Market Reports

Millennials Drive Shift to Experiential Shopping in Indianapolis Retail Market

by Danielle Everson March 18, 2015

The retail market as a whole is shifting to make shopping more experiential amid a recovering economy and the influence of millennials and their shopping demands and interests. Despite the buzz about the popularity of online shopping, less than 10 percent of all retail sales take place via the Internet. According to the International Council of Shopping Centers (ICSC), online retail sales in 2013 were nearly $263 billion, accounting for a mere 6 percent of total retail sales. In-store sales accounted for the remaining $4.3 trillion, according to the U.S. Commerce Department. It’s clear that while some consumers find online shopping convenient, the majority still prefer the shopping center experience. In particular, millennials, who are 74 million strong with a buying power of $174 billion, demand that experience. Last fall, Indianapolis-based Simon Property Group forecast that 89 percent of millennials would shop at a mall over the holidays. Surprisingly, millennials use technology to conduct research about products, but they generally prefer to visit stores to make purchases. Millennials will read product reviews online but they want to touch the merchandise, feel it, experience it and then tweet about it to friends. So, while the entire shopping process revolves around technology, …

March 18, 2015

Market Reports Retail Western Market Reports

Grocery Tenants Drive SLC’s Retail Market

by Nellie Day March 17, 2015

The retail market in Utah continues to build steam and has expanded over the past 12 months. With these gains, tenants are in abundance and new construction is on the rise. Vacancy continued to improve through 2014, as the overall vacancy rate declined by 0.7 percentage points on a year-over-year basis to end at 6.2 percent. This represents the lowest vacancy rate of the past decade. With supply constrained and demand improving, average asking lease rates jumped by 9 percent on a year-over-year basis, to $18.98 per square foot. New construction continued across the valley, with 548,577 square feet of space added to the market. The local housing market drives retail development in Utah. About 18,573 building permits have been issued throughout the state in the past two years, including multifamily projects. This construction pushed many retailers into expansion mode, looking to take up shop in locations that cut off the competition. This is particularly true in one segment of the market that now stands supreme in the Utah retail ecosystem: grocery. Grocers have expanded at a breakneck rate. Sprout’s Farmers Market opened new stores in Holladay and South Jordan. A Smith’s Marketplace opened its doors in West Jordan at …

March 17, 2015

Industrial Market Reports Southeast Southeast Market Reports Tennessee

Global, National Brands Heat Up Nashville’s Industrial Market

by John Nelson March 16, 2015

Jack Daniels, FedEx and Gibson Guitar are a few international brands that already call Tennessee home, and the list has expanded over the past two years, as major brands have chosen to grow their operations in Middle Tennessee. Recent industrial relocations including Under Armour, Beretta and Hankook Tire are a few notable companies that chose Nashville over other major markets in the U.S. In addition, existing companies such as General Motors, FedEx and Nissan continue to expand their footprint in the region, creating more jobs and building larger facilities. All of this activity has created the demand for more site-ready properties that can accommodate build-to-suit projects and be delivered quickly. Nashville’s continued evolution as the South’s leading auto manufacturing hub, as well as its favorable central location, has bode well for the industrial market over the last few years. Favorable Fundamentals Nashville’s industrial market vacancy rate of 7.1 percent at the end of fourth-quarter 2014 is the lowest it has been since the fourth quarter of 2008, and the 2014 total net absorption has reached more than 2.25 million square feet, the highest absorption since 2006. This year is projected to be a banner year for new construction with multiple …

