The boom times of retail development in Metro Phoenix, which started in the mid-‘90s, have long been considered the “good ol’days.” The market peak of 2007, when 11.2 million square feet of new retail was delivered, was followed by development plummet. Between 2010 and 2012, the region averaged less than 1 million square feet per year. Phoenix’s retail recovery began in 2011, and has experienced a steadily increasing demand for existing space. Though few are singing “Happy Days are Here Again,” times are looking up. Retail and restaurant sales are increasing in Phoenix. This, combined with an availability of quality retail locations at attractive rents, has inspired national and regional retailers and restaurants to increasingly think about Phoenix when they’re looking to expand. Much of the demand for new retail and restaurant space has occurred in mature areas since the start of the recovery. As reports of new home sales increase in the outlying areas, however, some of the troubled retail centers that were built between 2006 and 2008 are experiencing an increase of activity. Retail vacancy rates dropped in the past nine months by almost 1 percent, settling at 10.5 percent for the third quarter of this year. The …
Market Reports
The Corpus Christi regional economy has been pushed into overdrive with the South Texas oil boom, which is resulting mainly from the Eagle Ford Shale play. The main area of Eagle Ford is located about 90 miles to the north, but the impact to the Corpus Christi economy is tremendous. The Port of Corpus Christi is at the center of this growth, with billions of dollars foreign and domestic being spent on projects throughout the Port and the area. China-based Tianjin Pipe Corporation (TPCO) is under construction on their $1.3 billion plan that will manufacture oil and gas pipes. Switzerland-based Trafigura AG is spending around $500 million to build crude oil and natural gas storage docks, and Cheniere Energy is planning a $10 billion plant that liquefies natural gas to sell it abroad. All of the above and several other projects are bringing workers and money into our economy. The refineries (Valero, Citgo, Lyondell and more) are operating at capacity with continual upgrade projects on their board. Of course, with the industrial growth, you can expect retail growth, and 2013 was indeed been a strong year for Corpus Christi. To list just a few of the national and regional tenants …
The Raleigh industrial market dipped slightly in the third quarter of 2013 with negative net absorption, yet overall it improved from a year earlier, in part because of the general health of the North Carolina economy. Four factors are pushing the state’s economic recovery: a manufacturing revival, a construction surge, a boost of college graduates who are attracting knowledge-based industries and an influx of retirees, according to Dr. Michael L. Walden, a North Carolina State University professor and author of a report on the North Carolina economy that was published in the summer of 2013. The combination of factors led Dr. Walden to forecast that North Carolina’s Research Triangle, which includes Raleigh, would have an unemployment rate below 6 percent by the end of 2014. Ironically, some of the positive news for the state’s economy is putting pressure on the region’s industrial marketplace and driving these trends in Raleigh: • Net positive migration and population growth, year-after-year • The loss of industrial development opportunities to the homebuilding industry • Local pressure to prioritize live/work/play environments and de-emphasize industrial development • Constrained land supply • A lack of institutional grade space Consistently ranked by Forbes as one of the best places …
The best word to describe the current retail real estate market in Connecticut is “stabilized.” The majority of the big box and junior anchor vacancies resulting from downsizing and bankruptcies have been absorbed. Although rental rates are still not at pre-recession levels, new construction — which has been absent over the last few years — is now being seen with multiple projects throughout the state. In Brookfield, Samuels & Associates recently completed a redevelopment of an existing 40-year-old shopping center on Federal Road by demolishing the majority of the existing shopping center adjacent to a freestanding Kohl’s and constructing a BJ’s Wholesale Club along with several restaurant pads. The project will also debut the first Chick-fil-A in Connecticut. Walmart Neighborhood Market has opened its first two Connecticut locations. The first opened at Edens redevelopment of the Bishops Corner West shopping center in West Hartford followed by the opening of a freestanding store in a former Shaw’s Supermarket on Route 6 in Bristol. Walmart has also opened a new Walmart Supercenter on Route 5 in East Windsor that is a relocation of an older Walmart on the opposite side of Route 5. Also, Walmart will soon open a new freestanding supercenter …
