The coming several quarters may be a great time to be a landlord in Omaha because the market continues to see a steady decline in the overall vacancy rate. As of the fourth quarter of 2013, the industrial vacancy rate registered 4.8 percent. Although the decline has not been rapid, tenant representation specialists and space users alike are starting to observe a scarcity in the market for available industrial space. What is most telling is that new construction is largely at a standstill. Since 2010, the Omaha industrial market has added 16 new buildings to the overall inventory. These new buildings account for slightly more than 387,000 square feet of the entire 67.8 million-square-foot market. In all, 11 of these 16 new buildings were either single-tenant, build-to-suit projects or owner-occupied properties. Speculative construction has totaled only 71,300 square feet since 2010. To put that figure into perspective, the 71,300 square feet accounts for a miniscule 0.1 percent of total inventory. The lack of new product is by far the largest driving force behind today’s tight vacancy rate in greater Omaha. Stringent design requirements, rising construction costs and a shortage of developable industrial land all play a role in the dearth …
Market Reports
New multifamily development in Seattle was robust through 2013. That trend is continuing into this year, as demand remains strong and interest rates stay favorable. Healthy job growth, specifically those with higher wages, has particularly benefitted the Seattle market, leading to declining vacancies and increased rental rates. Vacancy rates continue to remain low at just 3.9 percent, compared to the five-year average of 5.2 percent, according to CoStar. Decreasing vacancy, combined with newer product, has pushed rental rates higher. The current average rent for a one-bedroom unit in the Seattle area is $1,078, up $93 compared to the five-year average. In addition to higher rents, concessions are currently at 1.5 percent, compared to the five-year average of 3.2 percent. Absorption remains strong and is keeping pace with new construction. So far, 3,300 units have been absorbed year-to-date. New construction in 2013 and 2014 has been at one of its highest levels ever. This development is largely concentrated in the Seattle urban core. Job growth remains strong, which has kept this additional supply in check with new demand. A total of 6,171 new apartment units were added over the prior 12-month period. As further evidence of a strengthening market, even condo …
Miami’s residential boom is not the only red-hot segment of South Florida real estate market. While the world’s attention may be fixated on Miami’s next crop of “starchitect”-designed condo towers and their sky-high penthouses, the city’s commercial office sector is also surging. Growing interest among domestic and multi-national tenants, coupled with diminishing supply and a lack of new office product set to deliver in the coming years, have given way to new confidence in Miami’s office market and initial talk about the need for future commercial development. This would have seemed unlikely as recently as 2010, when three new Class A office towers prepared to deliver 1.9 million square feet of new space in downtown Miami. The first of those buildings to deliver, 1450 Brickell, has been 100 percent leased and occupied since the first quarter of 2013 and is home to a number of global firms, including JPMorgan Chase, American Express, SAB Miller, H.J. Heinz Co. and BBVA Compass. The other two buildings are also experiencing positive absorption as demand for downtown Miami office space grows. This activity is taking place as Miami’s urban core emerges as an international destination for commerce, investment, residential living and travel. What was …
Galveston is poised for economic growth and expansion on several fronts. With a proven track record for resiliency, the city has continued to see investments across the island touching all geographic and economic clusters. As illustrated in the 2013 Developer Profile magazine, a publication of the Galveston Economic Development Partnership (GEDP), more than $2 billion in investment is currently in process across the island. The area is seeing new investment in both public and private sector ventures. Retail, commercial, residential, industrial and institutional projects continue moving forward at an accelerated pace. Education & Healthcare As home to the University of Texas Medical Branch at Galveston (UTMB), Texas A&M University at Galveston (TAMUG), Galveston College, Texas A&M Engineering Extension Service (TEEX) Center for Marine Training and Safety, the Galveston Independent School District and several other private schools and charter schools, Galveston Island has a strong education sector. These institutions are each making investments, which points to an enhanced and superior environment for education and healthcare services. For example, UTMB is currently constructing the new Jennie Sealy Hospital, a $438 million facility with 310 patient rooms, 58 intensive care unit beds and 20 state-of-the-art operating rooms. The hospital is expected to open …
In Pittsburgh’s industrial market, the fourth quarter of 2013 finished in much the same way it began and maintained throughout the year; solid if unspectacular growth. The vacancy rate fell from 7.9 percent in the third quarter to 7.7 percent in the fourth quarter and dropped three basis points in total over the course of the year. The lack of quality Class A warehouse space continues to be a factor with vacancy levels dropping to an astounding 2.97 percent. The greater Pittsburgh’s industrial market is approximately 172 million square feet spread out over the six-county region that includes Allegheny, Butler, Beaver, Westmoreland, Washington, and Armstrong counties. The Class A portion is approximately 17.5 million square feet. With a vacancy rate of 2.97 percent, we only have a total availability across our total market of 519,750 square feet of Class A product. This is below equilibrium for a healthy market. Furthermore, the definition of Class A product in the Pittsburgh region would not necessarily hold up in markets with more speculative developments such as Columbus or Lehigh Valley. Although Pittsburgh has hit the radar of the national real estate community for the opportunity on the investment side, we are still very …
