Market Reports

Growing Pains — The History, Revitalization and Relocation to Austin’s CBD

by Haisten Willis November 13, 2015

Operating as our state’s political core and as the “live music capital of the world”, Austin’s real estate market is as distinctive as the people that make this city great. Austin is a one-of-a-kind place that’s unique to Texas and the entire country. It defies stereotypes with its progressive and fiercely entrepreneurial spirit, and continually gets top marks for its quality of life, pro-business culture and pro-environment views. WalletHub recently ranked Austin as the 2015 best large city to live in and the data matches up — the city ranks second among 2015’s fastest-growing cities in the U.S., according to Forbes, behind Houston and ahead of Dallas-Fort Worth. In the era of ‘Walker, Texas Ranger,’ Emmitt Smith and ‘the Dream Team,’ and the release of ‘Dazed and Confused,’ the tech boom of the 1990s drove the Austin office market. During that same time, Austin’s total population increased 35 percent and close to 1,750 companies employed over 110,000 people in technology-related jobs in Austin. By the end of the 90s, Texas’ capital city was widely known as Silicon Hills, home to a critical mass of institutional technology knowledge and major tenants like Dell, IBM, Motorola and other software and gaming companies. …

November 13, 2015

Market Reports Midwest Midwest Market Reports Missouri Office Uncategorized

Tight Office Conditions Lead to Much-Needed New Construction in St. Louis

by Christina Cannon November 12, 2015

Improving real estate fundamentals in the St. Louis office market are opening the floodgates to new construction that is greatly needed as large occupiers are finding limited, if any, existing available options. Over the past few years, the gap between rent for existing office properties and new properties was too great to justify construction. Until now, that is. The St. Louis employment base is finally reaching a pre-recession level with continued growth in the healthcare, information technology and engineering industries. The centrally located and more affluent residential areas — the West County and Clayton submarkets in particular — are experiencing higher occupancies and increasing rental rates. Clayton historically has been the best-performing submarket in St. Louis and still is today, while West County is situated near mid- to upper-level income workers. Development has and will continue to follow these highly sought after submarkets as they offer the metro area’s best real estate fundamentals and returns. Add to all of those factors a lack of new product in the past several years — plus a Class A vacancy rate of 10 percent — and you have an ideal climate for new construction. Pivotal project is catalyst The announcement that St. Louis-based …

November 12, 2015

Market Reports Western Market Reports

Record-Setting Employment Figures Fuel NorCal’s Strong Multifamily Market

by Nellie Day November 10, 2015

Fueled by record-setting employment, the San Francisco Bay Area multifamily market is performing at its highest level in recent years in terms of low vacancy rates, strong rental growth, and new apartment communities coming online, under construction and planned. The San Francisco metropolitan area – which accounts for half of the San Francisco Peninsula, San Francisco, Marin and Oakland – added about 4,100 jobs during September, according to Beacon Economics. This number is on par for most of the year. Sources from the City of San Jose reported the Bay Area added more than 40,000 new jobs during the 12-month period from October 2014 through September 2015. A further report from the Association of Bay Area Governments stated that “by spring of 2013, the region had regained all of the jobs lost in the 2007 to 2009 recession, while estimates indicate that the jobs lost since the higher peak in 2000 were finally regained by the end of 2014. This rebound has spread unevenly throughout the region, with counties as diverse as San Francisco and Napa each having passed the two previous peaks in employment.” Unemployment is running as low as 3.7 percent in the San Jose/Sunnyvale-Santa Clara MSA. It …