March 16, 2015

Industrial Market Reports Texas Texas Market Reports

Need for Smaller Spaces Drives Austin Industrial Development

by Haisten Willis March 13, 2015

Austin is happening. The city was ranked No. 1 for small business growth by Forbes.com and No. 1 in Kiplinger Finance Magazine’s “10 Best Cities for the Next Decade.” Steady population growth has created demand for virtually all real estate product types in Austin. While the office market and vertical condo developments grab most of the headlines, the regional industrial real estate market has recovered significantly from the recession and is expanding in lock step with the overall economy. The Texas capital is now the 11th most populous city in the U.S. and the fourth largest in Texas. From a population of 132,459 in 1950, the city grew to 465,622 in 1990, 656,562 in 2000, 790,390 in 2010 and an estimated 865,504 today. More new industrial product was delivered in Austin last year, approximately 675,000 square feet, than any year since 2008. Another 550,000 square feet of industrial property is expected to deliver this year. In a market of 46 million square feet in total, these are robust years for industrial development. Net absorption for the year was 376,279 square feet, according to Xceligent. While positive, it was substantially less than the 887,544 square feet of net absorption in 2013. …

March 13, 2015

Industrial Market Reports Midwest Midwest Market Reports Ohio

Demand for High-Quality Industrial Space in Toledo Greatly Exceeds Supply

by Danielle Everson March 12, 2015

Industrial real estate market fundamentals in the Toledo, Ohio, area remained quite sound at the end of 2014. Most key indices showed stability or improvement. The most noteworthy statistic is the 2.3 million square feet of positive net absorption recorded in the second half of the year — the highest amount in recent memory. The lion’s share of the absorbed space can be attributed to the delivery of the 1.6 million-square-foot Home Depot warehouse in Troy Township. Even if the Home Depot deal is excluded from the data, the total absorption notched in the third and fourth quarters was impressive. Absorption would have been higher had the nearly 400,000-square-foot former Ace Hardware distribution center in Perrysburg Township not become vacant. In 2014, Ace announced that it would relocate its warehouse in the Columbus, Ohio area. Dearth of Suitable Space Despite the generally strong performance of the industrial real estate sector this past year, one senses that many of the players in the market are feeling some level of frustration. The frustration stems from the sentiment that things could be better — a result of the generally tight supply of buildings and the even tighter supply of the right types of …

March 12, 2015

Market Reports Massachusetts Northeast Northeast Market Reports Office

Boston Office Market: Can 2015 Top a Blockbuster 2014?

by Jaime Lackey March 11, 2015

By all measures, 2014 was the strongest year in recent memory for the Boston office market. With an approximate 1.8 million square feet of positive net absorption, nearly 5 million square feet of tenant demand, and continued development around the city, Boston remained one the country’s strongest markets. It’s not news that proximity to parking, public transportation, restaurants, bars and other amenities keeps employees happy. But Boston’s escalating prices mean cost-conscious companies must evaluate their downtown options — which means they have begun trading other items of importance, such as locational cachet, space configuration, look, feel and ultimately building type, for access to amenities. As a result, if 2013 was the year of the Seaport, then 2014 was the year of Downtown Crossing (DTX). With the renovation of 10 Summer Street and Havas’ 120,000-square-foot move to the Millennium redevelopment complete, other companies have followed suit. The third and fourth quarters brought more than 250,000 square feet of deals to 500 Washington Street. Carbonite and Sonos took 52,000 square feet and 170,000 square feet, respectively, in the third quarter, while Safari Books Online took 30,000 square feet in the fourth. Prominent national non-profit Year Up also consolidated its headquarters near DTX …

March 11, 2015

California Market Reports Office Western Western Market Reports

San Diego’s Office Landscape is Changing

by Nellie Day March 10, 2015

San Diego’s core commercial office markets continue to tighten. Less than 1 million square feet was added last year, while more than 1.2 million square feet was absorbed. In 2014, construction commenced on the first speculative high-rise office project since Hines’ La Jolla Commons I in 2008. The Irvine Company plans to deliver a 306,000-square-foot, Class A development called One La Jolla Center in UTC this year. This project follows on the heels of the adjacent 415,000-square-foot, build-to-suit for LPL. This activity points to a strengthening market as developers, equity partners and lenders believe the benefit outweighs the risk of speculative development. Sorrento Mesa also received 410,000 square feet of new office space at 10001 Pacific Heights Blvd. last year that was pre-committed by owner-user Qualcomm. The overall vacancy rate for the core markets in three San Diego regions (Downtown, Central and North County) was reduced to 11.5 percent by year’s end, indicating a tight market for users. Rent spikes can be anticipated when vacancy rates shrink to single digits. This should occur this year in submarkets like the Uptown area (5.5 percent), Poway (5.4 percent), Rancho Bernardo (6.8 percent), North Beach Cities (5.7 percent), Torrey Pines (8.0 percent), Sorrento …

