Market Reports

Mixed-Use Projects with Grocery Anchors Top the Bill for Atlanta Retail Market

by John Nelson January 25, 2016

Economic indicators that support the retail market in Atlanta, like unemployment and the addition of non-farm payroll jobs, show positive signs that the sector has recovered from the economic downturn. Unemployment dropped to 6.1 percent in July 2015, compared with 7.6 percent a year earlier, and companies are showing no signs of slowing down on the hiring process. Non-farm payroll jobs in July reached 2.58 million, an increase of 85,000 jobs, or 3.4 percent, from a year ago. Atlanta’s vacancy rate continues to fall, dropping from 8.1 percent earlier this year to 7.9 percent in the second quarter, according to CoStar. While space is hard to come by, the good news is that some developments are popping up. In fact, during the second quarter, 12 buildings were completed totaling 208,524 square feet. Mixed-use projects featuring multifamily units are still active, particularly when a grocery store anchor is involved. Fuqua Development is building a six-acre project on Piedmont Road near Cheshire Bridge Road that will feature 300 apartment units, as well as 34,000 square feet of retail space. Sprouts Farmers Market will anchor the retail space with a 26,000-square-foot store. Fuqua Development also broke ground on Kennesaw Marketplace in June. Academy …

January 25, 2016

Market Reports Midwest Midwest Market Reports Missouri Multifamily

St. Louis Apartment Builders Play Catch-Up

by Christina Cannon January 21, 2016

Strong renter demand in the metro St. Louis apartment market helped boost annual effective rent growth by 3.6 percent in 2015, 200 basis points above the market’s long-term average, according to Axiometrics. An estimated 1,012 apartment units were delivered to the St. Louis market for all of 2015 compared with 2,378 units of absorption during the same period, reports Axiometrics. But with numerous projects in the pipeline, that ratio is likely to change over the next few years, say real estate experts. “We expect supply levels to increase in 2017 and for absorption to begin to struggle to keep up due to slowing job growth,” says Sophie Zatterstrom Gore, analyst with Axiometrics. But 2016 is a different story, she points out. Robust job growth will help absorption outpace new supply by about 600 units in 2016: 1,587 units of absorption versus 990 units of new supply. Such strong demand is giving a strong lift to real estate fundamentals in the local apartment sector. The average effective rent in the third quarter of 2015 was $914, which Axiometrics projects will rise to $948 by the end of 2016. The average vacancy rate is projected to fall from 6.3 percent at the …

January 21, 2016

Georgia Market Reports Office Southeast Southeast Market Reports

Tech Firms are Bringing Atlanta’s Office Market Into the Modern Age

by John Nelson January 18, 2016

Atlanta’s office market offers key factors that are harder to come by in other top markets: stability and top universities. Because the city is so diverse, it is not reliant on any one type of business for survival. It’s less volatile, which is one factor that has allowed us to come back from the Great Recession, although slowly, in a more firm and healthy fashion. In line with the majority of the country, Atlanta is currently a landlord’s market. With continued occupancy gains and a shortage of new product, rents are increasing and will continue to do so until additional Class A product delivers and the price gap between existing buildings and new construction gets smaller. Overall office vacancy in Atlanta is as its lowest point in 14 years, with strong growth in rental rates. However, Atlanta still offers the best deal overall, as tenants, developers, owners and investors are able to take advantage of its low cost of living and operating costs, excellent quality of life and a rich local talent pool. Driving the Atlanta office market, we see the technology, advertising, media and information (TAMI) sector. CBRE recently released two tech-related reports that rank the top tech talent …

