Hawaii is one of – if not the – top-performing industrial market in the country. The city and county of Honolulu, which contains Hawaii’s main shipping port, had a low vacancy rate of 2.05 percent at the end of the first quarter. This vacancy rate peaked at 4.8 percent in 2009. Significant gains have been made since then. The direct weighted average asking net rental rate for industrial users in Honolulu was $13.80 per square foot (NNN) at the end of the first quarter, while operating expenses ran an additional $5.16 per square foot, per year on top of that. Having bottomed out after the downturn in 2009 at $11.20 per square foot, the Honolulu market has gained almost 24 percent since then. Land values have also followed suit. Hawaii is definitely not Chicago or Los Angeles. In fact, both of those markets have individual industrial parks greater in size than the entire Hawaii marketplace, at 39 million square feet. Having said this, Hawaii is in the midst of a construction and tourism boom, with billions of dollars being allocated to urban core renewal projects, light rail, resort renovations and new residential developments. Up until recently, this renewal had occurred …
Downtown Miami is on fire by any measure. The neighborhood is home to more construction cranes than any other place in the U.S., businesses are moving in and expanding on an almost daily basis, hotel room rates and occupancy levels are at all-time highs, and new residents are relocating here from all over the world. A recent study by the Miami Downtown Development Authority found that greater downtown Miami’s residential population has literally doubled in size — from 40,000 people to 80,000 people — since 2000. Another 200,000 people commute to the area each day for business. The area’s commercial real estate market has closely followed this trajectory of growth, with Downtown Miami and the Brickell Financial District welcoming more than 2 million square feet of new Class A office product in the last five years. Strong demand among domestic and multinational companies, along with an improving economy, has resulted in positive absorption and record-setting lease rates in excess of $50 per square foot for premium space. Land values in downtown are also reaching new heights as developers spend as much as $125 million for one acre on the water. All of this is creating a steep barrier to entry …
The Dallas/Fort Worth industrial market is one of the biggest and most strategically important in North America. With an inventory of more than 500 million square feet of warehouse and distribution space, the DFW industrial market serves a metro area of 6.8 million people and a larger region that stretches to Mexico. More than 70 percent of goods exported to Mexico roll through the metro area, and the North American Free Trade Agreement (NAFTA) has been a huge driver of those exports. These days, the industrial market is buoyed by a local economy that is outpacing most of the nation’s major metros. In March, Dallas/Fort Worth registered an unemployment rate of 4 percent, compared to 5.9 percent in Atlanta, 6 percent in New York, 6.4 percent in Chicago and 6.6 percent in Los Angeles, according to the U.S. Bureau of Labor Statistics. The GDP also grew by a healthy 2.2 percent in 2014. Dallas/Fort Worth’s economic momentum has heightened demand for industrial space. The first quarter of 2015 marked the 18th consecutive quarter of positive absorption, according to CBRE. The DFW industrial market has been among the top five markets in absorption over the past several years, and this impressive …
The Cleveland retail market has shown a dramatic recovery over the last five years. The overall vacancy rate has fallen from just over 14 percent in 2011 to slightly under 9 percent at the beginning of 2015, and rental rates have noticeably increased. As a result, there have been some landmark sales as part of a brisk investment market and new retail development has started in earnest. However, there are also some high-profile retail centers that continue to be plagued by a variety of issues, in spite of the market’s turnaround. Nearly $400 million of retail properties have changed hands over the last 12 months and this sector is the most active of all the property types. While local investors have certainly played a part, the majority of the buyers have been from outside the region. Among the most active non-local purchasers has been a pair of REITs — Inland Real Estate Corp. (NYSE: IRC) and Devonshire REIT. Recent purchases by Inland include Creekside Commons, a 200,000-square-foot center that sold for $28.3 million and Cedar Center North, a 60,000-square-foot center that sold for $15.4 million. Meanwhile, Devonshire REIT has acquired The Plaza at Chapel Hills, a 450,000-square-foot center that sold …
Rhode Island’s retail market continues to improve, although not to the point that new ground-up major projects are feasible. There is considerable activity with retailers expanding and absorbing the existing supply of retail space. In the past few years, a lot of the activity has focused on absorbing the mid-size boxes that went dark after the start of the recession, due to the closings of stores such as Circuit City, Linens ’N Things, and Borders. The leasing activity over the last several years seems to be the final stages of the absorption of these vacant boxes. As the supply of these existing anchor spaces continues to be reduced, the health of the retail market continues to improve with the result being a slight upward pressure on rents. The 500,000-square-foot Garden City Center in Cranston, which first opened in 1948, continues to upgrade its tenants, with The Wilder Company’s ongoing multi-year expansion and renovation of Rhode Island’s premier open-air mixed-use shopping center. New tenants opening over the last year include The Container Store, which has taken 25,000 square feet, as well as French natural skin care retailer L’Occitane and natural burger concept b. good. Additional new leases have been signed with …
