There is no doubt that Walmart is the dominant force driving growth in the San Antonio area right now. San Antonio-area shoppers gained four new Walmart Supercenters in 2013, five more are nearing completion and scheduled to open in the next few months, and two or three more are expected to break ground later this year. At the same time, two new Sam’s Club stores will be opening in the first quarter, and Walmart’s new Neighborhood Market concept stores are slated to debut in the area this year with three locations already announced and more expected. Meanwhile, speculative development has remained very limited, but two new projects — both located in the Northwest sector — were delivered in the final quarter of 2013. Although not huge projects, these two new centers mark the delivery of San Antonio’s first sizeable speculative retail properties in over a year. One of these developments was Helotes Town Centre, which serves as an example of growth stimulated by the adjacent Walmart that opened earlier in the year. Pre-leasing activity in the 50,000-square-foot Helotes center includes Great Clips, Cash Store and Marco’s Pizza. Elsewhere, Dominion Ridge is a two-story retail project located along the I-10 corridor …
Market Reports
The New Jersey retail marketplace is finally showing signs of modest recovery for the first time since the recession. Retail is on somewhat stable ground, but not as solid as we would hope. We expect continued bumps caused by the harsh winter we have experienced, the closing of stores by some major national and regional retailers nationwide, and the fact that consumer confidence is still not in a fully stable position. Retail closings and bankruptcy filings continue to remind us that nothing is certain. For example, RadioShack recently announced it will close 1,100 stores nationwide; Pathmark and A&P supermarkets continue to close underperforming stores; and some other retailers such as Loehmann’s, and more recently, Dots women’s apparel chain have filed Chapter 11. But all is not so bleak. There are some new trends in retail that show how the sector continues to reinvent itself in an effort to thrive in this new economy. We saw the economy start to come out its doldrums, especially this past year, with many furniture and home furnishing stores opening in New Jersey for the first time. Paramus — which is one of the strongest retail markets in the U.S. — had several out-of-state furniture …
Indianapolis is experiencing explosive growth in the mid- and big-box grocery store sector. Capitalizing on the consumer trend of active and healthy lifestyles, the metro area has attracted new concepts to the market. Fresh Thyme Farmers Markets will soon join the already healthy and organic offerings of Whole Foods, The Fresh Market and Earth Fare. Although these brands have a smaller footprint than traditional grocers, these specialty gourmet grocers account for seven new stores consuming more than 160,000 square feet of retail space throughout Indianapolis and the suburban markets. This growth in the organic and health food concepts complements the well-care businesses that expanded their presence in the Indianapolis area last year, including Vision Works, Med Express, ATI Physical Therapy and Accelerated Physical Therapy. Consumer demand for convenient access to personal well-care services, such as medical spas, massage therapy, cosmetic dentistry and personal fitness is on the rise. These types of businesses account for a significant amount of absorption within several neighborhood shopping centers throughout the market. In that vein, consumers also are choosing healthier dining options such as grab-and-go prepared foods at their local grocer rather than hitting the fast food drive-thru or dining at a restaurant. This preference …
Momentum in the industrial market has remained strong for the past three years. This momentum should continue through 2014. Total market activity for 2013 generally remained on par with a record-setting year from 2012, but the makeup of that activity changed significantly. On a square footage basis, leasing activity decreased by 25.6 percent, while user-sale activity increased by 117.3 percent. Much of the increase in user-sale activity can be attributed to Boeing’s acquisition of the 850,000-square-foot Kraftmade building. Strong activity in the market led to more than 2.5 million square feet of positive absorption, representing the highest level of annual absorption since 2007 and exceeding the absorption of the past four years combined. This high level of positive absorption pushed overall vacancy rates down by 1.6 percentage points to end the year at 7.4 percent. As vacancy rates have declined, achieved rental rates have increased by 8.1 percent. The greatest increase was seen in spaces with more than f 100,000 square feet where rental rates increased by 14.7 percent. This category accounted for more than 40 percent of total market activity. The expansion of e-commerce continues to leave its mark on the development and functionality of buildings. E-commerce accounted for …
