Net absorption in the first half of 2014 for the Las Vegas office market is positive, by about 500,000 square feet, causing the total office vacancy rate to decline valley-wide. This market has a total office inventory of 60.7 million square feet in 3,860 buildings. About 900,000 square feet remains under construction at the end of the second quarter — about 800,000 square feet of which is speculative development. This is interesting, considering the overall market vacancy is hovering around 20 percent. Average quoted asking rental rates decreased slightly to $1.88 per square foot, per month ($22.56 per square foot annualized) on a full-service gross basis. Concessions, incentives and tenant improvement allowances to secure tenants continue to vary from project to project. The assumption that a tenant could expect to receive up to one month free rent per year of lease term may be a declining trend in the coming quarters. The newer trend is landlords completing speculative build-outs in vacant suites, though this is still not the norm. Investment sales in the first half of 2014 decreased from the previous year, with about 800,000 square feet of properties sold at an average price per square foot that was slightly …
Market Reports
The first half of 2014 has produced a tremendous amount of activity in the Richmond retail market. The vacancy and unemployment rates have both seen a reduction within the past 12 months. The overall vacancy rate for retail in Richmond is 8.3 percent, down from 8.6 percent this time last year, and unemployment is down 70 basis points to 5.6 percent for the same period. The main drivers of activity throughout the Richmond MSA are grocery stores. The most impactful announcement is Wegmans committing to open two stores in the market, one in Short Pump and one in Midlothian. Another newcomer to the market is A Southern Season, a gourmet food emporium based in Chapel Hill, North Carolina. A Southern Season will open a 53,000-square-foot gourmet food emporium in the new Libbie Mill at MidTown development. The grocer’s offerings include cooking classes, a restaurant, gift baskets, accessories, cookware, and a large selection of specialty food items. Libbie Mill is a mixed-use project that Gumenick Properties LLC is developing on Staples Mill Road near Willow Lawn. Kroger has also been active in Richmond with two new Marketplace format stores in the last 12 months and a third to-be-built in Colonial Heights. …
The Phoenix metro economy continues to outpace the nation in job growth, even though 2014 has taken on a slower pace than last year. Much of the 2013 job growth occurred in education, healthcare and financial services. The latter has been a particularly strong growth industry for Phoenix, with 7.2 percent job growth in 2013, versus overall job growth of 2.8 percent. Overall job growth for Phoenix is forecast to be 3.2 percent this year. Despite the job growth and the cautiously optimistic outlook from most within the retail industry, new retail development is still very limited. Unlike in the past when the anchor was a traditional grocery or discount store, much of the development today is anchored by non-retail traffic generators. This includes office and apartment developments, such as new retail space planned for SkySong at Scottsdale and McDowell roads. There are also several ground-floor retail opportunities at the newest mid-rise apartment developments around Scottsdale Fashion Square, Arizona State University and the area on the northern edge of Downtown Phoenix near Roosevelt and Central. Additional retail is planned adjacent to the newest Village Health Club at Ocotillo/Alma School Road in south Chandler. Retail and hospitality developments have been proposed …
Momentum continues to build in the St. Louis commercial real estate investment market across all major product sectors. As private and institutional investors search for higher yields, they are drawn to secondary markets like St. Louis. Investors are seeing a yield premium of 100 to 150 basis points as measured by the initial cap rate. Office Market Grows Hotter The suburban office sector has generated the most momentum, building on a strong 2013. Suburban office investment sales activity could exceed $450 million in 2014, which would be a 90 percent increase over 2013. The largest office deal is the sale of Cityplace, an 884,000-square-foot Class A office complex in Creve Coeur that is under contract and expected to close for approximately $141 million. New Boston Fund and the Koman Group are the sellers. The buyer is undisclosed. While the search for higher yields is certainly a factor driving increased suburban office investment activity, another big part of the story is the continued occupancy growth supported by job gains. The St. Louis unemployment rate, which in May 2014 stood at 6.96 percent, is rapidly approaching the pre-recession level of 5.7 percent set in November 2007. Growth in industries such as technology, …
The Phoenix metro office market continues to show signs of growth and recovery despite a high level of economic uncertainty that businesses around the country are experiencing today. Besides this being an election year, there is uncertainty over healthcare costs, the regulatory environment, minimum wage, taxes, government spending, entitlement programs, political gridlock, and on and on. The Phoenix metro area has absorbed 1.1 million square feet of office space year-to-date, bringing overall vacancy down to 18.6 percent, according to Colliers. Most of the larger, contiguous office spaces that are in demand by larger companies have been absorbed. However, uncertainty has caused postponement in investment, hiring, expansion and relocation, especially for small- to medium-sized businesses. Much of the vacant office space is composed of small, noncontiguous spaces that these firms would occupy. Certain submarkets enjoy vacancy rates in the single digits. Chandler’s Price Corridor and downtown Tempe have been consistently attractive to larger office users given their amenities and concentration of technology firms, financial institutions, software developers, insurance, and many other industries and institutions. Rental rates are beginning to inch up in these submarkets as supply is absorbed and new construction begins to take shape. Excessive economic uncertainty has kept the …
