Market Reports

Surging Atlanta Office Market Attracts Heightened Investor Interest

by John Nelson July 6, 2015

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 …

July 6, 2015

Market Reports New York Northeast Northeast Market Reports Retail

New Construction and Compressed Cap Rates Demonstrate Demand for NYC Retail

by Jaime Lackey July 1, 2015

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 …

July 1, 2015

Market Reports Multifamily Washington Western Western Market Reports

The Sustainability of the Seattle Apartment Building Boom

by Nellie Day June 30, 2015

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, …

June 30, 2015

Market Reports Midwest Midwest Market Reports Minnesota Multifamily Office

Office, Multifamily Developers Capitalize on Growth in Twin Cities’ West End

by Haisten Willis June 25, 2015

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, …

June 25, 2015

Market Reports New Jersey Northeast Northeast Market Reports Retail

North Jersey Retail Rising

by Jaime Lackey June 24, 2015

For the first time in a long time in Central and Northern New Jersey, we can stop talking about the light at the end of the tunnel. The market has emerged into full sunshine, and the lingering aftereffects of the recession are now fully in the rearview mirror. The current strength of the market and robust activity in terms of new commercial development is something we have not seen for some time. Not only are there more opportunities for developers to get financing, but with rates at low ebb as well, developers are moving to take advantage. At the same time, banks and financial institutions are motivated and aggressively looking to make deals. The result is a perfect storm of sorts: the money is there, developers are willing and ready, and retailers are looking for quality space. That dynamic is good news not only for Central and Northern New Jersey, but also for all of the metropolitan New York City market. It is noteworthy that very few of the big box retail spaces that became available in the wake of high-profile closings and bankruptcies from brands like Linens ’N Things and Borders are still available. Slowly but surely, the inventory …

June 24, 2015

California Market Reports Multifamily Western Western Market Reports

Multifamily Development Picks Up the Pace in LA

by Nellie Day June 23, 2015

Improvement in apartment fundamentals has remained strong and is expected to continue over the next two quarters. The unemployment rate in Los Angeles County was 7.6 percent in March 2015, which represents a 100 basis point decrease from the same period last year. Supported by steady job growth, more than 108,000 new jobs are forecast for Los Angeles County in 2015, representing a 2.6 percent improvement over last year’s performance. A significant amount of units are currently under development and more are expected to come on line later this year. Issuance for about 7,446 multifamily units is forecast for 2015, and issuance is expected to rise to more than 17,000 units in 2016 and 2017 with the anticipated absorption of about 11,800 units over that same period. That said, developers are likely to relax their efforts to obtain new permits into the latter half of 2015 based on an expected modest uptick in vacancy. Currently standing at 3.2 percent, the overall vacancy rate will likely increase to 3.5 percent by year-end. The average year-over-year rent increased about 2.5 percent depending on the individual submarket. The greatest level of appreciation was represented in the South Glendale/Highland Park submarket where asking rents …

June 23, 2015

Georgia Market Reports Multifamily Southeast Southeast Market Reports

Multifamily Owners in Atlanta are Enjoying Surging Rental Rate Increases

by John Nelson June 22, 2015

Atlanta’s healthy multifamily market exhibits strong fundamentals, such as rising rental rates, and continued job creation. Last year alone, the city added more than 100,000 jobs and 2015 seems to be on track to surpass 2014 based on weekly announcements of companies moving to Atlanta. A decent amount of multifamily inventory hit the for-sale market in the first quarter of 2015, and those deals are now in the process of closing. We are seeing a lull in the number of listings across the market early in the second quarter. As owners attempt to capitalize on top-line collection, an increase in listings is expected in the latter portion of the second quarter in conjunction with the spring leasing months coming to an end. As most know, commercial real estate has peaks and valleys, with our last peak in 2007 and the valley landing somewhere in 2010. From 2010 to early 2015, investors were presented with a great opportunity to capitalize quickly from the rising rental rates even without implementing any value-add platforms. This quick rise in rental rates coupled with historically low interest rates has been the catalyst for the surge in trades. That said, as the REO bucket has all …

