Market Reports

Building Sustainable Communities: Three Models for Equitable Development

by Kristin Harlow December 14, 2023

By J. Byron Brazier Equitable development is a knotty concept. In theory, development equity sounds easy and essential. In practice, it’s not clearly defined and not easily sustainable — economically, socially or politically. Equitable development is generally seen as an approach that revitalizes and empowers disinvested communities by meeting residents’ wants and needs, diminishing disparities and spurring economic growth, ensuring residents benefit from such growth and creating conditions for people to live healthy and happy lives. That definition is accurate but incomplete. Equitable development has multiple meanings, some less intuitive than others. Chicago lawyer Danielle Meltzer Cassel says there are three ways to define development equity. The first is the one above, which is the direct model of equitable development. This model rectifies inequality through what development directly produces, such as affordable housing in areas where there’s little or no such housing, good jobs for people who are unemployed or underemployed, greater access to quality healthcare and education, and other resources that allow communities to thrive. There are two other definitions, the indirect model and what Cassel calls the procedural model of equitable development. The indirect model involves real estate developments that do not directly benefit disinvested communities, such as …

December 14, 2023

Louisiana Market Reports Office Southeast Southeast Market Reports

Shell’s Move Exemplifies Flight to Quality Trend for Office Users in New Orleans

by John Nelson December 11, 2023

Shell’s announcement in mid-September to relocate its home from the Central Business District (CBD) of New Orleans to the planned 50-plus acre River District rocked the office market. The oil and gas giant has been in the Hancock Whitney Center (formerly One Shell Square) since 1972, and will be rightsizing in a Class A mid-rise office building that will anchor the River District. The planned building will be approximately 142,000 square feet and home to 850 to 1,000 employees. What a huge win for the planned River District and city of New Orleans. However, the void left in Hancock Whitney Center raises the question, what will building ownership group do with all of the space that Shell vacates? If the current occupancy rate stands, Hancock Whitney Center will have over 500,000 square feet of vacant space. Elsewhere, Entergy is in the process of a major contraction in its building located at 639 Loyola Ave., and earlier this year, Freeport McMoRan vacated over 100,000 square feet of space at 1615 Poydras. Both buildings are also located in the CBD. A number of office towers have loans maturing within the next 24 months, and the logical assumption is that securing financing will …

December 11, 2023

Market Reports Nevada Retail Western Western Market Reports

Job Growth, Tourism Create Opportunities for Northern Nevada Retail

by Jeff Shaw December 8, 2023

— By Tad Loran, Vice President, Retail Specialist, Avison Young | Western Alliance Commercial Inc. — The Northern Nevada retail sector has made quite a comeback post-pandemic as both the population and job market expand. The retail vacancy rate ended last year at 4.7 percent and increased 20 basis points to a current level of 4.9 percent, while market rent increased from $1.70 to $1.83 on a monthly basis for the same period. South Virginia, Meadowood, South Reno and the North Valleys are all recipients of a thriving market. Tenants that have recently entered the region or are expanding in Northern Nevada include Petco, Panera Bread, Colombia Sportswear, Voodoo Brewing Company, the Human Bean, Starbucks, Cracker Barrel, Mountain Mike Pizza, Take 5 Oil Change, AutoZone and Five Below. Tenants with recent closures include Bed Bath & Beyond, Lucky Brand Jeans, Tuesday Morning, Steak ‘n Shake, Sizzler Steakhouse and Claim Jumper. Unemployment in Nevada increased to 4.4 percent in July 2023 from 3.5 percent in December 2022. Even though there was an increase, this continued low unemployment rate has created a challenging labor market with employers lacking the necessary labor pool to grow. Unfortunately, this shortage has led to some prospective new businesses …