November 10, 2015

Florida Market Reports Office Southeast Southeast Market Reports

Innovation Assists Orlando Office Market in Fighting its Way Back

by John Nelson November 9, 2015

After six painful years, vacancy is finally declining in the Orlando office market. Effects of the Great Recession on real estate markets have been thoroughly examined here before, but outside factors that have played such a prominent role in reshaping the office market are creating significant impact. These changes might appear to be negative, but they will ultimately prove positive. Quantum advances in communication and data storage, new attitudes regarding workplace culture, workspace sharing centers and virtual offices have stirred the submarkets that comprise the greater Orlando area. While they are affecting all sectors of commercial real estate, they are felt most acutely in the office markets, slowing employment growth and corporate expansion, which have always powered the rate of change in quarter-to-quarter vacancy declines. Cloud-based data storage and paperless transaction platforms have shrunk the size of private offices with file storage rooms. Text messaging, email and file sharing platforms such as Dropbox have reduced the need for face-to-face meetings and demand for conference rooms and private offices. Real estate closings that once involved several parties in a conference room are antiquated now. Over the past five years, staffed reception areas have given way to scaled down waiting salons with …

November 9, 2015

Market Reports Western Market Reports

Grocers, Dollar Stores Take Center Stage in OC

by Nellie Day November 3, 2015

The Orange County retail market remains active due to declining vacancies and increasing job creation and housing starts. As a result, enthusiasm was evident at the recent ICSC Western Division Conference in San Diego, as industry colleagues discussed opportunities and challenges associated with the strength of the local market. There has been very little new development recently in Orange County, which has seen more than 3 million square feet of vacant space absorbed since 2011, according to CoStar. There continues to be an unbelievable demand for retail investment properties, while the Fed’s announcement to maintain existing interest rates will only increase competition in this limited market. A dynamic investment market offers both challenges and opportunities for retail leasing. Limited local new development is directly connected to continued instability among major grocery stores and big-box retailers. We might never see another ground-up traditional power center again because of post-recession downsizing and shakeouts among major retailers. While many of the major national retailers remain active, the focus has turned to expansion in smaller urban environments, which are limited in Orange County. Grocery-anchored daily needs centers remain a Class A asset type, though instability within the local grocery sector continues to challenge the …

November 3, 2015

Florida Industrial Market Reports Southeast Southeast Market Reports

Small Tenants Causing Big Demand for Industrial Product in Orlando

by John Nelson November 2, 2015

The industrial market in Orlando has undoubtedly experienced robust leasing activity over the first half of 2015, especially among the smaller users ranging from 3,000 to 10,000 square feet. With an average industrial vacancy rate of 9.3 percent throughout Southeast / Southwest Orlando according to second quarter 2015 market reports, quality space for smaller tenants is becoming more and more scarce and available dock-high small space is virtually nonexistent. Industrial is Rebounding Two specific factors can be directly linked to the current industrial shifts in Central Florida: construction spending and theme park growth. The construction industry is booming, in particular within the single-family and multifamily sectors, allowing construction companies of all sizes market share due to high demand for services. Industrial parks are welcoming back smaller construction business owners that may have downsized and operated out of their homes during the downturn but are now looking for larger warehouses and mixed-use spaces for business. Secondly, theme park expansions, spurred by the record year of tourism in Orlando in 2014, have caused many businesses that were on the back lots of the parks to be pushed back out into the marketplace. Higher tourism rates represent a boost in consumer confidence and …

November 2, 2015

Market Reports Multifamily New York Northeast Northeast Market Reports

NYC Multifamily Market Shows No Sign of Slowing Down

by Jaime Lackey October 28, 2015

New York City’s multifamily market in the second quarter of 2015 was able to continue the momentum of 2015’s first quarter and generate an impressive $3.30 billion in gross consideration. The quarter also saw 364 properties trade over 225 transactions, which is a 33 percent increase in transaction volume compared to the same quarter last year. Boosting significant growth, both Brooklyn and Manhattan saw a number of institutional and portfolio deals again this quarter. Of the trades in Manhattan, the top 10 percent made up approximately 73 percent of Manhattans dollar volume and four of the five largest multifamily transactions to occur in NYC happened in Brooklyn, which contributed to both submarkets ending the quarter with dollar volumes above $1 billion for the second time in as many quarters. Pricing throughout the city continues to evolve by most measures. Gross rent multiples have increased by 1.4 year-over-year and the average price per square foot in Manhattan has eclipsed $900. Compared to last year, average capitalization rates were down 60 basis points in The Bronx, and are down in Brooklyn and Northern Manhattan. These are the signs of solid fundamentals in the market. Institutional caliber multifamily deals had a big second …

