Market Reports

Birmingham’s Apartment Market Feeds Off Downtown’s Renaissance

by John Nelson June 20, 2016

Birmingham’s renaissance has been underway for several years now, but it has taken some time for the rest of the world to find out. This year they started paying attention. The opening of Railroad Park, Regions Field, the Iron City event venue and now the recently restored Lyric Theatre have made it clear that there are intriguing things going on in downtown Birmingham. Lonely Planet, the respected travel information source, included Birmingham in its “2016 Best in the U.S.” list, asking, “Could Birmingham be the coolest city in the South?” Food media giant Zagat named Birmingham “America’s No. 1 Next Hot Food City” and the Travel Channel chose Birmingham to its list of “11 Next Great Destinations.” Foodies and fashionistas are not the only groups showing interest in Birmingham. Multifamily investors have been building new developments and acquiring and repositioning existing properties over the past few years. This activity reflects national trends — investors looking for alternatives to top-tier markets and Millennials gravitating to an affordable urban core. Nonetheless, with its burgeoning downtown food and arts scene, Birmingham has earned a second look. Strong Year for Downtown Developers liked what they saw and acted accordingly. In 2014 and 2015, plans …

June 20, 2016

Illinois Market Reports Midwest Midwest Market Reports Office Uncategorized

Market Conditions Ripe for Office Acquisitions by Single-Tenant Users

by Christina Cannon June 16, 2016

Across the country, and specifically in the Chicago corridor that leads to the northwestern suburbs, a wide range of businesses are debunking the commonly held notion that urban migration is diminishing the suburban marketplace. The evidence is indisputable. While Fortune 500 firms are leasing hundreds of thousands of square feet in Chicago’s suburbs, small to midsize firms are facilitating the expansion of their businesses by acquiring single-tenant facilities in the burbs as well. Since 2014, 20 businesses in Chicago’s northwest suburbs have acquired buildings totaling more than 1.3 million square feet of space, according to Colliers International. The cumulative purchase price of these assets exceeds $97.1 million. This level of activity compares favorably to statistics for the entire suburban marketplace that show 63 buildings totaling approximately 4.7 million square feet and valued in excess of $307.7 million were sold during that time (see table). Four driving factors This healthy level of activity can be attributed to a variety of factors, four of which we highlight in this piece. • Access to capital — Banks are lending again and exhibiting greater levels of caution after years of retreating to the sidelines. Additionally, the cost of capital is very reasonable, in spite …

June 16, 2016

Market Reports Northeast Northeast Market Reports Office

NYC Sees Rising Office Rents, Development Activity Picks Up Across Boroughs

by Jaime Lackey June 15, 2016

In New York City, sizable tenants are renewing their office leases and expanding work space. Citywide, office space searches are being driven by new businesses that need to establish presence. These dynamics have the office market operating as powerfully and effectively as possible. New York City organizations are slated to create 80,000 new jobs this year, expanding total employment by 1.9 percent. Major companies like Google, Facebook and Amazon have recently committed to large blocks of space, which are becoming notably rare as office vacancy levels in the Big Apple continue to tighten. Vacancy will slip 10 basis points to 9.6 percent this year as firms absorb more than 3.8 million square feet. As a result of office vacancies continuing to tighten, builders have started to add to the pipeline, which New York City will see come to fruition this year with the opening of 10 Hudson Yards, Related Cos.’ long-awaited office building project in Manhattan’s West Side. Overall, developers will complete 3.6 million square feet of office space this year, with nearly half at 10 Hudson Yards. Located near Hell’s Kitchen, Chelsea and the Penn Station area, the building is part of the Hudson Yards urban renewal project. Manhattan …

