Market Reports

Miami’s Industrial Market Poised to Benefit from Panama Canal Expansion, Cuba

by John Nelson August 8, 2016

Given a handful of macro-factors in the Miami industrial market including the Panama Canal expansion nearing completion, PortMiami expansion, strong American dollar, and improving relations with Cuba coupled with the country’s new mega-port project, it is a unique time to be an industrial real estate service provider. To succeed in this environment, it takes deep local knowledge and a global understanding of how Miami, the Caribbean and Latin American economies and infrastructure are intertwined into global commerce. The first macro-factor is the Panama Canal expansion, its first major renovation since the 1914 opening. The expansion is set to have a major impact on global trade; specifically, the way cargo will be handled and transported throughout the Western Hemisphere. The larger canal will accommodate the new line of Post-Panamax vessels — supertankers, container and passenger ships too large to previously pass through the canal. Miami is a prime location for these vessels and offers a tremendous expansion opportunity for the local industrial market provided the vessels have a port to dock. In response to the Panama Canal expansion, PortMiami completed a deep dredge project to allow the Post-Panamax vessels full access, which is the second macro-factor affecting Miami’s industrial market. The …

August 8, 2016

Market Reports Multifamily Texas Texas Market Reports

Houston’s Apartment Gains and Pains Haven’t Been Equally Distributed

by Haisten Willis August 5, 2016

The downturn in the upstream oil and gas industry, caused by the low prices of these commodities, has been the subject of continuous examination and prognostication since its onset in late 2014, particularly in the Houston region. Though it has diversified its economy somewhat since the 1980s, when its overdependence on that industry brought ruin to its economy, Houston remains the large Texas metro most economically tied to oil and gas. Houston benefited from those ties from 2011 to 2014, during the period of surging fortunes in that sector, by adding 380,000 jobs. However, because this tremendous boom in employment was less economically diversified than the region’s overall economy, when upstream oil and gas abruptly switched from growth to contraction, so did the region’s growth prospects. Houston’s other economic sectors at this point are not growing substantially enough to keep net growth strongly positive in terms of jobs. So far they are merely keeping the region in an essentially stagnant condition. The Push for Amenities All sectors of Houston-area real estate have felt an impact from this reversal, but to varying extents. The apartment market, which is traditionally among the sectors most directly tied to current employment levels, is receiving …

August 5, 2016

Market Reports Michigan Midwest Midwest Market Reports Multifamily

Metro Detroit Apartment Market Finds Its Groove

by Christina Cannon August 4, 2016

Favorable hiring trends in metro Detroit have driven household formation to its highest point since the start of the new millennium. As a result, multifamily asset performance and operations have shown marked improvement with respect to demand, occupancy, rents and prices. In the first quarter of the year, local employers created 14,500 jobs for a year-over-year gain of 2.3 percent, which brought Detroit’s unemployment level to its lowest level since 2001. Employment advances were led by the professional and business services sector as well as the leisure and hospitality sector, which added 16,100 and 6,000 workers, respectively. Total employment at the end of 2016 is projected to be 1.9 percent higher than it was at the end of 2015. The generally higher paying professional and business services jobs will lead to broad-based employment growth through the rest of the year, and gains in this segment are expected to support growing demand for luxury rentals. In any event, rental demand in Detroit is on the rise for the foreseeable future. Construction takes off Encouraged by positive employment trends, economic indicators and a recovering automotive industry, new construction, renovation and conversion are thriving. Developers have new multifamily projects underway in more than …