The Central Florida industrial market (comprised of Seminole, Orange and Lake counties) is currently undergoing a transformation, one that will make the majority of property owners very happy. After suffering crippling vacancy rates from early 2008 through the end of 2011, Central Florida has rebounded solidly and the good news is that there is still time to capitalize on the opportunities. The current rebound can be attributed to several items, not in any particular order: • Increased employment opportunities: Orlando’s unemployment peaked in September of 2010 at 11.7 percent and it has steadily decreased. In April of 2014, the unemployment was at 5.2 percent, according to the U.S. Bureau of Labor Statistics. • Lack of new product / inventory: Since 2008, there have only been a handful of new, speculative industrial buildings built as demand was not there and rental rates were depressed due to the massive amount of vacancy. This has resulted in there being very few choices for companies desiring new, first generation product and led to the current new building pipeline of over 2.4 million square feet under construction as of July. • Absorption and rental rates: In 2012, we experienced positive market absorption slightly better than …
Stand in the center of Des Moines, take a look in all directions and one will discern that retail growth is not discriminating. It’s occurring in all areas of the marketplace.That’s not surprising for a metro area of 600,000 that was recently named “America’s Wealthiest City” by NBC’s Today show as part of a special series titled “Healthy, Wealthy, Wise.” In 2013, Forbes magazine ranked Des Moines tops on its 15th annual list of “Best Places for Business And Careers.” Market statistics provide plenty of evidence. Occupancy in neighborhood retail centers has increased for three straight years, rising to 81.9 percent at the close of 2013. Leasing activity has been robust with more than 300,000 square feet of positive absorption during the past 12 months. Only a few big-box retail spaces are now available with occupancy rising to 97.5 percent in December 2013. Although growth is occurring in all areas, the Jordan Creek Town Center corridor continues to grab headlines. Hurd Real Estate continues construction on the 328,597-square-foot Plaza at Jordan Creek. In addition to Lowe’s and the recently opened Dick’s Sporting Goods, both HomeGoods and Nordstrom Rack are nearing completion. The Nordstrom lease is a significant milestone for Iowa …
Las Vegas investors remain risk averse, favoring Class A and B properties. Increased buyer demand and a lack of inventory will support more aggressive pricing, with the sellers capitalizing on improving property performance. With stronger operations, Class C owners are encouraged to bring assets to market, pushing deal flow for the properties. The location of the asset is crucial to investors searching for higher returns, which is expected to exceed 8 percent. With an improving local economy, new construction, strengthening job market and a new “downtown,” we can expect a lower apartment vacancy and higher rents in Las Vegas this year. The improving local market and strengthen job market is being driven by some noteworthy construction and openings this year. They include the Linq, SLS Hotel (formerly Sahara Casino), the Downtown Summerlin Mall, the Grand Bazaar Shops, the Malaysia-based Genting Berhad’s $4-billion Resorts World Las Vegas (formerly Echelon) and the announcement of the $2.5-billion renovation of the Las Vegas Convention Center. These projects will create more than 15 million direct and indirect jobs. On top of this, occupancy rates keep rising. The Las Vegas market absorbed more than 3,000 units in 2013. It has absorbed another 760 net-leased units so …
Did Richmond get hip while you weren’t looking? If you missed all of the skinny jeans, slim-fit plaid, tattoos, beards and craft breweries, then you were not paying attention. Is there a correlation between the amount of breweries, luxury apartments and historic rehabs? Maybe, but something is happening here and it has little to do with Richmond’s former designation as the Capital of the Confederacy and more to do with a vibrant and diverse culture, native-brick buildings, the James River, Virginia Commonwealth University (VCU) and a great quality of life. Millennials are flocking here and Richmond has gotten cooler (i.e. better) every year, albeit somewhat slowly. In terms of apartments, there are several hotspots in the area that continue to be, or are becoming, destinations to live, work, shop and play, and multifamily developments are leading the way. Shockoe Bottom is booming, Manchester is coming to life, Scott’s Addition & Boulevard could become Richmond’s SOHO, Short Pump is moving into Goochland County and does not seem to be stopping anytime soon, and Chesterfield County, once you get around the cash proffers, continues to surprise. Richmond has just over 70,000 units and a very stable vacancy rate of 4.5 percent. Class …
The Houston retail market has changed dramatically in recent years, but 2014 has seen historically strong real estate fundamentals to date. It is a sign of considerable economic strength that per capita personal income reached a new peak in 2013, even while Houston experienced the largest change in population across U.S. metro areas, according to the latest estimates from the U.S. Census Bureau. Houston’s population increase of nearly 137,700 over the year ending in July 2013 outpaced all other metro areas, with New York in second place (111,749) and Dallas/Fort Worth in third (108,112). Additionally, with Houston employment growth among the strongest in country, it should come as no surprise that household incomes are rising and retail sales are strong. A Retail Landlord’s Market Retail occupancy in Houston reached nearly 93 percent during the first quarter of 2014. While retail availability is extremely limited across the city, it is particularly tight inside the Loop as well as in the northwest areas inside of Beltway 8. Class A product is in high demand across all submarkets, so much so that the highest profile centers currently have no availability. However, despite this high demand, retail construction activity is less than a quarter …