Market Reports

Expanding Omaha Businesses Fuel Construction of Class A Office Space

by Danielle Everson January 21, 2015

Omaha’s office market finds itself in a favorable position at the start of 2015. Local economic indicators are solid, absorption has been positive year over year, and vacancies across the board are declining. One big reason is that Omaha businesses are growing. The low vacancy rate of Class A space is driving an appropriate amount of new construction, and Omaha’s abundant supply of quality Class B office space is expected to accommodate demand. Class A Advantage As businesses compete for the best and brightest employees, office space becomes an important hiring tool, causing businesses to look for inviting buildings and spaces in locations with enhanced amenities. This trend has increased activity in Omaha’s Class A office market, driving down the vacancy rate and spurring new construction. Omaha’s Class A vacancy rate stood at 5 percent at the end of the third quarter of 2014. The average asking rent was $24.95 per square foot on a gross basis, up 4 percent since the start of 2014. The uptick in Class A rents is likely to continue Corporate headquarters and speculative buildings are spurring the Class A construction boom. Local businesses such as Millard Refrigerated Services, Tenaska, Gavilon, TD Ameritrade, NorthStar Financial …

January 21, 2015

Connecticut Market Reports Multifamily Northeast Northeast Market Reports

Construction Activity and Rents on the Rise in Connecticut Apartment Market

by Jaime Lackey January 21, 2015

Apartment rents and multifamily asset values are rising while vacancy remains low in Connecticut’s New Haven and Fairfield counties. Young professionals and commuters are moving out of suburban areas to reside in downtown locations so they can take advantage of transit-oriented, live-work-play environments. Costly single-family housing is another factor contributing to new residents seeking rentals rather than buying homes. There is a strong demand for apartments, which keeps vacancy low and prompts new development in the region, so much so that delivery of multifamily housing units this year will more than double those built in 2013. Demand however, outweighs the new supply and the current, record-low vacancy levels will be unaffected. Average prices for apartment assets in New Haven and Fairfield counties rose 3 percent over the last year to $169,000 per unit as the overall quality of listings improved. While the region experiences strong rent growth and higher yields than the likes of New York City and Boston, more foreign investors and institutional buyers continue to emerge with sights set on multifamily assets; and in particular, top-tier assets with more than 250 units in primary markets. Properties near Metro North commuter rail stations and employment centers will generate elevated …

January 21, 2015

California Market Reports Retail Western Western Market Reports

Global Fundamentals Favor OC’s Retail Market

by Nellie Day January 21, 2015

There are many opportunities for Orange County tenants and landlords in this ever-evolving region of more than 3 million residents. The county’s unemployment rate was 6.2 percent in 2013, compared to the nationwide rate of 7.3 percent. Homeowners have also prospered over the past two years as Orange County home values rose a whopping 25.8 percent on average in 2013. The median home price is a stout $560,000 and climbing. What does this spell? Opportunity – for businesses, jobs and investors. Tenants are back full throttle with expansion plans for the Southern California basin. The big issue tenants and developers will have to face is a lack of available entitled land where they can construct and occupy a retail strip center or single-tenant restaurant. Tight governmental regulation and healthy city development fee structures can drive the costs of development too high, thereby stunting development growth. Conversely, if you currently own property, the prospects for continued yield growth are promising due to the lack of supply and a global “uber appetite” to own California commercial real estate. We will see a tremendous transition of generational wealth over the next five years, the magnitude of which we have not seen before. This …

