Market Reports

Why E-Commerce Will Drive Growth of Indianapolis Industrial Market

by Christina Cannon March 10, 2016

The greater Indianapolis industrial market has experienced incredible growth over the past three years, and it continues to be one of the most sought-after industrial markets in the country. Supply and demand is the big story in early 2016. Because shovel-ready land is difficult to find, demand for land alternatives is pushing development further and further away from the beltway while simultaneously causing land prices to escalate. Local communities that figure out how to competitively bring shovel-ready land to the market will reap great rewards. There is strong demand for space across the industrial sector, with second-generation and medium-size distribution space outpacing the other industrial product types. Those seeking smaller, single-tenant buildings under 50,000 square feet are realizing how difficult they are to find. Additionally, the supply of available speculative space in the greater Indianapolis market has been on everyone’s radar for the past two years. Demand for spec space is catching up to the supply as evidenced by several new leases signed since the end of 2015. Currently, there is approximately 2.2 million square feet of industrial product under construction, including 1.4 million square feet of speculative development and 800,000 square feet of build-to-suit construction. Game changer The e-commerce …

March 10, 2016

Industrial Market Reports Northeast Northeast Market Reports Pennsylvania

Industrial Demand and Development in the Philadelphia region

by Jaime Lackey March 9, 2016

Metro Philadelphia’s industrial market saw strong demand, developer confidence and declining vacancy rates in 2015. Asking rents averaged $4.43 per square foot for the region, a 4 percent increase from 2014. The overall vacancy has decreased to 7.7 percent as demand kept pace with 5.7 million square feet of completed spec development. The only submarket that is posting greater than 10 percent vacancy is New Castle County, Delaware; however, New Castle’s vacancy rate was trending downward at the end of 2015. We continue to see healthy demand for industrial space in 2016. There could be some impact from global uncertainties, but these will be offset by continued on-shoring of manufacturing requirements and last-mile delivery expansion. Companies seeking between 25,000 to 80,000 square feet have seen limited availability in most submarkets, particularly for purchase. Due to strong demand and reduced availability for modern, net-leased, single-tenant buildings, some investors must consider lesser-quality assets and/or secondary locations. Sale prices and rents have increased. It is not unusual for modern bulk facilities with long-term leases in place to trade in the $90-per-square-foot range. In one recent deal, a private investor paid more than $78 per square foot for the leaseback transaction of an 85-year-old …

March 9, 2016

Market Reports North Carolina Retail Southeast Southeast Market Reports

Grocer Expansions, High-Profile Projects Keep Charlotte’s Retail Market Humming

by John Nelson March 7, 2016

The Charlotte MSA continues to experience a high level of retail activity as we go into the last quarter of 2015. With a regional inventory of 62 million square feet of retail space, the MSA has seen more than 8 million square feet of new development proposed. Vacancy rates are holding steady in the 8 to 9 percent range, and average rents have remained stable. Grocers Setting the Pace Retail development activity in the Charlotte area remains driven by grocery store expansion. Publix has opened units in Ballantyne, Matthews, Southeast Charlotte and, most recently, South End, with several new stores approved and in various stages of development. Some of the Publix activity has resulted from conversions of units it acquired from Bi-Lo, while the Ballantyne, Fort Mill and South End stores were new construction projects. Publix will open five more stores in the market in the coming year, bringing its MSA store count to 16. This will include Publix’s first stores in the Cabarrus County and Gaston County markets. Perennial market leader Harris Teeter remains the dominant traditional grocer in Charlotte with a 20 percent market share, which places it, Walmart and Food Lion in close proximity. Harris Teeter, which …