March 10, 2015

Market Reports Office Southeast Southeast Market Reports Tennessee

Thriving Economy Fuels New Class A Office Development in Nashville

by John Nelson March 9, 2015

Nashville is now an established growth leader regionally and nationally. The city was a national trailblazer as the U.S. economy recovered from the Great Recession. That head start positioned Nashville to take advantage of broader growth trends and stay ahead of the pack as the remainder of the region and country started to grow again. Moody’s Analytics places Nashville firmly in an expansion phase, with fourth quarter employment growth 330 basis points ahead of the prior year, in-migration driving single-family housing permits up 13 percent last year and accelerating wage growth. Quoting Moody’s, “With the commercial real estate market tightening quickly, the pace of hiring will soon be contingent on how quickly new offices can be built or renovated. Yet there is still a good chance office-using employment could beat expectations, especially after 2016.” Class A buildings continue to dominate growth. Overall absorption for 2014 totaled 666,639 square feet, while Class A absorption was 689,009 square feet. Absorption exceeded construction by over 200,000 square feet, and Class A vacancy dropped from 5 percent at the beginning of the year to 3.5 percent at year-end. Vacancy that low inhibits movement, as is obvious in Brentwood with only 45,000 square feet vacant, …

March 9, 2015

Market Reports Midwest Texas Texas Market Reports

Migration to Central Texas Fuels Austin Multifamily Market

by Haisten Willis March 6, 2015

Austin continues to be one of the hottest multifamily markets in the country due to its exceptional economic and population growth. According to Angelou Economics, Austin gained 39,100 jobs in 2014, a growth rate of 4.5 percent. In the 12 months ending in November 2014, Austin experienced an unemployment rate of 3.9 percent, well below the national average of 5.6 percent, according to numbers published by the U.S. Bureau of Labor Statistics. Fueled largely by the city’s increased hiring in the tech sector, Austin had an in-migration of 66,000 people in 2014, a growth rate of 3.5 percent. The city attracts residents from all over the country due to the low cost of living, the University of Texas college atmosphere, the beautiful hill country setting, and internationally renowned events such as Austin City Limits, Formula 1 Grand Prix and ESPN’s Summer X-Games to name a few. Supported by technology, creative industry jobs and the seat of state government, the Austin MSA was recently ranked No. 2 on Forbes magazine’s list of “America’s Fastest Growing Metros,” down from the No. 1 position the city held for the previous four years. The U.S. Census Bureau estimates Austin will exceed 2 million residents …

March 6, 2015

Illinois Market Reports Midwest Midwest Market Reports Retail

Several Factors Keeping Retail Construction in Check Across Metro Chicago

by Danielle Everson March 5, 2015

Mid-America Real Estate’s annual Chicagoland Shopping Center Report shows construction completions totaled 2.4 million square feet in 2014, a slight uptick from the 2.26 million square feet completed in 2013. Looking ahead, 2015 should yield a little over 2 million square feet, which will likely prove to be within the normal range for development going forward. However, this is significantly less than the 8.3 million square feet completed in 2007. One of the primary causes of this decline is the demand for new shopping center space in the suburbs is primarily limited to single users, predominately grocery stores. While the demand for multi-tenant retail developments in urban markets remains high, the barriers to entry are significant. Consider, for example, that of the combined 26 new projects delivered in 2014 and planned for 2015, only one project, Regency Centers’ Shops on Main in Schererville, Indiana, is a suburban project built to accommodate more than one big-box retailer. Anchored by Gordmans, Shops on Main is also home to DSW, Home Goods, Ross, Pier 1 Imports and a planned Whole Foods. All of the remaining suburban projects are limited to single users such as Walmart/Sam’s Club, Target, Mariano’s or Meijer. The mid-sized boxes …

March 5, 2015

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