August 4, 2016

Georgia Market Reports Retail Southeast Southeast Market Reports

Atlanta Retail Market Experiences Demand in Hottest Submarkets

by John Nelson August 1, 2016

The Atlanta retail market continues to be robust, with vacancy tightening in key submarkets and rents trending upward. Overall vacancy fell slightly from 7.1 percent during the fourth quarter of 2015 to 7 percent in the first quarter of 2016, according to CoStar. However, the decline is greater in hot submarkets such as Buckhead and Central Perimeter that boasted vacancy rates as low as 2.8 percent and 3.2 percent, respectively, in the first quarter. Demand Up, Supply Tightens There is still a disconnect between supply and demand, especially in strong trade areas, and many retailers that wish to enter or expand in the market are finding it difficult to do so. Rents are escalating by 10 percent to 15 percent because of the increased competition for space and the high cost to build new developments is attributable to escalating land costs. During the first quarter, 21 buildings totaling 300,174 square feet were delivered, according to CoStar, and at the end of the first quarter, 1.73 million square feet of retail space was under development. As Atlanta can deliver more of the space that’s under construction and open up availability, rent is expected to continue to climb. Health and Fitness Food …

August 1, 2016

Hospitality Market Reports Michigan Midwest Midwest Market Reports

I-94 Corridor From Detroit to Ann Arbor Piques Hotel Investors’ Interest

by Christina Cannon July 28, 2016

Even as hotel operators continue to report steady gains in revenue per available room (RevPAR) nationally, Wall Street execs have begun to downgrade the lodging outlook, painting an entirely different picture. This disconnect is rooted in fears that the year-over-year growth in RevPAR is not sustainable in the current climate and that a spate of high-profile mergers and acquisitions among national operators must dictate a lower assessment of the industry. In spite of these concerns, demand continues to outpace new supply, both of which are occurring at a strong clip. Though industry observers may point to tepid occupancy as a concern, robust increases in average daily rates are leading to continued growth in RevPAR nationwide. How does Detroit stack up? Similar to the national hotel industry, Detroit is registering these same trends. On one hand, the market has recorded an increase in supply and a decrease in occupancy. On the other hand, average daily rates are steadily rising and RevPAR is growing overall, a sign of a strong hotel market. STR’s April 2016 report on the U.S. hotel pipeline indicated 1,046 rooms under construction in metro Detroit, or approximately 2 percent of the existing supply. This supply increase is at …

July 28, 2016

Georgia Market Reports Office Southeast Southeast Market Reports

Talent, Innovation Are Driving Today’s Real Estate Decisions in Atlanta

by John Nelson July 25, 2016

There has been a seismic shift in the way that companies throughout America make their relocation decisions, and it applies to Atlanta as well as its competitors. Companies are driven to locations that can provide a robust pipeline of talent and tight-knit innovative communities. This focus has created new demands on cities that want to build and sustain competitive economies. Companies have always taken talent into consideration but ultimately there was a belief that the talent would follow the company. This is no longer true. Millennials first choose where they want to live and then where they want to work. Today’s sought-after talent is closely tied to a city’s ability to provide a high quality of life. This means a connected transportation system, plenty of entertainment activities and accessible, affordable housing. All of this can be found in Atlanta. Companies that have recently chosen to call Atlanta home are a testament to this. From NCR (3,600 employees) to Kaiser Permanente (900 employees) to Worldpay (1,266 employees), all of these prestigious business newcomers have emphasized the critical role that access to highly qualified talent played in their decision to relocate here. Tight-knit, innovative communities do not just appear and cannot be …

July 25, 2016

Industrial Market Reports Texas Texas Market Reports

Look Beyond Oil and Gas to Understand Prospects for Houston’s Industrial Sector

by Haisten Willis July 22, 2016

Outsiders looking at the Houston industrial real estate market may automatically presume doom and gloom for all commercial real estate segments due to the significant downturn in the oil and gas industry during 2015 and 2016. When it comes to the Houston industrial sector, we caution not to jump to that conclusion too fast! In 2016, the Houston regional economy has much more going for it that creates industrial real estate demand than simply oil and gas. Momentum from economic drivers not dependent upon the oil and gas industry are stabilizing industrial real estate. They are also helping counter the drag on the area’s economy that may be attributed to excess inventory and price deflation in oil and gas. Through the end of the year, we expect activity in industrial leasing to remain relatively stable and to offer rental rates that are comparable to early 2016. Our confidence in the stability of industrial real estate is partially based on our fundamental understanding about segmentation in the energy industry that directly impacts Houston’s industrial real estate utilization. Oil and gas is not a simple, homogenous industry with all segments moving in lock step. Clearly, the energy downturn has hit oil and …