December 8, 2023

Market Reports New York Northeast Northeast Market Reports Retail

Stability Returns to New York City Retail Market

by Taylor Williams December 7, 2023

By Taylor Williams Across Manhattan’s major retail corridors and pockets, leasing agents, operators and owners are all gaining greater clarity on what levels of rent various submarkets can bear and, by extension, how much spaces are truly worth. After three years of disruptions of the public health and financial variety — each devastating in its own right — a reset of sorts is a major windfall for the country’s largest and arguably most dynamic retail market. Closing deals is challenging enough when all parties are on the same page and the economy is stable. When markets are going through tumultuous phases of discovery in which perceived valuations of spaces fluctuate wildly, negotiations tend to flame out even more quickly — if they even get going at all. “A year ago in Manhattan, you could have two adjacent stores, and one might have been asking for $120 per square foot while the other wanted $220 per square foot,” says Chase Welles, partner at TSCG, an Atlanta-based brokerage and consulting firm that is active in New York City. “There’s certainly more definition relative to last year, and the range of asking rents in each submarket has narrowed.” “The market has become more …

December 7, 2023

Market Reports Midwest Market Reports

Consider Constitutionality in Property Taxation

by Kristin Harlow December 6, 2023

By Cecilia Hyun, Esq. Taxpayers usually appeal property tax assessments by proving a market value different from the assessor’s finding, but they should not overlook constitutional guarantees of uniform and equal taxation. As an ad valorem tax, real property taxes are charged on the value of the underlying real estate, usually measured as fair market value. In many states, taxpayers can demonstrate their property’s market value with a recent, arm’s-length sale price or by independent appraisal evidence. Two potential concerns emerge for taxpayers in an assessment appeal centered on market value: the declining reliability of data in volatile and rapidly changing markets, and the trailing nature of market data used by assessors. Those data issues can skew the mass appraisal techniques tax assessors often use, including comparisons to sales of similar properties, when assessing real property. Volatility, rapid change Commercial property data can lose relevancy with surprising speed in a volatile market. For example, office properties continue to bear the consequences of increased remote work and occupants’ shrinking footprints since the pandemic. Many office properties with mortgages maturing in 2023 have lost half or more of their previously underwritten asset values. Badge swipes tracked by Kastle Systems show an average …

December 6, 2023

Louisiana Market Reports Multifamily Southeast Southeast Market Reports

New Orleans Multifamily Market Contends With Inflation, Interest Rates, Insurance

by John Nelson December 4, 2023

The volatility in the capital markets over the past 12 to 18 months has wreaked havoc on many aspects of the economy, and real estate has not gone unscathed. Unlike the retail and office sectors whereby there is a fundamental shift in how people work and shop, housing is a basic need. The equilibrium between supply and demand in metro New Orleans’ multifamily market is still in sync. It would however be naïve to suggest there are no challenges that are affecting our real estate market. The “three dreaded Is” (i.e. inflation, interest rates, insurance) is not a Halloween mask but a euphemism that crystallizes the challenges multifamily owners are faced with both locally and nationally. Each of these factors singularly are powerful forces, yet the trifecta is playing a role in the current state of our metro market. However, despite these challenges, the regional multifamily market has stable occupancy with most submarkets reporting levels in the 92 to 94 percent range. Overall monthly rental rates average $1,263 with rents ranging from a low of $1,000 in Eastern New Orleans and Algiers to rents in the Downtown market as high as $3,000. Once again, the barriers to entry (lack of …

December 4, 2023

Industrial Market Reports Nevada Western Western Market Reports

Tourism to Operations: Reno’s Robust Industrial Market

by Jeff Shaw December 1, 2023

— By Justin Basie President of Real Estate, Mark IV Capital — While the Reno-Sparks Metropolitan Statistical Area (MSA) is best known for its gaming-tourism industry, its location in Northern Nevada also appeals to fans of the outdoors. In addition, Reno’s diversified economy readily attracts Fortune 500 companies that are targeting the area for their manufacturing and distribution efforts. This, in turn, drives the massive growth of Northern Nevada’s industrial sector, generating overwhelming demand for warehouse, logistics and manufacturing space in the region. The following fundamentals have positioned Northern Nevada and the Reno-Sparks MSA as ideal destinations for logistics, manufacturing and other industrial activities: • Population Proximity The MSA is conveniently located within a one-day trip of major West Coast cities like Los Angeles, San Francisco and Portland, Ore. Thanks to an efficient infrastructure network that includes major highways, two railways and the Reno-Tahoe International Airport, companies can reach a vast 80 percent of the Western U.S. population in less than 24 hours. • Business-Friendly Climate Nevada is consistently ranked as a top 10 state for conducting business because of its pro-business regulatory environment, low-cost start-up fees, and streamlined licensing and approval processes. Nevada also offers a favorable tax environment for …