January 21, 2015

Georgia Market Reports Retail Southeast Southeast Market Reports

New Year Promises Expanding Retailers, Improving Fundamentals in Atlanta

by John Nelson January 19, 2015

The overall snapshot is that Atlanta’s economy is on a growth tract in terms of employment and corporate growth, and has definitely rebounded from the recession and its previous overbuilding. Economic growth and the current lack of speculative development are driving the improvement in the retail market. Rental rates, occupancy levels, absorption, leasing momentum and pricing are increasing. In addition, new retailers are entering or looking to enter the market. However, the retail market’s improvement varies across the metro region. Vacancy and Rental Rates Due to positive absorption and leasing momentum in both vacant and sublease space, the overall occupancy rate and average rental rate for Atlanta’s retail inventory have been increasing. According to CoStar’s third quarter retail market update, the overall vacancy rate is now down to 8.8 percent and the average rental rate is $12.78 per square foot. However, when you break it down by submarket and property types, rental rate and occupancy gains vary significantly. Quality shopping centers in strong submarkets and locations have experienced very strong gains, yet Class B and C centers and those located in certain submarkets are still lagging the overall market. The Buckhead, Central Atlanta, Central Perimeter and Georgia 400 submarkets are …

January 19, 2015

Market Reports Texas Market Reports

State Historic Tax Credits Provide Incentive to Rehabilitate Historic Buildings in Texas

by Haisten Willis January 16, 2015

During the 2013 Legislative Session, the Texas Legislature established a state tax credit against franchise taxes equal to 25 percent of eligible costs and expenses incurred in rehabilitating certified historic structures. Combined with the 20 percent federal historic tax credit, owners and developers of historic properties in Texas have significant incentives to revitalize and rehabilitate rather than demolish qualifying historic structures. Texas is not well known for preserving historic buildings. While the federal historic tax credit was enacted in 1986, this incentive alone was not enough to prompt owners and developers to negotiate the process of completing a certified rehabilitation with the Texas Historic Commission and the National Park Service. Take for example Mike Sarimsakci’s 211 N. Ervay project located in Dallas. While the building is listed on the National Register of Historic Places and is an example of 1950’s and 1960’s architecture, prior to the enactment of the Texas credit, Sarimsakci did not consider utilizing tax credits because he could raise the capital privately. Further, many tenant brokers indicated that many of the office tenants he sought were searching for unique spaces that had character and a story to tell. The enactment of Texas’ state historic credit altered this …

January 16, 2015

Connecticut Market Reports Northeast Northeast Market Reports Retail

Retail Development Branches Out in Connecticut

by Jaime Lackey January 15, 2015

Large-scale new retail development in Connecticut has historically been relegated to super-regional markets or traditional retail nodes — north of Fairfield County, for the most part. It’s really a simple formula: strong national and regional retailers typically want to be surrounded by dynamic retail synergy, and if there’s a great enough demand for a specific market, developers jump on the opportunity to capitalize. It’s happened in Manchester/South Windsor, it’s happened in Milford and its happened in Danbury. From time to time we see pockets of development in less traditional markets but overall, developers stick to “less risky” markets where demand is imminent and the municipalities are of the pro-development variety. Recently, though, larger-scale developments in smaller towns are starting to appear more frequently and retailers and brokers seem to be slowly embracing the emerging trend. Are we running out of developable land in the super regional markets? I don’t think this is the case. I think developers are recognizing that well-placed, large-scale retail projects in smaller towns are garnering significant interest from national brands of all sizes. Developers have had success getting the ever-important anchors to these sites, and that is more than half the battle. -Smaller-format retailers follow in …

January 15, 2015

California Industrial Market Reports Western Western Market Reports

OC’s Industrial Market is About to Get Tighter

by Nellie Day January 13, 2015

The Southern California Leading Economic Indicator is continuing its upward trend. It has been on the incline for more than four years, since the last decrease in 2009. This suggests a rise in economic activity over the next six months that will continue the solid fundamentals for the Orange County industrial market well into 2015. A near record low industrial vacancy rate of 3.5 percent, along with an unemployment rate of less than 6 percent, has caused an aggressive search for viable land amongst developers. Numerous cities in Orange County have modified their industrial zoning regulations this year to permit a variety of additional uses that encourage new development. As a result, residential and retail property developers have been removing existing industrial buildings from current inventory. Growing companies in Orange County are starting to feel the inventory squeeze. The lack of available space is making it difficult to meet a client’s needs. This is causing landlords, buyers and tenants to make extensive renovations to the few buildings left available to them. The limited supply has been a major factor in the increase in value for larger assets, as clients are willing to pay more for properties. Sale prices are up …

