Having been at the same desk and phone for 37 years, I can definitively proclaim that the activity has reached a level in Waco and Central Texas that has never been experienced before. Blessed with a diverse economic base and stable market growth, the greater Waco real estate market weathered the storm of the last few years rather well with the addition of jobs and capital investment throughout the recession and sluggish economic recovery. The metro is one of only 34 of the 372 MSAs in the U.S. that has now exceeded its pre-downturn employment levels, and the city saw 20 consecutive months of economic growth in 2012 and 2013. Capital investment in the past five years has totaled nearly $1.8 billion, including corporate, university, health care and public investments. There’s considerable excitement for several reasons, one of which is a resurgence of the Interstate 35 corridor. With the rise in popularity and awareness of Baylor University, especially its sports, activity has picked up on I-35 near the school, including demo and new construction at a fever pitch. What’s more, the new stadium serves as representation of the excitement and new development. Industrial Landscape Since 2010, the majority of industrial …
Market Reports
If 2013 was considered a year of great health in New England retail real estate, we’ll likely need to craft stronger superlatives to describe 2014. Exciting new projects circling metro Boston, rising retailer demand, and a flood of capital chasing retail centers were consistent stories throughout 2013 and will only amplify in 2014. Surprisingly quiet during the prior decade, grocers are now driving much of the activity and creating the lion’s share of the retail headlines. With Whole Foods inhaling five Food-master stores, opening in Lynnfield and exploring any other site that comes available and with Wegmans committed in the Fenway, set to open in Burlington and Chestnut Hill and construction finally underway in Westwood, stories of supermarket growth were ubiquitous throughout 2013. The recent announcement of a new Star Market at North Station provides evidence that the new entity behind the Shaw’s chain may have quickly turned around the grocery operator’s downward spiral while the team at Roche Bros. surprised many in the industry with a small store in Medfield and an urban store to join the Millennium Tower project at Downtown Crossing. And Market Basket? Here’s to hoping that 2014 provides a clearer path for the powerhouse local …
Considering the city’s recent negative press, as well as the government loans that General Motors and Chrysler both required in order to manage their way through structured bankruptcies nearly five years ago, it is understandable why one would question the economic vibrancy of Detroit and the surrounding region. However, the much-maligned Motor City is actually a lot healthier than the view projected by the city’s high-profile bankruptcy status. The Michigan jobless rate is hovering near 9 percent. While still high compared to other states, the unemployment rate is the lowest it has been since mid-2008. Since March 2012, the state has gained more than 18,000 manufacturing jobs and over 20,000 jobs in other sectors. The U.S. energy boom is making it more cost effective for factories to operate, and Michigan’s manufacturing base is directly benefitting from lower energy costs. In addition to the automotive sector, Michigan industries that thrive include advanced manufacturing, defense, information technology, water technology, medical devices, food processing and logistics and supply-chain management. The rebound in manufacturing has cut metro Detroit’s overall industrial vacancy rate by 400 basis points since the peak of the recession, falling from approximately 14 percent in mid-2010 to 10 percent at the …
There’s a clarity that’s emerged in the Inland Empire industrial market following 20 consecutive quarters of positive absorption. As a result, it’s not surprising the market is experiencing the highest number of speculative developments in five years. In 2013, development took off, absorption was strong, and the overall vacancy rate was low, all of which were strong indicators of the role and importance the industrial sector plays in Southern California and the entire Western Region. The Inland Empire West submarket experienced the majority of the increased gross activity that was reflected in an overall 1.2-million-square-foot, year-over-year increase on 7.9 million square feet of activity in the fourth quarter of 2013. That resulted in 4.2 million square feet of net absorption for the quarter, pushing the year-end total to 14.8 million square feet. Notably, the Inland Empire East submarket surpassed the West submarket in generating more net absorption during this same time – 2.3 million square feet to 1.9 million square feet, respectively. This was due to the lack of supply of high-quality buildings in the West submarket, while the East submarket was viewed as a more desirable location in terms of building quality. Steady demand and shrinking supply during the …
More than 9.5 million people live in the Chicago area, making it the third most populous metropolitan statistical area (MSA) in the country. Like many other markets in the Midwest and Northeast, the ongoing population shift from north to south in the United States continues to pose a challenge. Consequently, population growth during the next five years in Chicago is projected to lag behind the national average. The good news is that Chicago employers are expected to generate the largest job growth locally in 15 years in 2014. Indeed, Marcus & Millichap forecasts a net gain of 79,900 jobs this year, a 1.8 percent annual increase. If realized, this would top 2013’s 1.7 percent expansion. The increased job creation is expected to attract new residents to the region, boosting population. During the past decade, the western suburbs have recorded the largest population gains, especially in Aurora, Naperville and Joliet. Renewed urbanism is playing a major role in growth within the city of Chicago, as young professionals and empty nesters return to the urban core. An influx of young workers and an exodus of retirees have lowered the median age in the metro to 36.1 years, which is below the national …