December 1, 2023

Market Reports Retail Texas Texas Market Reports

InterFace Panel: Interest Rate Movement Raises New Questions for Retail Investment Strategies

by Taylor Williams November 30, 2023

By Taylor Williams Retail owners are facing critical questions about whether to sell or hold their properties in the current environment, which is still defined by uncertainty about whether interest rate hikes have truly peaked and investment sales prices have actually bottomed out. Investment sales decisions frequently hinge on analysis of cap rates, defined as a property’s net operating income divided by its sales price. Generally speaking, higher cap rates indicate lower sales prices and are therefore sought by buyers, whereas lower cap rates reflect higher prices and are preferred by sellers. Cap rates are fluid and tend to move linearly with interest rates. Thus, the Federal Reserve’s campaign of 11 interest rate hikes totaling 500 basis points over the last 20 months has caused cap rates in all asset classes to rise, or as industry folks say, to decompress. The extent to which this cap rate movement influences an investor’s sell-or-hold dilemma varies from deal to deal, but the common denominator is that it complicates all such decisions. At the inaugural InterFace Houston Retail conference, a panel of capital markets professionals delved into the numerical analysis and anecdotal evidence that investment sales brokers are relying on to guide clients …

November 30, 2023

Market Reports New York Northeast Northeast Market Reports

New York’s Small Business Lodging Crackdown — Another Ripple from a Big Wave

by Taylor Williams November 29, 2023

By Pam Knudsen, senior director of tax compliance services, Avalara While the dust has scarcely settled from a landmark ruling in New York City resulting in a massive crackdown on short-term rentals (STRs), the full extent of the fallout from the decision has yet to be fully grasped by many — and perhaps even by the city itself. Under the terms of Local Law 18, a resolution that passed earlier this year, hosts and owners of short-term rentals, including Airbnb, are now subject to tighter and stricter regulations. These include limits on numbers of guests, requirements to register with the city and obligations to more closely monitor guest behavior, among other regulations. The effective ban on short-term rentals will have considerable consequences on local economies, and more than anyone, it’s small lodging businesses that stand to be impacted by the resulting wave. But to fully understand the major impact this ban has on small businesses, we must first acknowledge that STRs should rightly be considered small businesses themselves. Much like any other small business, STRs are required by most communities to be licensed, registered and compliant with tax collection and remittance. Furthermore, the hosts and managers behind STRs operate in …

November 29, 2023

Georgia Industrial Market Reports Southeast Southeast Market Reports

Hyundai Plant, Port of Savannah Spur Demand for Industrial Activity in Savannah

by John Nelson November 27, 2023

Savannah’s industrial real estate market is experiencing exceptional growth and now totals 113.7 million square feet, of which 98.2 million square feet (86 percent) is dedicated to bulk distribution (tracking facilities sized 100,000 square feet or larger). Year-to-date net absorption as of the end of the second quarter was 6.3 million square feet, which suggests another solid year ahead. Additionally, the vacancy rate remains low at 4.6 percent, a historically favorable level. The development community has been quick to respond to robust demand, delivering 19 buildings totaling nearly 10 million square feet in the second quarter, with the majority of it already leased. The market is primed for additional growth, with a significant amount of new construction underway. More than 16 million square feet is currently under construction, not including the Hyundai plant that will span 17 million square feet itself, along with related supplier facilities covering an additional 1.9 million square feet as of this writing. The $5.5 billion Hyundai plant will employ 8,100 people and be the company’s first dedicated electric vehicle (EV) mass-production plant. It is expected to begin full production in early 2025 and will produce over 300,000 vehicles per year. The effects of Hyundai on …

November 27, 2023

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