According to the Allegheny Conference on Economic Development, in 2013 there were more people working in Pittsburgh than ever before. The region has seen five consecutive years of continuous expansion and a current capital investment of $3.2 billion. Pittsburgh ranks among the top 15 metropolitan areas for five-year private sector job growth according to On Numbers Economic Index. Possibly more impressive than the jobs themselves, the earnings growth in the region over the same five-year period was 24.3 percent — the highest increase in the U.S. Pittsburgh’s unemployment rate fell to 6 percent in February, with the seven-county region posting an increase of 2,400 jobs in the same period. Among the companies expanding in Pittsburgh is Cigna Health. The company, which currently employs more than 1,400 in the region, plans to grow by 10 percent in 2014, adding approximately 150 new management, training and customer service positions to its regional post in Pittsburgh’s Parkway West submarket. This is great news for retailers in the area, which is also known as the Airport Corridor and which has been a mecca for retail for several decades. In recent years, retailers have struggled to survive here, as the submarket suffered from over-development and …
Market Reports
The outlook for the West Michigan industrial real estate market remains optimistic due to consistent levels of sales and leasing activity, according to Colliers International. The industrial market has recorded six successive quarters of positive absorption despite the market seeing a major shortage of high-quality inventory. Some 522,717 square feet was absorbed during the fourth quarter alone, lowering the vacancy rate to 6.57 percent. With options for space becoming more limited every day, new construction is an important consideration for many companies. That option, however, requires vacant land on which to build. Consequently, vacant land sales have emerged as the focus of many industrial real estate transactions. Construction of industrial space has reached its highest level in eight years — 419,000 square feet completed in 2013 and 792,000 square feet underway and projected for 2014. We’ve experienced more land sales in the last six months than we’ve seen in the last six years. Our industrial team has recently closed or put under contract more than 150 acres of vacant land, and much of that acreage is slated for new construction. Ambitious Plans Several projects have already begun, including the 110,000-square-foot expansion that Undercar Products Group began occupying in November 2013, …
The New Mexico office market has gained more traction and absorbed a healthy level of excess inventory this year. Vacancy fell to its lowest level in more than two years. This decline can be attributed to an absorption of vacant inventory and an increase in demand for medium-sized spaces. One of those purchases was carried out by the State of New Mexico, which acquired the 60,000-square-foot Plaza Maya, a vacant building that’s no longer competing for tenants. Downtown’s vacancy also declined when a 19,500-square-foot space was taken off the market by a new company that won the contract administering mental health services for the state. Some of the most popular office spaces seem to be in the size range of 4,000 to 25,000 square feet. The state has had more than 73,000 square feet of this kind of space absorbed recently. A new charter school in the Airport submarket accounted for about one-third of this inventory, with engineering, legal and healthcare administration service companies taking up the balance. Activity for smaller spaces of less than 4,000 square feet remained consistent with 2013 levels. This strong demand has led to larger Class A spaces being master leased by national executive suite …
Birmingham was recently ranked among the “Top 10 Emerging Downtowns in the Country” by Livability.com, and the city has also become an attractive place for national investors. The Birmingham apartment market has shown stable occupancy of 93 percent and experienced gains in effective rents, despite 540 units being delivered in 2013. Construction of new communities is ramping up as projects delivered in 2012 and 2013 such as The Hill, Tapestry Park, Village at Lakeshore Crossing and Ashby at Ross Bridge were absorbed at record-setting rental rates. Additionally, new buyers are flocking to the Birmingham multifamily market. Improving Fundamentals Rental rates among Birmingham properties are showing encouraging signs of growth. Between mid-year 2012 and mid-year 2013, 61 percent of Birmingham-area properties experienced average effective rent increases, and 53 percent experienced quoted rent increases. This growth is reinforced by nearly universal drops in concession usage. Only one of the eight Birmingham submarkets (East submarket) experienced increased concession usage, and only the West submarket experienced no change. Overall, the Birmingham area experienced an 11.3 percent drop in the number of properties offering concessions. Between mid-year 2012 and mid-year 2013, six of eight submarkets in the Birmingham MSA experienced overall effective rent growth. Of …
There is no denying the Houston commercial real estate market is one of the strongest in the nation, and all indications are it will remain on this upward trajectory — especially the industrial sector. The Urban Land Institute (ULI) recently ranked Houston as the second best market to invest in industrial real estate in the country in its Emerging Trends in Real Estate 2014 report, and the organization predicts we will continue to build on this momentum. While energy-related businesses and healthcare have certainly fueled the overall real estate growth in recent years, we are now seeing more consumer goods and e-commerce tenants take occupancy in industrial properties. This activity will ramp up even more as we move closer to the Panama Canal expansion opening in 2015, as well as the enlargement of the Port of Houston. Larger Trends In the first quarter of 2014, we saw 2.4 million square feet of industrial space delivered, and more than 8 million square feet of industrial construction underway. Vacancy remains low at 5.4 percent, and net absorption is at 1.6 million square feet for the first quarter of 2014. A steady increase in job creation and homebuilding are also contributing factors. Houston’s …
