Market Reports

Tourism, Medical Center Drive El Paso Economy

by Haisten Willis April 24, 2015

In 2014, El Paso, along with the rest of the country, enjoyed a vibrant, active and growing economy, and we anticipate El Paso will continue its solid growth in 2015 and beyond. Similar to the rest of the country, El Paso continued to add jobs across all sectors, resulting in reduced unemployment and increased household income. In addition, a number of factors unique to the region have made El Paso a wonderful place to do business. Fort Bliss, always vital to the El Paso economy, continues its growth. A new 1 million-square-foot medical center, which will employ approximately 4,000 people, will open in 2016. El Paso has experienced substantial additions to its medical sector. Tenet Healthcare Corp. has added a new wing to its Eastside Hospital and recently announced a new hospital to be constructed on the northwest side in conjunction with Texas Tech University Health Sciences Center El Paso. In addition, both Tenet and Hospital Corp. of America (HCA) continue their rapid placement of urgent care, emergency care and other satellite facilities around the city. As many people know, El Paso benefits from economic growth outside its city limits as well. Union Pacific is making huge investments in Santa …

April 24, 2015

Industrial Market Reports Midwest Midwest Market Reports Nebraska

New Industrial Parks Will Help Ease Tight Market Conditions in Omaha

by Danielle Everson April 23, 2015

For years the Omaha industrial market — approximately 68 million square feet strong — seemed to be slow and steady. When the market tightened, developers were still able to meet demand. Over the past 15 years, companies looking to construct new facilities have historically had an ample number of options in which to relocate along I-80 in the southwest part of the metro area. The Great Recession of the late 2000s seemingly halted speculative construction. During the rebound of the early 2010s, the vacancy rate began to steadily decline. Tenants started to absorb excess space at a healthy clip. All of a sudden, the market has begun to face two overwhelming challenges: virtually full occupancy among rental space and few readily available land options to build new product. Space Users Stay Active Industrial vacancy in Omaha has continued to plummet, ending 2014 at a 3 percent vacancy rate. Both large national companies and local businesses have accounted for the healthy absorption of space. Sergeant’s Pet Care Products (which built 349,680 square feet), Airlite Plastics (71,272 square feet), and Election Systems & Software (40,000 square feet) all increased their footprint in 2014. Additionally, several smaller transactions have occurred this year. Companies …

April 23, 2015

Market Reports Western Market Reports

Industrial Real Estate’s Rebound Continues in Las Vegas

by Nellie Day April 21, 2015

Be careful what you wish for, industrial brokers. After years of recession, brokers have been given a second life. Virtually every broker we talk to can appreciate the boom this time around. The Las Vegas industrial market has seen positive absorption nearing pre-recession highs. With land selling, occupancy rising and major players vying for any asset, the forecast should remain bright for the next 12 to 24 months. Nearly 3,000 acres of industrial, commercial and residential land was sold in 2014, accounting for more than $700 million in sales volume. Las Vegas’ industrial vacancy was around 9 percent in the fourth quarter of 2014, a low since 2008. The fourth quarter also marked the eighth consecutive quarter of positive net absorption in Southern Nevada’s industrial market. All good news. The marketplace is swelling with credibility. Panattoni Development Co. bought a 103,000-square-foot industrial building and is developing another 200,000 square feet in the southwest market. ProLogis is developing several big box developments in North Las Vegas. Dermody Properties is reportedly developing industrial space this year, too . One key component of these new developments is that Las Vegas’ Class A criteria needle is moving upward, with 30- to 32-foot clear big …