July 22, 2016

Indiana Market Reports Midwest Midwest Market Reports Multifamily Uncategorized

College Students, Tech Jobs Are Drivers of Niche Apartment Construction

by Christina Cannon July 21, 2016

Growth in the Indianapolis downtown multifamily market is as dynamic as the city itself. Since 2013, 3,000 units have been delivered and leased up rapidly. The vacancy rate registers 4.5 percent in a submarket that historically has seen vacancy rates of around 8 percent. Demand is healthy and growth continues, with another 283 units scheduled for delivery by the end of this year. A unique contributor to this multifamily construction boom is the downtown campus of Indiana University-Purdue University Indianapolis (IUPUI), the IU Law School and the IU Medical School. A sudden building spree of more than $100 million of student-focused projects is occurring downtown near IUPUI. With more than 1,000 units currently under construction or in the works, these new deliveries signal a real change for IUPUI from a commuter orientation to that of a residential campus. These off-campus locations will likely appeal to young professionals as well, and savvy developers are making certain to provide conventional units as part of their mix. The largest such development currently under construction is Trinitas Ventures’ 193-unit, 669-bed project at the northeast corner of Michigan Street and Capitol Avenue. Known as Lux On Capitol, the student housing development is due to open …

July 21, 2016

Maine Market Reports Northeast Northeast Market Reports Retail

Greater Portland Retail Bucks National Trend with Decreasing Vacancy

by Jaime Lackey July 20, 2016

The retail sector in Southern Maine’s commercial real estate market remained strong through year-end 2015 with all signs indicating continued improvement through 2016. While the national average retail vacancy rate increased to 12.6 percent in 2015, the retail vacancy dropped to 3.6 percent in Greater Portland, according to Malone Commercial Brokers’ annual retail survey. Greater Portland is a major market in Southern Maine consisting of 6.46 million square feet of retail space. 2015 marked the sixth consecutive year of declining vacancy rates in the market since its 10-year high of 10.8 percent in 2009. Meanwhile, the national retail vacancy rate rose in 2015 over year prior, marking the first vacancy increase in five years and nearly matching the 2011 national vacancy rate of 12.9 percent. Heading into the third quarter of 2016, Southern Maine’s retail sector remains extremely healthy. Short-term forecasts for Portland predict continued absorption of existing space, new retail construction, and strong market competition. Significant Developments and Redevelopments Thompson’s Point, Portland — Represented by Drew Sigfridson of CBRE / The Boulos Company, this 29-acre redevelopment offers up to 220,000 square feet of retail, office, hospitality, and recreational space off of Interstate 295. Final renovations of the 34,000-square-foot Brick …

July 20, 2016

Market Reports Multifamily Texas Texas Market Reports

Oil Prices Cause Dip in Multifamily Market, But Value-Add Opportunities Remain Strong

by Haisten Willis July 15, 2016

Although Houston’s local economy is not exclusively dependent on oil and gas, re-energizing this sector will be key to a multifamily rebound in the area. Since the downturn in oil prices over the last two years, Houston’s multifamily market has been one of the most impacted victims of the area’s economic slowdown. Oil and gas is estimated to represent about one-fifth of Houston’s economy. This does not include construction and other new development that depends on the oil and gas industry. The Houston market’s annual rent growth rate is well below the national average of 4.1 percent, according to Axiometrics’ Houston-area Market Performance Survey. From the fourth quarter of 2015 to the first quarter of 2016, the annual growth rate in Houston’s multifamily sector was only 0.8 percent. The annual effective rent growth in the area is forecast to be 2.4 percent in 2017 and is expected to average 3.6 percent from 2018 to 2020. According to the Bureau of Labor Statistics, job growth in the Houston metro area was 0.3 percent in April 2016, reflecting 10,000 jobs added during the preceding 12-month period. The metro job growth figure was below the national number of 1.9 percent. Limited Demand On …

July 15, 2016

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