October 28, 2015

Market Reports Western Market Reports

OC’s Tight Industrial Market Leads to Bidding Wars, Rising Lease Rates

by Nellie Day October 27, 2015

Orange County’s industrial market highly favors the seller and landlord for properties of all sizes and conditions due to a tight vacancy rate and lack of available product. Vacancy rates have been on the decline, ending the second quarter of this year at 3.9 percent. Average asking rents rose to $0.83 per square foot – an increase of 9.2 percent over the 12-month span of the second quarter of 2014 to the second of quarter of 2015. The county continues to hit new pricing highs as well, with many transactions receiving multiple offers. Full-price offers are oftentimes not enough anymore, as bidding wars have driven prices above the listing. Demand remains extremely strong for owner/user industrial buildings in North Orange County. Several recent smaller sales transactions in the 10,000-square-foot range have sold for around $170 per square foot. Most of these properties received multiple offers within days of going to market. Industrial buildings in this size range were trading for about $125 per square foot just three years ago. On the leasing side, rates are escalating as product is in limited supply. User demand a year ago wasn’t as strong as it is now. This will likely continue to grow …

October 27, 2015

Florida Market Reports Multifamily Southeast Southeast Market Reports

Job Growth Key to Orlando Apartment Market’s Strong First-Half Performance

by John Nelson October 26, 2015

Orlando’s multifamily market is in the midst of a golden era of sorts, as it sits squarely at the intersection of strong employment growth, an increasing population, a major demographic shift and a variation in lifestyle preferences. Together, these factors provide a tremendous tailwind for future strength in the local apartment market. While the national multifamily market continues to perform at a high level, Orlando is starting to show up on the radar of more institutional investors due to its recent outperformance and tremendous growth prospects. According to recent data from MPF Research, Orlando is on pace to see 5.6 percent rent growth in 2015, followed by 4.7 percent growth in 2016. The strong momentum in the MSA is being driven by a rapidly expanding and increasingly diversified job market. Going forward, the picture looks even brighter. MPF Research ranks Orlando as the No. 1 metro in the nation for job growth through 2020, with a growth rate (2.7 percent), more than twice the national average (1.1 percent). Unlike previous cycles, today’s growth is spread more evenly across employment industries, resulting in a more diverse, dynamic labor market. The highest growth sectors are forecast to be construction, healthcare/bio-tech, business services, …

October 26, 2015

Market Reports Michigan Midwest Midwest Market Reports Office

Resurgence of Downtown Grand Rapids Is Occurring on Many Fronts

by Christina Cannon October 22, 2015

Downtown Grand Rapids is booming with commercial real estate activity, and it’s coming from many directions. The combination of new residential units, restaurants, bars and a variety of entertainment options is leading people to not only live downtown, but also work and play downtown. Activity in the downtown office market — including office leases, new mixed-use construction and new retail — has increased over the last couple of years, and there is no sign of it slowing down. The overall office vacancy rate in the central business district (CBD) decreased from 9.4 percent in the first quarter to 8.25 percent in the second quarter. While Class A office space has performed well in recent quarters, there was a slight increase in the vacancy rate during the second quarter. As for Class B space, we observed a sizable decrease in the vacancy rate, from 10.1 percent in the first quarter to 8.5 percent in the second quarter. As a whole, the CBD office market experienced positive absorption of 74,293 square feet during the second quarter. Rental rates stabilized in the second quarter after increasing for the past several quarters. Meanwhile, some new construction and planned construction is hitting the market at …

October 22, 2015

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