April 21, 2015

Louisiana Market Reports Retail Southeast Southeast Market Reports

High-Profile Mixed-Use Projects Help Attract Top-Notch Retailers to Baton Rouge

by John Nelson April 20, 2015

Attention retailers — Baton Rouge is the place to be. For the first time in the area’s history, the Baton Rouge MSA is expected to exceed 400,000 overall jobs in 2015 according to economists Loren Scott and James Richardson. The surge in employment is being fueled by numerous projects including $16 billion in industrial construction projects in the Baton Rouge MSA, along with $1 billion in public construction. Construction is underway downtown on a $55 million office tower and residential complex, which will be the home of the new IBM Technology Center where 800 highly skilled computer savvy individuals will be employed. Construction is also underway on a state-of-the-art water research facility in downtown Baton Rouge. The “Water Campus” situated on 30 acres next to the Mississippi River will initially consist of three buildings totaling $45 million in construction costs. This research park will provide an opportunity for academics and private-sector scientists and engineers to collaborate in producing the best available science on water management and coastal issues. For a state heavily weighted in the energy and petrochemical sectors, this will be a catalyst for economic diversification. Newsworthy Projects Juban Crossing: The most significant new mixed-use project to come on …

April 20, 2015

Market Reports Multifamily Texas Texas Market Reports

San Antonio Growing Outward, Northward Thanks to Strong Demand

by Haisten Willis April 17, 2015

San Antonio remains a strong growth market. While not receiving as much national attention as its sister metro areas of Dallas/Fort Worth, Austin and Houston, the San Antonio area gained over 25,000 new jobs last year. The growth is concentrated in tourism, conferences, military and business support services. San Antonio’s growth is expected to remain strong over the next two years and should continue to drive demand for housing throughout the metro area. Local unemployment remains low at 3.8 percent, almost two points below the national average of 5.6 percent. Unemployment is forecasted to remain well below 5 percent over the next five years, according to Moody’s Analytics. However, with per-capita income at $42,000, about 10 percent below the national average, and with lower paying service jobs, San Antonio remains an affordable market for most real estate — particularly residential, which consumes the most land. At Stratford Land we invest in and lend on land for development across the faster growing metropolitan areas in the Sunbelt from the Carolinas to Southern California. Therefore, we either have the opportunity, or burden, of staying abreast of the fundamentals driving demand in all product types — residential and commercial. In looking to invest, …

April 17, 2015

Industrial Market Reports Michigan Midwest Midwest Market Reports

Industrial Developers in Grand Rapids are Putting More Shovels in the Ground

by Danielle Everson April 16, 2015

With the industrial real estate market in Grand Rapids nearing critical mass — where demand is strong enough to fill the entire supply of available space — a new challenge has emerged for developers. How do they create enough new, competitive product to keep up with continued market momentum? For the first time in a decade, total inventory in the industrial market must grow. The solution will likely come in the form of new construction and creative repositioning of functionally obsolete facilities. During the Great Recession and slow recovery, many companies consolidated operations. Buildings that had become vacant were repurposed, substantially modified or eliminated altogether. Now, we are beginning to see a trend of new construction. Both speculative and build-to-suit construction has become the logical solution to the lack of inventory. Noteworthy Projects An investment group led by a local building materials supplier, and marketed by the industrial team at Colliers, is developing a 45,000-square-foot light manufacturing speculative building, located at 3838 Soundtech Court in Kentwood, a southern suburb of Grand Rapids. Delivery is expected by June 1. On the city’s southeast side near Gerald R. Ford International Airport, a new industrial building is under construction at 5300 Broadmoor Ave. …

April 16, 2015

Market Reports Western Market Reports

Rising Rents, Falling Concessions Keep Multifamily Developers Active in Vegas

by Nellie Day April 14, 2015

Boosted by healthy employment growth, demand for apartments in Las Vegas metro area surged in 2014. Local employment grew 2.7 percent, outpacing the 2.1 percent national gain last year as metro-wide apartment vacancy plunged 110 basis points to 6.8 percent. Employers added 22,900 jobs to payrolls in 2014, as nine of the 11 job sectors hired, indicating broad-based economic resiliency and supporting demand across all classes of apartments. Apartment operators particularly benefited from outsized expansion in the trade, transportation and utilities, and the leisure and hospitality sectors, where a combined 7,400 jobs were created. Mass hiring in the Downtown Summerlin mixed-use development, The LINQ and Zappos.com significantly contributed to growth in these segments. The greatest rate of increase, a 10.5 percent gain, occurred in the construction industry, as 4,200 workers were hired. The effects of hiring were felt in the apartment rental market as 3,790 units were absorbed in 2014, up from 1,990 units absorbed during the preceding year. Absorption outpaced deliveries, underpinning the sharp drop in vacancy. Operators moved to take advantage of demand by advancing monthly asking rents 3.1 percent marketwide to $837 per month, the greatest annual increase since 2006. At the same time, operators scaled back …