Baltimore, long known as a city that wore its grit as a badge of honor, is now shining with high-end multifamily developments and new in-town retail destinations. This city of neighborhoods has hit Forbes’ “hipster” list thanks to a vibrant arts scene, established and trendy restaurants, vital retail destinations and world-class attractions and events. These quality amenities make it possible for residents to work, shop, play and stay in the city, appealing to a growing young professional population. Baltimore’s strong economic base of higher education and health, coupled with the unwavering trend for convenient, quality city living, is driving a strong multifamily market. Delta Associates reports that the Baltimore area economy is experiencing above average growth. Despite losses in the state and local government sector, the unemployment rate remained steady at 6.9 percent in October 2013 compared to the national rate at 7.3 percent in the same period. The region is poised to experience long-term growth as a result of growth in sectors based in the Baltimore area, namely cyber-security, education and health. From December 2012 to December 2013, Delta notes that Baltimore’s Class A rents increased an average of 6 percent and stabilized occupancy is at 95 percent. Baltimore …
Although El Paso’s industrial vacancy rate remains near recession highs, the city is surrounded by positive developments expected to drive stronger demand and allow for tighter industrial fundamentals. The high vacancy is due in large part to the availability of large, bulk spaces of 200,000 square feet and more. However, such properties account for only 30 percent of El Paso’s industrial inventory, and these structures do not serve the market’s core tenants, which typically seek spaces of 100,000 square feet or less. There are currently six of these large vacancies in El Paso for a total of 2.6 million square feet, which represents 34 percent of the total vacant space in the market. Without these large blocks of availability, the market vacancy rate would be in single digits; also, several encouraging trends point to improved conditions ahead. Submarkets The East and Lower Valley industrial submarkets, which account for more than half of the total industrial inventory in the city, have stabilized for spaces less than 100,000 square feet. Bulk vacancies (in this case, buildings greater than 600,000 square feet) in these submarkets are keeping overall vacancy elevated, but for industrial space that meets the size of El Paso’s core tenants, …
The Manhattan office leasing market witnessed a substantial amount of activity in 2013. Surprising moves were made as tenants relocated out of traditional submarkets into emerging submarkets throughout the city. Many well-known companies, such as Condé Nast and Jones Day, made big commitments to move from traditional office space in Midtown to Downtown. The low vacancy rate in the Midtown South market forced tenants to look for outside options. Companies such as Nielsen, Shazam Media Services, and Alloy Digital have moved out of the Midtown South market over the past 12 to 18 months. This movement is expected to continue in 2014. This year started off well. However, anecdotal evidence suggests that many early 2014 transactions were carried over from the end of 2013. From January through end of February, a total of 301 lease transactions were signed amounting to 4.4 million square feet of leased space, as compared to 600 transactions closed in the first quarter of 2013. The average Class A vacancy rate throughout Manhattan remained between 9 and 10 percent, while Downtown experienced vacancy in the lower double digits mainly due to new construction. Pockets within the Midtown submarket showed diverging dynamics. For example, the Midtown submarket …
The Toledo industrial market remained stuck in a bit of a soft patch through most of the second half of 2013. Transaction activity was tepid until mid to late fourth quarter when deal flow began to increase. Consequently, the overall market vacancy rate and average asking rental rate have been essentially flat since mid-2013. With the delivery of the newly built and fully occupied FedEx building in Perrysburg Township contributing materially, the market did absorb more than 316,000 square feet during the last six months of 2013. Encouraging Signs There are a number of factors suggesting that real estate fundamentals in Toledo’s industrial market will start moving in a positive direction this year, in some cases quite dramatically. The first is a new construction boom, which we have been anticipating for some time. With the groundbreaking for the new 1.6 million-square-foot Home Depot warehouse in Troy Township, there is now more space under construction than at any time since before the recession. Several other build-to-suit projects are already in the works and poised to launch in 2014. Secondly, a rebound in demand from users at the end of 2013 year suggests there will be more transaction activity in the coming …
As predicted, the Columbus industrial market saw a wild end to 2013 with more than 1 million square feet of leasing activity in the final weeks. During the first two months of 2014, the market continued this aggressive pace, as Denver-based DCT Industrial Trust leased its final block of 500,000 square feet. Several other prospective tenants for both existing big-box spaces and build-to-suit facilities are ready to ink deals. The perfect storm is now brewing in Columbus for speculative construction as tenant demand remains strong and vacancy rates continue to fall. Only one Class A bulk warehouse and one Class B bulk warehouse currently remain vacant in the market for existing available product. Flurry of a Finish The Columbus market was feverish with activity near the end of 2013, resulting in Almo Corp. leasing 240,000 square feet, food safety innovator Handgards leasing 312,000 square feet and Government Liquidation leasing 516,000 square feet. When you combine that last-minute rush with several other deals that were signed during the final months of the year, Columbus recorded more than 2 million square feet of positive absorption during the fourth quarter of 2013. This final burst of activity for the year resulted in just …
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 …