Slowly but surely, the missing pieces of the puzzle critical to the long-term vitality of the city of Detroit are starting to fill in, say real estate experts and business leaders. While the city is working through a painful bankruptcy to get its financial house in order, the public and private sector are moving forward with a sense of urgency to make sure that revitalization efforts in Downtown and Midtown don’t lose momentum. The success stories in the office, retail and apartment sector often come in fits and starts, but collectively they show measurable progress. A planned 3.3-mile streetcar line, known as the M-1 Rail project, is the infrastructure piece of the puzzle. Utility relocation work is underway on Woodward Avenue, the first step toward full-fledged construction of the planned light rail line that will connect 11 stops between Larned Street in Detroit’s central business district up to West Grand Boulevard in the New Center area at the north end. Funding for the $140 million streetcar project, which is expected to be complete in 2016, has come from a variety of sources including corporations, foundations, nonprofit agencies and government sources. “We’ll have more of a pedestrian connection between Downtown, Midtown …
Despite the continuing economic uncertainty, the Denver market is maintaining its status as a major thriving city with respect to all aspects of growth from commercial real estate sectors. This growth is clearly apparent by all the cranes in operation as you drive down Interstate 25—the main arterial highway that runs north and south bound through the entire state. Though 1.2 million square feet of retail was built in 2013 – and 197,000 square feet was delivered in the first quarter of 2014 – most of the current cranes are working on medical, office and multifamily developments. With all the national retailers setting their sights on the Denver market, there is a definite lack of A-grade retail centers that have availability. B-grade product is now being thoroughly analyzed as the next best option. Several of the national and regional tenants are in bidding wars against each other for the remaining A- and B-grade sites. The challenge of the development process is the growing cost of land and construction, which ultimately drives the rates up, thus limiting a huge pool of potential tenants. The Denver retail market in the first quarter of 2014 experienced a positive net absorption of 820,357 square …
The Las Vegas multifamily market is back with a vengeance. The market went into a meltdown in 2009 while the financial crisis was in full swing, delivering the biggest blow to the local economy in Vegas’ history. What had been low unemployment and a development boom to rival all past development cycles quickly turned into a downward spiral. Construction came to a standstill and workers fled the city in search of work elsewhere. Apartment fundamentals dropped to record lows. Asking rents dropped 19.25 percent between 2009 and the second quarter of 2012, while concessions stood at 8.5 percent. Even with all this in play, the Las Vegas market is known for reinventing itself. The market recovery was in full swing last year. Stalled projects were restarted with a whole new set of players, and employment was picking up speed. An exodus from California to Nevada is currently underway, with Penske Truck Rental citing Las Vegas as one of its top 10 places where new residents are moving. Unfortunately, unemployment is still above the national average, but that is changing fast. Fundamentals are improving with concession shrinking to 5.25 percent compared to a high of 8.5 percent in 2009. Asking rents …
Rail, river, runway and road offer a robust quadra-modal transportation solution in Memphis, which creates an environment for on-going real estate development, investment and job growth in the region. Five Class 1 railroads operate major facilities in the Memphis metro. In recent years those railroads have collectively invested more than $1 billion in infrastructure to serve a growing customer base. Likewise, Memphis International Airport, the largest cargo airport in the U.S. and second-largest in the world, has been the center of much investment and activity. FedEx is currently adding an 88,000-square-foot, $20 million “cold-chain” facility at the airport to handle highly specialized bio-medical shipments, and UPS has recently leased an additional 26 acres on the airport property for a reported $80 million expansion of its existing Memphis airport sort facilities. Manufacturing Growth According to the Federal Reserve Bank of St. Louis, manufacturing job growth continues to outpace the U.S. with a 1 percent increase compared to 2012, while the nation only saw 0.1 percent growth in jobs overall. Manufacturers have been increasingly vigorous in the last several years, taking advantage of the go-to-market transportation infrastructure and a low-cost business environment with investments in new or expanded facilities by Nucor Steel, …
New Jersey’s industrial market took a positive turn in the past 18 months, and now the lack of new development during the downturn has market conditions comparable with any boom period. Occupiers are paying record rents as high as $8 per square foot for new, Class A product, while submarkets such as Port/Airport and Exits 10 and 12 report vacancy below 5 percent. Investor demand for industrial property with credit tenants and decent lease term remaining is literally insatiable. Central New Jersey closed 2013 with 1.2 million square feet of fourth quarter net absorption and a vacancy rate of 6.6 percent, which is a 170–basis-point decrease compared to the end of 2012. Northern New Jersey’s largest -submarket, Meadowlands, has 78.2 million square feet and the submarket posted 1.7 million square feet of net absorption to finish the year with 6.2 percent vacancy. To the south, where average asking rents are $4.87 NNN per square foot, several Central New Jersey submarkets are at sub-6-percent vacancy, including Exit 8A, the region’s largest industrial submarket, which ended 2013 at 5.1 percent vacancy. Mom & Pop, Meet Amazon New Jersey’s traditionally strong base of small- to medium-sized, mom-and-pop end users certainly plays a role …