The biggest news about Delaware retail is the expansion of Christiana Mall in Newark, Del., and an equally ambitious redevelopment of The Colonnade at Christiana, which is adjacent to the mall. Everyone in the Mid-Atlantic knows that Delaware does not have retail sales tax, thus the driver of Christiana’s expansion and the new projects is simply shopping demand and a geographically dense population base that draws from more than 20 million people in nearby states including Pennsylvania, Maryland, New Jersey and even New York. It’s one thing to save $4 when you spend $50 but the money gets real when you can save $80 on a $1,000 shopping tab. (This example is based on 8 percent sales tax that you’d pay in Philadelphia, which is about 30 minutes from Wilmington and has more than 4 million people in its MSA). Christiana’s expansion to 1.1 million square feet and the adjacent 915,000-square-foot The Colonnade is made possible by construction improvements to the I-95 and Route 1 interchange that will give drivers and shoppers better access to the existing and refurbished retail centers. The Colonnade was previously called the Christiana Fashion Center and it is being redeveloped by Frank Acierno and his …
At the end of 2013, the Federal Reserve Bank of Philadelphia reported that year-to-date building permits rose by 17 percent in Pennsylvania, 36 percent in New Jersey, and 21 percent in Delaware as compared to the same 11 month period in 2012. Much of that increase was due to multifamily development. While not yet back to pre-recession levels, multifamily permitting has steadily increased since the third quarter of 2010 in the Philadelphia metro area. As of August, there were a total of 3,485 units approved for the previous 12 months, high enough to rank 25th in the nation for multifamily permit authorizations. In 2013, there were 1,183 multifamily units delivered in eight new development projects. Currently, there are nearly 4,800 units in 27 separate projects in various stages of construction and some 70 projects in the planning stages for a total of 12,740 additional units in the pipeline. Then there are proposed new developments that have been announced, but are not yet in the permitting process. These represent an additional 3,280 potential units scattered throughout the tri-state area in 15 projects. It is unlikely that all of these proposed projects will be constructed, but it is indicative of the optimism …
Is suburban retail dead? The short answer is “of course not.” While the recession was especially hard on many suburbs, recent activity indicates that conditions have improved greatly. To better understand where we are, we need to examine where we have been. During the real estate boom leading up to 2007-08, retail developments were sprouting up everywhere. Many developers expanded farther and farther away from Chicago, while incurring an additional risk through overleverage and speculative projects. The economy started to crash about the same time that many real estate projects came to market. Developers and landlords quickly discovered that there was a lack of consumer demand necessary to drive retailers to lease space in the newest suburban centers. Many retailers were attracted to the suburbs due to high household income levels. However, population density was often overlooked. Even the most affluent suburbs experienced difficulties as too many retailers were chasing a limited amount of customers. Tale of Two Markets As the economy and overall real estate market started to recover, many retailers focused their energies on opening stores in Chicago’s core metro areas. Neighborhoods such as the West Loop, Streeterville, River North and Wicker Park were on fire. For many …
Manufacturing, beer and the Green Bay Packers are typically the three things that come to mind when one thinks of Wisconsin. Although we will always love beer and our Green Bay Packers, the real estate landscape is changing. During the past decade — and even more so over the past few years — Milwaukee has begun its transformation into a hip and vibrant city and is making its mark in progressive green technologies, water research and startups. As Steve Palec, managing principal of Cresa Milwaukee, pointed out in his May 2012 article for Heartland Real Estate Business, for the first time since 2001 we are finally going to see a new office development and a change in our skyline. With the exception of the world-renowned Calatrava Art Museum and Pier Wisconsin in 2001 and 2006, respectively, Milwaukee’s lakefront has remained relatively unchanged for decades. The recession is only partly to blame. A 1915 deal made by the city of Milwaukee divided the lakeshore into land reserved for public use and land eligible for private development. Although the city entered into this agreement for several reasons, it was partially to ensure that all, not just the elite, could utilize the shores …
We all know the recent recession was hard on the Las Vegas commercial market. The good news is that a recovery is now well underway. End users are moving quickly to take advantage of historically low interest rates, which are coupled with potential rental income streams in buildings and office projects that are mostly vacant. The overall market vacancy rate is currently estimated to be at about 25 percent. For tenants that need larger spaces, however, that number can be misleading. Smaller tenants have more options, and Downtown Las Vegas continues to outperform the rest of the market, with only a 10 percent vacancy rate. Although it’s still a tenant’s market, they no longer have the leverage they once had during the middle of the downturn. Landlords are tightening concessions and seeking stronger tenant commitments, though many investors have budgeted tenant improvement dollars during acquisition and underwriting. Investors are now willing to spend these dollars to acquire quality tenants, which previously would have presented a tough sell to banks, receivers and servicers. Most other concessions remain similar to other years, with landlords standing somewhat firmer in the negotiating process. Given these conditions, Las Vegas is now seeing activity in all …