June 15, 2016

Market Reports Retail Southeast Southeast Market Reports Tennessee

Memphis Retail Market is a Hotbed for Leasing, Sales Activity and Redevelopments

by John Nelson June 13, 2016

The retail market in Memphis has continued to improve over the past year with new developments now open for business and redevelopment projects popping up across the metro area. Memphis, most commonly known for its blues and barbecue, has recently become the dreamland for those looking to lease, buy or redevelop assets. Vacancy rates are falling, new tenants and stakeholders are entering the market and retail investment sales continue to be in high demand. With several new development projects in the pipeline, the metro area is looking to capitalize on the new infrastructure. Memphis, located in the southwest corner of Tennessee within Shelby County, boasts a large metropolitan statistical area comprising Crittenden County in Arkansas; Benton, DeSoto, Marshall, Tate and Tunica counties in Mississippi; and Fayette and Tipton counties in Tennessee. One of the most attractive features of life in Memphis is the area’s remarkably low cost of living, which has allowed Memphis to become the city where one eats and stays instead of eats and plays, adding increasing demand on the commercial real estate market. According to a variety of real estate professionals doing business in the area, national and international investors and developers are looking to Memphis because …

June 13, 2016

Illinois Industrial Market Reports Midwest Midwest Market Reports Uncategorized

Don’t Expect Metro Chicago’s Industrial Boom to Tail Off Anytime Soon

by Christina Cannon June 9, 2016

The Chicago industrial market continues its charge full steam ahead in 2016, driven by strong fundamentals, our diverse economy, intense investor demand and constrained development. After a strong first quarter, the second quarter seems to be keeping pace. Demand remains high and continues to outpace new construction. We will also see more new projects announced as developers see continued success with existing projects. At the end of the first quarter, the overall vacancy rate in metro Chicago was slightly over 7 percent, down 10 basis points from the end of 2015, according to CoStar Group. All of the major submarkets posted vacancy rates of 10.1 percent or lower. Robust leasing activity Positive absorption in the first quarter was approximately 3.4 million square feet. Chicago has seen positive absorption every year since 2011, and this year looks to be headed in the same direction. The most active submarkets of O’Hare, I-55 and I-80 recorded vacancy rates of approximately 4.8 percent, 7.4 percent and 8.9 percent, respectively. Vacancy rates in those submarkets will continue to improve as speculative development is gobbled up as quickly as it is built, and existing product continues to get leased up. The I-80 and I-55 submarkets alone …

June 9, 2016

Market Reports Office South Carolina Southeast Southeast Market Reports

Greenville’s Booming Office Market Drives Interest from New Investors

by John Nelson June 8, 2016

Greenville is undergoing significant growth and capturing the attention of national investors and tenants. Historically high rental rates, increased occupancy and strong construction activity for the first time in recent years collectively indicate a healthy market. Additionally, tight market conditions provide an ideal investment sales environment encouraging landlords to market their office assets for sale, something they couldn’t justify doing a few years ago. The market’s occupancy rate was up to 85.2 percent at year-end 2015 from 83.7 percent the previous year. As demand grows and space is absorbed, the market is shifting in favor of landlords, who are pushing up rental rates to levels never before seen in the market. Asking rental rates for Class A office space in the market averaged $22.41 per square foot at year-end 2015, increasing 9 percent in a one-year span. Class A space in the central business district (CBD) is even more costly with asking rental rates averaging $25 per square foot. With office users showing a strong desire to locate in the market and willingness to pay higher rental rates for quality space, developers are turning to new construction and adaptive reuse projects to meet the heightened demand for space. Several projects …

June 8, 2016

Market Reports Northeast Northeast Market Reports Pennsylvania

Lehigh Valley Retail Development is Up, and Class A Values Top Pre-Recession Highs

by Jaime Lackey June 8, 2016

The Lehigh Valley has experienced significant residential growth over the last 20 years, and retail development is now catching up. High-growth suburban townships have seen significant retail development. Mixed-use projects that include retail are planned or underway in downtown Allentown, Bethlehem and Easton. New pad site and outparcel development has continued to be strong throughout the entire valley. The Hamilton Boulevard/Route 222 corridor in Lower Macungie has been the most active area for new construction. The 560,000-square-foot Hamilton Crossings in Lower Macungie is scheduled to open shortly and will feature Target along with the valley’s first Costco, Nordstrom Rack and Whole Foods. Trexler Business Center, a new project anchored by Movie Tavern, is also in the works. These developments will keep local residents shopping in this area versus traveling to the Macarthur Road corridor, Cedar Crest Boulevard or the Promenade Shops. The 140,000-square-foot retail component at Madison Farms in Bethlehem Township is nearing full completion and the 270,000-square-foot Westgate Mall is in the middle of a major renovation. New projects are in the planning stages along Route 309 in North Whitehall Township, Macarthur Road in Whitehall Township, Airport Road in East Allentown, Eighth Avenue in Bethlehem, Route 33 in Bethlehem …