January 13, 2015

Industrial Market Reports Southeast Southeast Market Reports

Servicing the Market on a Global Scale: Ports in the Southeast are Pursuing New Business, Boosting Region’s Industrial Market

by John Nelson January 12, 2015

The Southeast’s increasing relevance in the global marketplace is due in large part to the success of its ports. Internationally recognized companies like BMW, Boeing and Walmart have expanded in the Southeast to operate closer to the ports handling their imports and exports. According to JLL’s Port, Airport & Global Infrastructure research division, volume of twenty-foot equivalent units (TEUs) in 2013 at 13 seaports across the country was 3.3 percent higher than in 2007. TEU volume at West Coast seaports dipped by 6.8 percent in that period, while East Coast ports exceeded their 2007 volumes by 19.1 percent. The large spike of activity for East Coast ports in the past seven years has resulted in a windfall of industrial tenants expanding in and around the ports. Three of the largest Southeastern ports in terms of capacity are the Port of Charleston, PortMiami and the Port of Savannah. Each have been a boon to the industrial market in their respective state, and with the expansion and harbor deepening projects underway at each port, each should only escalate their importance in the coming years. In the Driver’s Seat The South Carolina Ports Authority (SCPA) is currently in a growth mode with container …

January 12, 2015

Florida Market Reports Retail Southeast Southeast Market Reports

Tenant Demand at an All-Time High for Prime Retail Space in Jacksonville

by John Nelson January 12, 2015

Jacksonville boasts the fourth-largest metro population and the largest city proper population in the state of Florida. It is the 14th most populous city in the United States, and with a breadth of approximately 841 square miles, it is the largest city in the contiguous United States by area. The county seat of Duval County, Jacksonville touts a population of approximately 900,000 people (2012 estimate) with a median household income of $50,701 and a median age of 31.4. The unemployment rate is presently on a downward trend decreasing 80 basis points from August to September 2014 to 5.8 percent, which was significantly lower than the previous year’s rate of 6.6 percent and Florida’s 6.1 percent. Jacksonville’s retail market remains strong despite the lack of available space in the mature Class A submarkets such as Town Center, Rivercity Marketplace, Mandarin, Orange Park, West Beaches and Beaches. National retailers and restaurants remain active seeking deals throughout Duval County, yet are still hesitant to consider Class B and C submarkets given their selective national site strategies. As most of the highly desirable spaces has been absorbed, there is more demand for new space than any time in recent memory. Although several redevelopments and …

January 12, 2015

Industrial Market Reports Midwest Midwest Market Reports Missouri Uncategorized

E-Commerce, Auto Industries Drive Speculative Development in Kansas City

by Danielle Everson January 7, 2015

The Kansas City industrial market continues to be an incredibly strong performer. At the end of the third quarter of 2014, the industrial vacancy rate stood at a tight 6.1 percent. Absorption totaled more than 2.5 million square feet during the first nine months of the year, while new deliveries were slightly over 2.6 million square feet in the same period. Let’s examine some contributing factors that are encouraging new deliveries while still driving vacancy rates down and absorption up. Spec Is King The biggest story in the Kansas City industrial real estate market during the first three quarters of 2014 was the delivery of over 2.5 million square feet of Class A distribution facilities on a speculative basis. It can be argued that, in the past, many prospective tenants considered locating a distribution center in Kansas City, but they ultimately selected a different market based on a lack of available inventory and the inability of some companies to wait on the extended timetable for a build-to-suit project. Developers that took notice of this trend and reacted by delivering space to the local market are currently being rewarded for their actions. Much of the speculative development in 2014 centered around …

January 7, 2015

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