend to continue, especially in the downtown markets of Phoenix, Tempe and Scottsdale. Strong leasing activity throughout the Phoenix market this year resulted in robust absorption, with Class B product leading the way. There are numerous large tenants currently in the market seeking to lock up space, which will keep demand elevated throughout the remainder of the year. Healthcare and financial services industries are committing to the market, especially with larger-scale operations centers. Parking needs for these users are 6:1000 and greater. Tempe remains a hot spot for development, with two new high-profile speculative projects underway — the Grand at Papago Park Center (213,055 square feet) and 2100 Rio Salado (102,819 square feet). Two new buildings were completed this quarter at Tempe’s Marina Heights …

October 25, 2016

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Job Growth, Proximity to D.C. Help Boost Baltimore Multifamily Rents, Supply

by John Nelson October 24, 2016

Historically overlooked along the East Coast, Millennial migration has symbolized the dawn of a new day in Charm City. The recent influx of a budding dynamic workforce to Baltimore’s urban core neighborhoods has driven the fourth largest increase in college-educated young professionals amongst metro areas nationwide. These young professionals followed substantial job migration resulting in a paradigm shift from Washington, D.C., and other major Mid-Atlantic employment centers. Baltimore’s labor market has demonstrated year-over-year gains since 2010. As of March 2016, Baltimore metro-area non-farm employment totaled 1.4 million, up 2.6 percent over the past year, as compared to 2 percent growth nationally over the same period, according to data from the U.S. Bureau of Labor Statistics. The professional and business services sector contributed the largest gains since March 2015, adding 13,500 jobs to Baltimore’s work force, representing a growth rate of 6 percent over the prior year. The recent surge in employment has driven sustained demand for rental housing, pushing vacancy rates to historic lows and placing upward pressure on rents. Despite its rapid ascension, Baltimore continues to benefit from its proximity to other East Coast cities, which have experienced economic expansion as well, with Baltimore remaining the most affordable of …

October 24, 2016

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