June 22, 2015

Industrial Market Reports Texas Texas Market Reports

The Emergence of South Dallas

by Haisten Willis June 19, 2015

The South Dallas industrial submarket has emerged and is here to stay. As one of the hottest up-and-coming industrial submarkets, South Dallas has all the components to continue to thrive for the foreseeable future. For the last five years, South Dallas has been a basin for major industrial development. Located south of downtown, the well-positioned submarket provides several key logistical advantages. The convergence of several major arteries makes South Dallas an ideal distribution market, and the ability to import, store and export goods, particularly from Mexico, California and the Port of Houston, greatly benefits the area. Supply can easily move along I-20 or I-35 while avoiding some of the worst congestion of the DFW Metroplex. This infrastructure, coupled with intermodal access, allows for a faster and more efficient transport of goods. Additionally, unlike the other major industrial submarkets, South Dallas contains an abundance of land at favorable pricing. Since early 2010, South Dallas has dominated the market in terms of new construction. It has been the fastest growing submarket, accounting for over 25 percent of the total delivered construction in the entire Metroplex in the last five years. Historically, South Dallas has been considered a big box market. The latest …

June 19, 2015

Illinois Industrial Market Reports Midwest Midwest Market Reports

Dynamic O’Hare Industrial Submarket Regains Its Beat on Development Front

by Haisten Willis June 18, 2015

Chicago’s 1.2 billion-square-foot industrial market has weathered the Great Recession and is now showing strong growth through expansion of the region’s traditional boundaries and by way of redevelopment in land-locked areas. At the center of this trend is O’Hare International Airport — sixth in the nation and 17th in the world in air cargo tonnage. All totaled, the O’Hare industrial submarket contains 103 million square foot of product. Since the vacancy rate peaked at approximately 13 percent in 2010, the O’Hare industrial submarket has rebounded in a big way. In fact, the submarket has recorded positive absorption every year since 2011. The vacancy rate fell to 7 percent in 2014 due to an improving economy and the aggressive deal making of the larger industrial owners such as Prologis, KTR and Hamilton Partners. Development Ramps Up Shrinking vacancy rates and a lack of available Class A logistics facilities led to the delivery of multiple speculative developments in 2014. These projects were the first built since 2007. Panattoni completed 208,000 square feet at 1925 Busse Road in Elk Grove Village and leased the entire facility to CEVA Logistics. The project was subsequently sold to AEW Capital Management at a record-setting cap rate …

June 18, 2015

Market Reports Office Washington Western Western Market Reports

Seattle’s CBD Gains in Popularity With Office Users

by Nellie Day June 16, 2015

The Seattle office market has been a shining example of strength and solidity. Compared to the U.S. job rate, which expanded by 2.4 percent over the past year to drop the unemployment rate to just 5.5 percent, the Seattle-Tacoma-Bellevue Metropolitan Statistical Area is looking good. Seattle added jobs at a rate of 3.1 percent in the first quarter of 2015. It also saw employment gains in every category. The unemployment rate remained in line with the U.S. rate at 5.5 percent. Construction led all job sectors with 12.6 percent growth, followed by professional and business services at 4.2 percent. The Seattle Central Business District office market showed continued improvement as the overall vacancy rate declined by 2.8 percentage points on a year-over-year basis. Asking rents continued to climb in all submarkets with an overall increase of 4 percent, while Class A rents increased by 5.6 percent. Making tech giants feel at home is nothing new to the Seattle area. The largest lease of the past quarter was Facebook’s 274,000-square-foot deal at Dexter Station. With a planned delivery of May 2015, Dexter Station will be a 10-story, 345,992-square foot office building located in the flourishing Lower Queen Anne/Lake Union submarket. Facebook …

June 16, 2015

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