January 18, 2016

Georgia Industrial Market Reports Southeast Southeast Market Reports

Atlanta’s Industrial Market Continues Historic Pace of Sales, Leasing Activity

by John Nelson January 11, 2016

Atlanta’s industrial market is hotter than the proverbial pistol. Second-quarter activity set a single-quarter record with more than 18.2 million square feet leased or sold. When added to the activity from the previous three quarters, Atlanta strung together more than 59.6 million square feet of completed transactions. This represents the second highest activity level ever recorded for a four-quarter period. There was more than 6.3 million square feet of positive net absorption. Combined with the previous three quarters, Atlanta shows a total of more than 19.7 million square feet of positive net absorption for the last four quarters. For the second quarter, the availability rate dropped one-tenth of a percent to 14 percent — the lowest it has been since the fourth quarter of 2000. And just four to five years ago, the overall availability rate was above 20 percent. Development and construction are absolutely booming. With more than 7 million square feet of new construction recorded during the second quarter, the market also set a record for new construction in a single quarter. When looking at the four-quarter total, we see more than 18.8 million square feet of new construction — a level not seen since 1998. Of that …

January 11, 2016

Industrial Market Reports Multifamily Office Retail Texas Texas Market Reports

Strong Economic Growth Continues in Waco

by Haisten Willis January 8, 2016

Greater Waco’s economy is on a roll. Positioned halfway between Dallas and Austin, Waco is a prime destination for companies and individuals wanting access to large metro areas without the hassles of traffic, expensive real estate and labor shortages. With newly completed facilities such as Baylor University’s McLane Stadium and major downtown redevelopment projects, Waco is hitting the radar for new development opportunities. October 2015 marked 43 months of positive economic growth for the area, with 4.8 percent growth in the third quarter of 2015 alone. Major organizations, including Baylor, continue to aid in elevating the status of Waco as a dominant player in the Central Texas region. Just as Texas has seen significant growth since 2008, so too has Waco. One major contributor to Waco’s economic success has been employment growth. Employers are creating new jobs in the area, with 1,600 more positions now in place, 113,700 compared to 112,100 in October 2014. Construction, manufacturing, healthcare, hospitality and logistics remain strong drivers for the economy. The result is a community with a 4.8 percent unemployment rate and residents with more disposable income. In fact, real median household income for the Waco MSA grew 5.8 percent, to $43,184, between the …

January 8, 2016

Market Reports Midwest Midwest Market Reports Missouri Retail

IKEA Leads Retail Development in St. Louis

by Christina Cannon January 7, 2016

Without question 2015 was a “great year” for the St. Louis retail market, says Adam Glosier, senior vice president with Colliers International. “New users entered the market and few vacated. The St. Louis retail landscape benefitted from the continued expansion of organic grocers, sporting goods operators, quick service restaurants and soft goods retailers.” At the end of the third quarter, the vacancy rate stood at 7.1 percent, unchanged from the prior quarter but down from 8.2 percent a year earlier, according to CoStar Group. Net absorption totaled 579,206 square feet during the third quarter, bringing the year-to-date total to just under 900,000 square feet. Six new retail buildings were delivered in the third quarter, which collectively brought 612,595 square feet to the market. The gross leasable area (GLA) of the 29 buildings under construction at the end of the third quarter totaled 915,751 square feet. “There was a lot of activity in 2015 in the freestanding and small retailer market, as well as activity from junior anchors,” says Christopher Zoellner, senior vice president of retail with Balke Brown Transwestern. “This has created strong activity and a good pipeline going into 2016.” IKEA Makes ‘Big Splash’ A few retailers opening new …

January 7, 2016

Kentucky Market Reports Retail Southeast Southeast Market Reports

Major Infrastructure Projects Will Benefit Louisville’s Two-State Retail Market

by John Nelson January 4, 2016

The retail market for Louisville has continued to improve over the past year. New ground-up developments, which have been virtually nonexistent the past five years, are now open for business. Vacancy rates are falling, new tenants are entering the market, and retail investment sales continue to be in high demand. The $2.5 billion Louisville- Southern Indiana Ohio River bridges project is on track for a 2016 opening. New developments in downtown and northeast Louisville, as well as Southern Indiana, are looking to capitalize on the new infrastructure. GBT Realty is looking to expand its presence in the market with a proposed 220,000-square-foot joint venture project across the river in Jeffersonville, Ind. The site is located within in the 170-acre master-planned Jefferson Town Center on Veterans Parkway. Menards is opening a new 200,000-square-foot property this fall across the street from GBT’s proposed development. In addition to GBT Realty’s newly opened Middletown Commons and Jefferson Commons in Louisville, the three projects are from developments that were planned before the Great Recession and now have new life. The Outlet Shoppes of the Bluegrass, located in Simpsonville, Ky., has been a major success since opening in late 2014. After just six months, an expansion …

