Market Reports

Las Colinas, Far North Dallas And Richardson/Plano Stand Out in Hot Market

by Haisten Willis June 5, 2015

Dallas/Fort Worth has experienced unprecedented growth over the past few years, and we have all the fundamentals in place to continue this growth. Since 2005, we have added more than 600,000 jobs to the region. That’s a whopping increase of 21 percent! The current outlook is for growth to continue at these levels. In fact, by 2030 population in our region is expected to hit 9 million, an increase of 2.1 million new residents. From a real estate perspective, these fundamentals will fuel demand across all property types for the foreseeable future. More importantly, DFW has evolved into one of the most balanced economies in the U.S. and has created the “perfect storm” for our continued, steady growth. In addition to our central location, key drivers include our diverse employment base, deep roots in technology, low cost of doing business, pro-growth philosophy and affordable housing. For a comparison to the rest of the country, office absorption in Dallas has paced ahead of most U.S. markets in the last few years. In the first quarter of 2015, Dallas made up almost 30 percent of the national net absorption among the 50 largest U.S. markets JLL tracks. While a large proportion of …

June 5, 2015

Market Reports Multifamily New York Northeast Northeast Market Reports

New York City Multifamily: Supply and Opportunity

by Jaime Lackey June 4, 2015

New York City multifamily has historically been a darling of the real estate industry — and for good reason. It is arguably the most sought-after investment product type within commercial real estate investment’s most targeted city. It is the perfect demographic storm on the demand side: two-thirds of the population rent versus own; the population is arguably the best educated and includes the highest income generators in the nation; and the market continues to exhibit vast growth in household creation and population. Not to mention, the supply side is both geographically and politically constrained. These limitations are further exacerbated by very high costs to build. However, even with the dual push of supply and demand continuing to be in investors’ favor citywide, there are some areas that are softening. Two areas that seem to be softening are luxury condominiums in Manhattan and rental product in Long Island City (Queens) and the downtown Brooklyn area. Manhattan Luxury Condo Sales Slowing Manhattan is often a trendsetter that is months and years ahead of the rest of the country when it comes to real estate trends, and the return of the luxury condominium market is a prime example of this. Some 2,500 units were …

June 4, 2015

Market Reports Multifamily New Mexico Western Western Market Reports

Millennials Lead the Way in New Mexico’s Multifamily Market

by Nellie Day June 2, 2015

Multifamily housing is coming of age in New Mexico, and the Millennial generation is spurring the growth. The old adage of “location, location, location” is ever present as the placement of a property in relation to cultural, educational, entertainment and natural amenities becomes a major factor in the value of the property. The ability to walk and bike to social amenities like restaurants, theaters and schools is, and will continue to be, very high on the list of importance for members of this generation in New Mexico. There is not only a distinguishable difference in occupancy rates for units scoring high on Millennial’s wish lists, but the income for these units is between 20 percent and 24 percent higher than those with lower scores. While newly constructed and refurbished multi-housing units often appeal to Millennials, all of New Mexico is experiencing high occupancy rates throughout the multifamily market. This push on availability is fueling an environment that will continue to encourage increasing rents and new construction. Though the sale of multifamily properties was deeply affected by the recession, a market shift in 2013 has allowed the multifamily market to regain its footing with a two- to three-times increase in sales …

June 2, 2015

Market Reports Mixed-Use Texas Texas Market Reports

Smart Code Helps El Paso Develop for the Future

by Haisten Willis May 29, 2015

In March 2012 The El Paso City Council unanimously adopted Plan El Paso, a comprehensive development plan based on the principles of green and smart growth. Smart Code, which is based on these same princples, was largely chosen to combat sprawl, large land use and carbon pollution. After numerous citywide meetings with citizens, government entities, nonprofit groups and business leaders, the plan moved forward. Smart Code emphasizes new urbanism, density, walkability, mixed-use development and open space with access to public transit. Developers have the choice in most instances to pick the traditional zoning code or opt for Smart Code. The Smart Code offers potential Chapter 380 economic incentives with city council approval. Sales, use and property tax abatements are available for qualified projects. Higher densities and higher property values through Smart Code generate greater taxes, which justify the rebates. Some developers say project costs are about 30 percent higher under Smart Code when compared to the traditional code. Smart Code typically makes the most sense for infill development in higher-income areas. Prior to the economic downturn of 2008, a large mixed-use development in northeast El Paso was slated to become the first project in the city to implement elements of …

May 29, 2015

Industrial Market Reports Michigan Midwest Midwest Market Reports

Convergence of Factors Puts a Charge in Southeast Michigan’s Industrial Market

by Jaime Lackey May 27, 2015

A trifecta shaped by six years of a bull market, historically low interest rates and oil around $50 a barrel is benefitting one business sector arguably more than any other industry in the United States: automotive. Researcher AutoData Corp. estimates that, seasonally adjusted, the annual vehicle sales rate topped 17.1 million in March of this year, indicating the industry is on pace to have its best year in more than a decade. Further, the industry’s 5.6 percent sales increase in the first quarter has come entirely on gains of sales of trucks and sport-utility vehicles, two categories that do well when gas prices are low. Ford Motor Co. is forecasting that between 17 million and 17.5 million light vehicles — from all automakers — will be sold in the United States this year. The estimate is similar to competitor estimates. If it comes to pass, 2015 would be the best year for unit sales since 2006. Approximately 16.5 million cars and light trucks were sold nationally in 2014, according to AutoData. Consequently, it has been shocking to see how quickly so many vacant Detroit industrial buildings have been occupied in such a short period of time. Vacancy Rates Tumble The …