March 7, 2016

Industrial Market Reports Texas Texas Market Reports

Pay Your Fair Share (And No More) of Property Taxes in Texas

by Haisten Willis March 4, 2016

The collapse of oil and natural gas prices has reduced the value of commercial, industrial and residential properties across Texas, and threatens to reduce those values even further. This market collapse greatly impacts property tax appraisals and related tax revenue, especially as it relates to upstream, midstream and downstream properties, and to a lesser extent, commercial properties in general. Now more than ever, owners need to ensure they’re paying their share of property taxes — and nothing more. Judicial challenges are becoming increasingly popular due to their effectiveness in reducing appraisals to align with fair market values. The Houston Chronicle reported that there were 2,541 active lawsuits over commercial property valuations for the 2015 tax year in Harris County alone. The owners of 33 of the 34 high-rise commercial properties in downtown Houston have filed a judicial property tax challenge, as reported by the Houston Business Journal, and Exxon Mobil is suing the Harris County Appraisal District for its $1 billion appraisal of Exxon’s newly constructed campus. To file a judicial appeal, an owner must first file an administrative appeal with the Appraisal Review Board (ARB). These protests are common and typically yield a modest reduction in the appraised value. …

March 4, 2016

Delaware Market Reports Northeast Northeast Market Reports Retail

Retail Gains Steam throughout Delaware

by Jaime Lackey March 3, 2016

Recovery is continuing to occur in the Delaware retail market and forecasts show it will continue in the year to come. The retail sector has been strong in Class A locations, while secondary centers have experienced less demand. Land values on major corridors remain high and the limited supply is expected to further this trend. The area around Christiana Mall continues to be a strong draw for national retailers. Recent new retail activity includes the Christiana Fashion Center, which has been approved for buildings totaling in excess of 500,000 square feet. Current tenants include The Container Store, REI, Nordstrom Rack, DSW, Saks OFF Fifth, Ulta Cosmetics and Jared Jewelers. Allied Properties is developing the center. Also in the Christiana area, Kimco is planning to develop the Christiana Promenade which will encompass more than 400,000 square feet. Demolition of an existing structure is underway. The city of Wilmington will see a new $40 million redevelopment of a popular retail and office location on the 2000 block of Pennsylvania Avenue. Mayor Dennis Williams recently announced the project, which will redevelop the existing property into an attractive, high-quality mixed-use and pedestrian-oriented space that incorporates luxury residences above a first floor of quality retail …

March 3, 2016

District of Columbia Market Reports Multifamily Southeast Southeast Market Reports

D.C. Multifamily Market Absorbing Massive Amount of New Supply

by John Nelson February 29, 2016

Over the last year, metropolitan Washington, D.C.’s multifamily market has seen staggering amounts of new construction deliver, with net absorption levels that have surpassed all expectations. This is likely a result of similarly unexpected rates of job growth in the area and the remarkable resiliency of the metro D.C. economy as a whole. Among the major metropolitan markets around the country, metro D.C. — with the sense of permanence lent by the presence of the federal government — has historically been the most stable year to year, making it one of the safest bets for investors. Yet, given the massive amount of supply in the pipeline in recent years, the multifamily market has suffered a degree of hesitancy from investors fearing supply would outpace demand. However, this trend has reversed in the last 12 months, during which a record-setting 13,800 Class A multifamily units were absorbed. That figure jumps to 16,484 with Class B product in the mix. For all investment-grade apartments, stabilized vacancy has dropped 50 basis points to 3.7 percent. Class B units in particular have experienced excellent rent growth, rising 3 percent annually, while Class A maintains a growth rate of between 1 and 2 percent. Although …

February 29, 2016

Industrial Market Reports Midwest Midwest Market Reports Wisconsin

Milwaukee Industrial Market Is Primed for New Round of Development

by Christina Cannon February 25, 2016

Metropolitan Milwaukee has experienced a robust industrial real estate market for the past several years. This strength should continue in 2016 and for the foreseeable future. Like many other metro areas, Milwaukee’s industrial sector experienced slow but steady economic growth as it emerged from the Great Recession. However, unlike many other metro areas, Milwaukee has not yet exhibited a strong uptick in new industrial development. Minimal speculative construction has occurred during the past few years. Consequently, while demand for industrial space has continued to increase, supply has remained fairly flat. This phenomenon of increased absorption without a corresponding increase in new product coming to market has driven down the overall vacancy rate to slightly under 5 percent, near a record low, according to Xceligent. Moreover, the new industrial development that has occurred has been primarily driven by users expanding, relocating or consolidating existing facilities, or by new build-to-suit or speculative developments undertaken by Milwaukee-based firms such as Zilber Property Group, Luterbach Properties, Briohn Building and Wangard Partners. Larger regional and national industrial developers such as Centerpoint Properties and First Industrial Realty Trust, which once drove industrial development in Milwaukee, ceased construction in Milwaukee during the Great Recession and have not …