January 4, 2016

Market Reports Massachusetts Multifamily Northeast Northeast Market Reports

Despite Naysaying, Boston Remains Attractive to Millennials and Developers

by Jaime Lackey December 30, 2015

Despite the clichés and naysayers, Boston’s apartment fundamentals continue to trend at the top of U.S. cities’ forecasts. For developers, investors and borrowers, Boston truly is that city on a hill. Clichés heard often in the commercial real estate community: Interest rates have no place to go but up. Who is going to pay $4.50-per-square-foot rents? Wait until the next wave of units is delivered. Valuation and yield don’t make sense. The facts: Economists have been predicting interest rate increases for the past five years. Market vacancy has been sub-5 percent for more than five years. Every major apartment player owns or is currently building in Boston, averaging $1.2 billion in product for past three years. Boston is a premier gateway city and buyers want in. The Investor Outlook Simplified When cap rates for the most desired real estate class — in a gateway city, in the safest country for investment in the world — average 4.25 percent, it’s a great time to invest. The 2006 cap rates were just 100 basis points above the 10-year risk-free rate. Today they are 2.0 to 2.25 percent. Half of the deals are cash transactions. Locals can only shake their heads at the …

December 30, 2015

Kentucky Market Reports Retail Southeast Southeast Market Reports

Louisville Sees Wealth of Retail Leasing, Development Activity Across Metro Area

by John Nelson December 28, 2015

Louisville’s retail market continues to experience a shortage of space in high-demand markets in spite of several new developments opening over the past year. During this period, two major retail developments have been completed with several smaller projects under construction or in the planning stages. Second-generation big box vacancy is virtually non-existent and finding quality shop space is becoming equally challenging. As a result, rents have escalated to historic highs. The most notable additions to the Louisville market are two neighborhood centers developed by Brentwood, Tenn.-based GBT Realty Corp. Nestled amongst a rapidly expanding residential community and PGA’s notable Valhalla Golf Club in eastern Louisville, the 240,000-square-foot Middletown Commons is anchored by Hobby Lobby, Academy Sports + Outdoor, Ross Dress for Less and Liquor Barn. Jefferson Commons, located in south Louisville, is anchored by Academy Sports + Outdoor, Hancock Fabrics, HH Gregg, Michael’s, Liquor Barn and several fast-casual restaurant concepts. In western Louisville, BC Wood Properties added Hobby Lobby and Goody’s stores at the 350,000-square foot Dixie Manor Shopping Center. Southwest of the city’s central business district, the redevelopment of Dixie Valley Shopping Center expanded its footprint to include additional soft goods retailers such as Marshalls, Ross Dress for Less, …

December 28, 2015

Market Reports Massachusetts Northeast Northeast Market Reports Office

Construction Completions Drive Boston Office Boom

by Jaime Lackey December 23, 2015

In what was the most dynamic quarter since the dot-com boom in 2000, tenants in Greater Boston absorbed 2 million square feet of office space in the second quarter of 2015. The activity was driven by a number of high-profile construction completions throughout both the urban and suburban areas of the market. The Boston CBD experienced its ninth straight strong quarter with 861,000 square feet absorbed. Notably the activity occurred mostly outside of the boundaries of the “Big 3” Boston submarkets of Back Bay, Seaport District and Financial District (though the latter did absorb 290,000 square feet in its own right). North Station saw a major bump in occupancy with the completion of Converse’s 230,000-square-foot headquarters, causing the submarket’s largest quarterly absorption number on record. Move-ins by Sonos and Safari Books Online added 200,000 square feet of absorption in Midtown, where vacancy has dropped to nearly half of what it was a year ago after State Street’s departure. And development continues at Boston Landing, where the 245,000-square-foot second phase is currently under construction and is already partially pre-leased to the Boston Bruins. Space continues to be scarce in Cambridge, where vacancy is just 5.8 percent and availability is at an …

December 23, 2015

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