May 27, 2015

Industrial Market Reports New Mexico Western Western Market Reports

New Mexico’s Industrial Market Looks for Solid Footing

by Nellie Day May 26, 2015

The industrial market had a notable year in 2014. Vacancy declined 270 basis points from the first quarter of 2014 where nearly 1 million square feet of space was absorbed. It has been more than seven years since absorption has registered similar figures. The primary factor driving last year’s success was a handful of large deals with more than 50,000 square feet. The supply of larger, quality spaces was steadily leased up throughout the year. These accounted for 54 percent, or 522,000 square feet, of absorbed space. Market velocity slowed down during the fourth quarter, driven by a lack of quality inventory. Absorption registered a positive 103,000 square feet, and was the lowest quarterly level of 2014. The centrally located North I-25 submarket outshined all other submarkets. In the biggest deal of the quarter, Flagship Foods occupied nearly 79,000 square feet of space in the North I-25 submarket. There were also nine other spaces occupied in this submarket that contributed another 60,000 square feet of absorption. A developing concern for 2015 is the significant amount of new available space being brought to market. Although still occupied, a total of 244,000 square feet of new space was added to the inventory …

May 26, 2015

Market Reports Office Texas Texas Market Reports

Demand for Energy, and Houston Office Product, Will Remain

by Haisten Willis May 22, 2015

The real estate capital markets are a funny thing — one minute you’re up and the next you’re down. The debt market starts making investors bring more equity to the table, reserves tied to energy-related tenancy are mandated, the four-letter word “recourse” is thrown around and more scrutiny is placed on every detail. No one wants to be laughed out of a committee meeting for trying to push through a multi-million dollar loan on an office building in the Energy Capital of the World. The same holds true in the equity market. Return requirements that fluctuate along the risk/return spectrum haven’t changed, but underwriting scrutiny has. Market rent growth has been scaled back or even gone negative, energy-related tenancy is being given a lower retention ratio or being downsized, downstream tenancy is more favorable than upstream tenancy, mark-to-market value-add strategies have been replaced with income preservation strategies, etc. Individually, these various reactions in the debt and equity market don’t have a huge impact on values. Combined, they have a material impact. You would think that this environment would bring about great opportunities for investors with a long-term, bullish view on Houston’s office market. Instead, most owners will be patient, electing …

May 22, 2015

Colorado Industrial Market Reports Western Western Market Reports

Colorado Springs Industrial Market Looks Positive

by Nellie Day May 19, 2015

The Colorado Springs industrial real estate market continues to rebound with a decrease in vacancy to 8.1 percent, an increase in the average asking rate to $6.19 per square foot (NNN) and a net positive absorption of 199,101 square feet. Along with these improvements, there has been a healthy number of owner/user acquisitions in the industrial market that has created a more competitive market for both tenants and owner/user buyers over the past year. Colorado Springs will also soon benefit from Sierra Nevada Corporation’s recent decision to construct its new $88-million hangar facility at the Colorado Springs Airport, a development that will significantly aid the city’s struggling southeast submarket. Designed as a 90,000-square-foot facility, construction is slated to begin in early 2016. The company estimates it will create about 2,100 new jobs. The city will further benefit from the formation of a new 225,200-square-foot FedEx distribution facility currently scheduled to open in 2016 These new developments reflect the abundance of opportunities and land options near the airport in the southeast submarkets, with available sites ranging from small sites of less than an acre to sites larger than 50 acres. The southeast area also offers a wide range of office/warehouse flex …

May 19, 2015

Industrial Market Reports Texas Texas Market Reports

World’s Third Busiest Airport Drives Growth, Economic Development in Texas

by Haisten Willis May 15, 2015

Texas has been a beacon of light during our country’s recent bout of recession. No doubt, this has to do with our business-friendly regulations and the physical space and capacity for business growth. Our economy is growing stronger every day. This past March, the United States Bureau of Labor and Statistics (BLS) released the latest employment numbers, and Regional Commissioner Stanley W. Suchman pointed out that the Dallas/Fort Worth (DFW) area ranked first in the rate of job growth and third in the number of jobs added among the country’s largest metropolitan areas. DFW’s largest growth last year was in the professional and business services sector, as 33,000 jobs were added. Other growth sectors included trade, transportation and utilities (30,500 jobs), education and health services (19,200 jobs), and leisure and hospitality (17,300 jobs). It is hard to open the business section of the morning paper anymore without seeing news of a company relocating to the DFW Metroplex, bringing along the promise of thousands of jobs. As a result, commercial real estate is booming in north Texas. Dallas/Fort Worth International Airport is an important force behind Texas’ growth and a contributor to one of the nation’s most prosperous and vital economies. …

May 15, 2015

Market Reports Midwest Midwest Market Reports Missouri Retail

Shopping Center Developers are Increasingly Active in Metro St. Louis

by Danielle Everson May 14, 2015

Statistically speaking, retail real estate market conditions have remained relatively stable in St. Louis throughout 2014 and early 2015. Close to 88,000 square feet of new retail space was delivered in the first quarter of this year, resulting in a slight uptick in vacancies. At the end of the first quarter, the overall vacancy rate stood at 7.3 percent, up 10 basis points from the prior quarter, according to CoStar Group. The pace of new development is expected to escalate this year, with several new projects on the drawing board: • Pace Properties is under contract in Midtown — across from the IKEA that will soon open — to develop Midtown Station. The project will include 150,000 square feet of retail space. • Summit Development Group is under contract in Richmond Heights to develop a mixed-use project totaling 120,000 square feet that will feature a combination of restaurant and retail space — possibly even a grocer — and a hotel. The project will be known as The Crossings at Richmond Heights. • The city of Kirkwood has approved plans to redevelop the southeast and southwest corners of Lindbergh Boulevard and Manchester Road to make way for a Fresh Thyme Farmers …

May 14, 2015

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