February 25, 2016

District of Columbia Industrial Market Reports Southeast Southeast Market Reports

Leasing Demand Supports D.C. Industrial Market’s Measured New Construction

by John Nelson February 22, 2016

New industrial demand in the Washington, D.C., metropolitan region has come not only from its strong service economy, but also a rapidly growing consumer goods supply chain, e-commerce distribution seeking speed of delivery, data centers and even government contractors. Both occupiers and investors seek modern, state-of-the-art building design and features. The Washington metro industrial market (185 million square feet inclusive of flex space) was well into the single digits with a sub-9 percent vacancy rate as of the third quarter of 2015. New construction has returned with 2.7 million square feet poised for delivery. The overall market is fairly balanced between suburban Maryland and Northern Virginia comprising 88.3 million square feet and 87.3 million square feet, respectively. The remaining 9.3 million square feet is located in the District of Columbia. Vacancy has been on a downward trajectory for the region as a whole. The current 8.8 percent rate represents a drop of 100 basis points compared with the third quarter of 2014. The largest industrial market is found in Prince George’s County, Md., and totals 52 million square feet of industrial and flex space. Prince George’s County also anchors the south end of the Baltimore-Washington I-95 Corridor. If the adjacent …

February 22, 2016

Market Reports New Jersey Northeast Northeast Market Reports Retail

New Jersey Retail Market Sees Continued Strength

by Jaime Lackey February 17, 2016

Despite a bump in big-box inventory in the wake of the A&P bankruptcy, the New Jersey retail real estate market continues to gain strength. Leasing activity remains robust, with strong suburban markets augmented by heightened urban activity. The inventory of properties for sale remains tight, while new development is highlighted by large-scale projects. This year’s major headline has been A&P’s bankruptcy. The sell-off of the grocer’s stores is ongoing, with Stop & Shop and Acme key bidders. Still, the stores remaining unsold are forcing landlords to think outside the box and/or redevelop their shopping centers, providing the opportunity to improve tenant mix and increase lease rates. Meanwhile, these immediate opportunities could slow down nearby projects in the works, including developments that could have come out of the ground in 2016 or 2017. Hot markets include Paramus, a perennial favorite. Also in the north, the redevelopment of Wayne Town Center has attracted Costco, Nordstrom Rack, Saks Off 5th, Dick’s Sporting Goods, and ULTA. In Bridgewater, Whole Foods signed a lease at Bridgewater Crossing, and negotiations are progressing with several major off-price and full-price specialty retailers. In Union County, Clark Commons opened with Whole Foods, LA Fitness, Home Goods, Michaels, Petco, ULTA, …

February 17, 2016

Louisiana Market Reports Multifamily Southeast Southeast Market Reports

New Orleans’ Metro Multifamily Market is Humming an Upbeat Tune

by John Nelson February 15, 2016

There is a popular song from the HBO show Treme written and performed by Steve Earle titled “This City Won’t Wash Away”. Ten years ago the wind and water of Hurricane Katrina threatened to destroy almost a third of the multifamily market in metro New Orleans. After a decade of rebuilding, the multifamily market has emerged as one of the most dynamic and resilient markets in the country. For 10 straight years this world-class city has seen strong demand, increasing rents and stable occupancy. New Orleans is not only unique in its food, music and culture, but also its geography. The Crescent City is situated on the bend of the Mississippi River with Lake Pontchartrain to its north and wetlands to the east and west. The ability to increase inventory in Metro New Orleans is seriously impaired by a lack of land, as well as historic and demographic factors. Over the past 14 years the multifamily inventory in metro New Orleans has only increased by 10,500 units, an average of only 750 units per year. Included in that number is the rebuilding of existing inventory damaged by Hurricane Katrina. Fifty percent of the increase of inventory has been in downtown …

February 15, 2016

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