The Omaha office market is poised for a significant increase in Class A inventory. Currently, there are planned developments in various stages that would add more than 3 million square feet to the marketplace. Slated for development is the Fountain West Office Park at 192nd Street and West Dodge Road. The developer, R&R Realty Group, has publicly committed to building the first of a group of speculative buildings. It will be a Class A, 75,000-square-foot building. Construction will likely begin in the second quarter of this year and be completed in about 18 months. The total inventory of the market today is just shy of 21 million square feet. This figure is comprised of non-owner occupied, non-medical office product. The 3 million square feet of planned development is unprecedented in Omaha, so why is the pipeline expanding now? (To view larger version of chart, click here.) A Historical Perspective For the past three years, the Omaha office market has recorded average annual absorption of 200,000 square feet. Prior to the recession, our pace was nearly 300,000 square feet yearly. While the pace of absorption has been healthy for a mid-market city like Omaha, new development has remained relatively slow. The …
It’s an incredible time to be in Lincoln, as the city’s new skyline conveys the momentum and energy Lincoln is experiencing. Four years ago, when many cities were paralyzed by the economic climate, Lincoln voters put the city on a new path by voting “yes” to move forward on the West Haymarket Redevelopment Project. In August 2013, the new 16,000-seat Pinnacle Bank Arena opened its doors. The $344 million West Haymarket project envisioned the redevelopment of 400 acres of blighted and underutilized property bordering the popular Haymarket Landmark District and downtown core. The area we call the “Haymarket” sits along the western edge of the central business district. It was a place for industrial and warehousing uses back in the early 19th and 20th centuries and served the adjacent Burlington and Missouri River Railroad yard. Nearly 100 years after the rise of the Haymarket, many buildings were vacated and boarded up as the last manufacturer, Russell Stover, pulled its operations from Lincoln. This eight-block district, however, was viewed as an important element to Lincoln’s history, and the city designated it as a Landmark District in 1982. A New Beginning In 1985, the Lincoln Haymarket Development Corp. was formed as a …
Though Atlanta has had a reputation as a boom-or-bust town for many years, it has struggled to maintain a thriving multifamily development business. However, an in-depth look at the current local trends shows a strengthening multifamily market, and with it, an evolution of many lower-cost neighborhoods into desirable development and residential sites. Now, the city is poised for a more sustainable future as demand for apartment housing inside the Perimeter continues to increase. Classic institutional developers are seeking to use this increasing demand as a platform to boost Atlanta to a new strata in line with New York, Boston and other metropolises such as Houston and Dallas. With no significant barriers to entry, active merchant buyers are taking advantage of Atlanta’s large developable land supply to support new high-density multifamily developments. Developers are working to stabilize the supply in response to the overwhelming demand; three- to five-year waves of building and development will help grow the market steadily. Amid the current five to 10 percent growth rate, some in-town projects are predicted to trade at higher levels than ever before. For example, 77 12th Street is widely expected to trade for more than $300,000 per unit — a robust figure …
Rhode Island’s economy continues to struggle with unemployment that is above the national average. As a result, it has been difficult to get new ground-up development projects started with only a few exceptions. In Johnston, Saletin Real Estate Group has completed construction on the first phase of Johnston Towne Center on Hartford Avenue. The 95,000-square-foot shopping center is anchored by a 40,000-square-foot Price-Rite grocery store. BankRI has also opened a new free-standing facility on the site. In order to make the development a reality, the mayor and town council worked with the developer and issued tax increment bond financing. The project is considered a major redevelopment victory for the town of Johnston, as the construction of Johnston Towne Center required the demolition of the former Stuart’s Plaza shopping center — which had been 100 percent vacant for many years, and had become an eyesore along Hartford Avenue, one of Johnston’s busiest streets. Johnston Towne Center serves as the second victory for the rejuvenation of Hartford Avenue. The former Shaw’s grocery store, which had been vacant for several years and shares the same traffic signal as Johnston Towne Center, is now fully leased to Ocean State Job Lot and Planet Fitness. …
The vital signs of Cincinnati’s industrial market are collectively the healthiest they’ve been since 2007, including vacancy, absorption, lease rates, property values and investment sales activity. This uptick is particularly encouraging considering that the recovery in the Cincinnati industrial market lagged the top five markets in this property sector nationally coming out of the Great Recession. The historical 20-year average vacancy rate for Cincinnati’s industrial market has ranged between 3 and 5 percent, but rose as high as 10 percent in 2008. With overall industrial vacancy on the decline for the past seven quarters, vacancy now stands at 6.35 percent, a five-year low. Bulk Distribution Space Becomes Scarce Vacancy in the bulk distribution subsector — large warehouse buildings primarily used to accommodate e-commerce, apparel or consumer goods — has been declining for the past eight quarters and now stands at 7 percent. That’s a departure from the usual 10 to 13 percent range. In the 29 million-square-foot bulk warehouse submarket of Northern Kentucky, vacancy is less than 2 percent. Space is so limited that no Class A bulk spaces larger than 200,000 square feet are currently available in Northern Kentucky. VanTrust Real Estate LLC has begun construction on a 273,000-square-foot …