June 8, 2016

Industrial Market Reports Southeast Southeast Market Reports Tennessee

Memphis Reaffirms Its Industrial Prowess with Strong 2015 Performance

by John Nelson June 6, 2016

To say 2015 was a good year for the Memphis industrial market would be an understatement. The Memphis market, which comprises approximately 220 million square feet spread across seven submarkets and three states (Mississippi, Tennessee and Arkansas), set a new record in 2015 with absorption exceeding 8.4 million square feet. This total is nearly double what the market recorded in 2014 and an impressive 2 million square feet more than the record set in 2006. Vacancy also dipped into single-digit territory for the first time ever, falling below the 10 percent mark to a new record low of 9.8 percent. Vacancy fell 370 basis points in 2015 alone, the most significant year-over-year vacancy decrease in market history. The market’s central U.S. location, quadra-modal transportation infrastructure (river, road, runway and rail) and abundant labor force are just a few of the benefits that make it an ideal location for distribution tenants. A total of 18 Class A deals were completed in 2015 by notable companies like Nike, Post, Cummins, Dayco Products, AmerisourceBergen, T.J. Maxx and Coca-Cola, to name a few. Class A buildings made up 6.3 million square feet, or 75 percent, of total absorption. There were five deals north of …

June 6, 2016

Market Reports Multifamily Texas Texas Market Reports

Are We Overbuilding Multifamily in Dallas? Let’s Review the Data

by Haisten Willis June 3, 2016

Most of us have read articles or seen reports that suggest we are building too many apartment units in the Dallas/Fort Worth Metroplex. Thus, we potentially could have a surplus of multifamily units resulting in lower occupancies and stabilizing rents (sorry to all the apartment renters — don’t anticipate rents going down). Let’s review historical data and trends, then see if we are truly overbuilding. Over the past 22 years, an average of 29,542 single-family building permits were issued annually across the Dallas/Fort Worth area. However, the figure fell to 22,678 on average from 2011 to 2015. Thus, over the past five years there were 34,320 less single-family units delivered than what the market has historically absorbed. In comparison, multifamily permits (those of two or more units) have averaged 14,094 annually over the past 22 years, and 18,417 annually from 2011 to 2015. Over the past three years, 2013 through 2015, the average increased for both single-family (25,937) and multifamily (21,231). The combined average of 47,168 permits over the last three years is above the 22-year average of 43,636 permits. Multifamily permits have most likely increased as a result of a significant decrease in single-family permits. We have only recently …

June 3, 2016

Market Reports Retail Texas Texas Market Reports

Have All the Stars Aligned for Dallas Retail Success?

by Haisten Willis May 27, 2016

As market momentum from 2015 spilled over into the first quarter of 2016 for the Dallas-Fort Worth metropolitan area, commercial retail metrics are still firing on all cylinders. The three key market indicators of occupancy, absorption and development are robust and expect to remain that way for the foreseeable future. With fundamentals in check and a thriving economy led by strong employment and population growth, metro Dallas will continue to be a thriving marketplace and a safe haven for investor capital. Record High Occupancy The Dallas-Fort Worth retail market ended 2015 with an impressive 93 percent occupancy — a little over a 1 percent increase from year-end 2014 — achieving its highest occupancy rate in the last three decades. The continued occupancy increase is directly related to net absorption and largely attributable to positive population and employment growth in the Metroplex. Continued Absorption Since 2012, absorption has continuously outpaced the delivery of new construction, and nothing in the foreseeable future looks to disturb this new norm. First quarter 2016 absorption totaled over 1.6 million square feet, with half of that figure attributed to new deliveries. This is the seventh consecutive quarter where absorption eclipsed 1 million square feet. This is …

May 27, 2016

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