The industrial market in Los Angeles County is extremely tight and shows no signs of letting up as the trend for conversion of industrial property to creative office space by tech and media industries is very prevalent. Many industrial property owners either sell their assets and realize major equity gains with the new buyer planning a conversion, or choose to convert it to creative office themselves, garnering two to four times the rental rate for creative space. The vacancy rate of 3.2 percent in the first quarter of 2015 was parallel to that of the last quarter of 2014. To give some perspective, the downward trend of industrial vacancy has continued since the second quarter of 2013 when vacancy posted at a 5 percent rate. Additionally, the majority of larger industrial development in the region is build-to-suit product, which has virtually no impact on vacancy. The Downtown Los Angeles industrial market continues this trend of industrial property conversion to creative office. The Arts District is ground zero for this. While the rejuvenation and gentrification of Downtown is a welcome sight, the industrial users are now having to relocate, seeking other spaces throughout the LA basin. Many of these users are …
The Atlanta office market continues to gain steam. Although Atlanta was slower to rebound from the recession than many U.S. markets, it was only a matter of time before the city’s numerous strengths — including its low cost of living, pro-business environment, excellent labor pool, above-average household income and strong university systems — placed it on a path of sustained recovery. The Atlanta office market has posted 13 consecutive quarters of occupancy gains. Strong absorption and limited development are exerting upward pressure on rental rates, particularly in the Class A market. There are also some significant new trends. While there was previously a clear “flight to quality” that enabled tenants to take advantage of rent bargains and concessions at Class A properties, diminishing space options and the pricier rental rate environment are causing tenants to consider Class B properties as a more economically viable alternative. Still, it is yet another sign of the overall recovery in Atlanta’s office sector that we are seeing an increase in rental rates and a decrease in landlord concessions in the Class B sector as well. The rebound of Atlanta’s office sector is not lost on investors. Strong tenant demand and the rise in rental …
Job growth in New York City is expected to reach a new high in 2015 with the addition of 92,500 jobs. This spike in employment will bode well for retail owners. Drawn by the strong economy, several retailers are expanding in the city, including Lowe’s, which already has two locations in Brooklyn and one in Queens. In the second half of 2015, Lowe’s will open its first two stores in Manhattan. Apple plans to open shop in Brooklyn; they’ve signed a long-term lease for a 20,000-square-foot store at 247 Bedford Avenue at the corner of North Third Street in Williamsburg. As retailers ramp up their presence in the five boroughs, the vacancy rate is going to reach a new multi-year low. Vacancy for retail properties in 2015 will fall to 3.9 percent on net absorption in excess of 2.8 million square feet. Tightening vacancy will allow for operators to increase asking rents for the fourth consecutive year and will encourage builders to start new projects. Currently, builders are on track to deliver 2.5 million square feet of retail space in 2015, increasing stock by 1.2 percent. The most notable project scheduled for delivery is the Westfield World Trade Center, a …
With all the recent froth in the multifamily markets, knowledgeable observers are expressing concern regarding all of the cranes that are sprouting around Seattle. To assess the apartment market, we have compiled data recently published in the “March 2015 Apartment Development Report” by Dupre + Scott Apartment Advisors. The Seattle Metro area is in the midst of an apartment development boom, with an estimated 17,400 units under construction, 12,000 units to be completed and ready for occupancy in 2015 and 11,000 units to be delivered in 2016. There is an additional 25,000 additional units in various stages of planning for delivery over the next five years. This new construction is in response to low vacancy rates (3.5 percent in the Seattle MSA, excluding vacancies for properties in initial lease-up), job expansion and related in-migration to the area. These trends have resulted in rising rents for new projects, up more than 7.4 percent in the region in the past 12 months (skewed by rents in newly opened projects). The new units under construction or proposed are heavily weighted to the close-in neighborhoods surrounding the Seattle CBD (Belltown, Downtown Seattle, South Lake Union) and close-in neighborhoods north of Lake Union (Ballard, Greenlake/Wallingford, …
You can hardly open the local paper lately without reading that “Downtown is hot right now; urban living is great.” Yes, downtown is booming. The suburbs are also riding the wave of new mixed-use development and could see more success. It may surprise some, but office vacancy rates and rental rates along I-394 and I-494 rival, and sometimes trump, downtown Minneapolis. The message is clear: convenience has value. The idea of a mixed-use neighborhood where people are living, working, shopping and having fun in one place is a relatively new concept to the Twin Cities. Minneapolis no longer turns into a ghost town after 6 p.m., but many people don’t want to live downtown. They find it too congested and far from work, with little green space and few parking options. If only there was a way to have the vitality of a mixed-use neighborhood without the drawbacks of the concrete jungle, right? Today that question is answered all around the metro area. West End’s Advantages In particular, the West End region of the Twin Cities shares that same long-term vision. With a strong office market long in place, Duke Realty’s addition in 2009 of The Shops at West End, …