April 14, 2015

Market Reports Office Southeast Southeast Market Reports Tennessee

Memphis Office Market’s Pecking Order is Easily Visible During the Current Upturn

by John Nelson April 12, 2015

When it comes to grading commercial office space, there is no doubt that location is still king — and other factors such as price, architecture, functionality and amenities all take a back seat to the property’s location. Since we assign buildings letter grades (A and B), let’s take a look at what these letter combinations mean and the relationship of quality to location. In these scenarios, the first letter describes the building’s class (A or B) and the second letter represents the desirability of its location (A or B). The A/A designation refers to Class A buildings in Class A locations. It’s no surprise that this is the first category of office space absorbed when a market heats up and leasing volume intensifies. During this stage of the cycle, rental rates to inch upward, and more importantly, lease renewal terms tighten as landlords sense a shift toward the middle. For Memphis, Tenn., the total vacancy for Class A space in the East Memphis submarket decreased from 2.9 percent during third quarter 2014 to 2 percent in fourth quarter 2014. Almost 24,000 square feet of Class A office space in the East submarket was leased during fourth quarter 2014, and this …

April 12, 2015

Industrial Market Reports Midwest Midwest Market Reports Office Ohio Retail

Investment Activity in Cincinnati Commercial Real Estate Market Spikes

by Danielle Everson April 9, 2015

Throughout the economic recovery, real estate has been investors’ preferred asset class in the Cincinnati region and across the United States. Although the Federal Reserve is likely to raise short-term interest rates in June or September, demand for commercial real estate is expected to remain strong as long as the recovering economy continues to create new demand for commercial space. According to Real Capital Analytics, 2014 finally saw total U.S. sales volume and property prices (at the aggregate level) reach pre-recession levels. In fact, Real Capital Analytics reports that excluding portfolio sales, activity was higher in 2014 than in 2007. Investment Sales Surge Metro Cincinnati’s property and portfolio sales in 2014 totaled more than $2.3 billion across all major real estate sectors, a 53 percent increase over 2013. It was, by far, the strongest year for investment activity in recent memory, with significant increases across all property types. For the second straight year, retail sales transactions led the way locally among all property types. Retail sales volume in 2014 exceeded $600 million, $370 million of which occurred in the fourth quarter. Office property and portfolio sales in Cincinnati totaled nearly $580 million in 2014. This figure was a 162 percent …

April 9, 2015

Market Reports Massachusetts Multifamily Northeast Northeast Market Reports

Developers Capitalize on Trends in Boston’s Apartment Market

by Jaime Lackey April 8, 2015

Young professionals are flocking to Boston to find higher-paying jobs generated by fruitful healthcare and technology industries. Pharmaceutical companies like GE Healthcare, Amgen and Novartis AG are expanding in Boston and Cambridge. In addition, professional, business services, education, and health services sectors have all surpassed pre-recession employment. In 2015, companies in Boston are projected to create 43,000 new jobs, which is a 1.7 percent annual increase. The increased pace of hiring will support household formation and elevate the area’s housing demand. The Greater Boston region is experiencing one of its largest residential building booms in recent history. Most of the area’s proposed and under-construction residences are apartments and many of them are on the luxury end, including the Ink Block and Troy Boston on the South End, and the Zinc in East Cambridge. Multifamily inventory will expand 1.6 percent this year, resulting in a total delivery of 7,250 new units. Many potential homeowners will choose renting over buying as more and more potential homebuyers prefer short commute times and the lifestyle that renting offers — a growing trend across many of the country’s major metros. Nationwide, apartments outperformed expectations for 2014. The national vacancy rate dipped as low as 4.2 …

April 8, 2015

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