Optimism is returning to the Inland Empire office market. With an overall vacancy rate of 18.3 percent at the end of the third quarter, the office sector is slowly improving. It’s down from a 19.4 percent vacancy rate, which was recorded in the second quarter of 2013. The declining vacancy number shows activity is increasing throughout the Inland Empire as tenants feel now is the time to take advantage of below-market rental rates for Class A and B properties. Landlords are also competing to lower their vacancy levels. They’re negotiating rental rates, tenant improvements and free rent concessions. Nevertheless, it’s a tenants’ market. There is an absence of new construction throughout the region and, as occupancies continue to improve, renewal negotiations will become tougher for tenants as the market is expected to gradually favor landlords as fundamentals continue their positive momentum. With that said, tenant urgency is returning to the market as absorption levels increase and options for quality product diminish. In fact, we’re starting to see rent growth in certain sectors of the market. The average overall asking lease rate ended the quarter at $1.73 per square foot, increasing by 1 cent from the previous quarter. CBRE forecasts that …
The strong performance of the Omaha apartment market is expected to continue in 2014 and beyond. According to MPF Research, Omaha’s apartment occupancy stood at 95.8 percent in the third quarter of 2013, up from 95.5 percent at the end of 2012 and in line with Omaha’s average occupancy rate of slightly under 96 percent since 2000. On the new construction front, developers continue to bring new projects to the market. During the first 10 months of 2013, multifamily building permits totaled 1,454 units in metro Omaha, which was 47 percent above the 986 multifamily housing units permitted during the same period in 2012 and 19 percent above the 1,225 units permitted during all of 2012. The figure was also slightly above the upper end of my range of expectations of 1,300 to 1,400 units for all of 2013. On a percentage basis, the addition of 1,454 units would increase the apartment housing stock by 1.6 percent based on an overall inventory of approximately 88,000 units. More Shovels in the Ground During 2014, I expect construction activity to continue to be strong. Indeed, we could see multifamily building permit issuance reach 1,300 to 1,400 units. Included in these new development …
The Dallas/Fort Worth industrial market is one of the healthiest in the country and dodged the recession unscathed. Texas leads the nation in job growth and has now enjoyed six years of economic growth, and the cold hard facts underpin our high-performance industrial marketplace. Some 548,000 jobs have been added to the state of Texas since 2008, and Dallas/Fort Worth ranks third among metro areas in the state for job growth, according to the U.S. Bureau of Labor Statistics. Approximately 1.2 million new residents were added to the Dallas/Fort Worth area from 2000 to 2010. Business Facilities magazine ranks Dallas as the No. 3 center in the U.S. for logistics and distribution, while Fort Worth is ranked No. 5 for aerospace and manufacturing. We know about Houston’s oil and gas-fueled economy, San Antonio’s growing entertainment and defense sector and Austin’s phenomenal growth backed by tech companies and anchored by state government. But what’s up with North Texas and the Dallas/Fort Worth economic drivers? For readers in the developer camp, they will be pleased to know that DFW was on track to have a record year of absorption in 2013 by the time we went to press with this article in …
With nearly 24,500 units planned, under construction or recently completed, Northern New Jersey’s impressive multifamily development pipeline continues as one of the region’s hottest discussion topics. Specifically, inquiring minds want to know how this growth in inventory will impact market fundamentals moving forward. The bulk of the development pipeline and activity (59 percent) is taking place along the Hudson River Gold Coast, from Jersey City to Edgewater. Just north of Edgewater, Fort Lee is seeing a surge of new construction. Three projects are underway or at the cusp of breaking ground there; over the next two years, they will add 1,000 units within a three-block radius of the entrance of the George Washington Bridge. This will have a transformative effect on the neighborhood. This raises some questions. At what pace will the new product be absorbed? What will happen to short- and longer-term rent growth? Northern New Jersey always has maintained high, unmet demand for newly constructed communities (especially along the Gold Coast), evidenced by high occupancy levels and rent growth for Class A product that outperforms the regional and national market averages. Currently, asking rent for Class A communities is at an all-time high of $2,043 per month. The …
The metro Phoenix office market is finally starting to make a comeback. Metro Phoenix ranked third in the nation in terms of net absorption for the third quarter, posting a positive 1,008,933 square feet. Demand has been steadily increasing for the office sector, especially for buildings that can accommodate large corporate users. Phoenix’s office market is still recovering from a large oversupply. The office vacancy rate more than doubled from the beginning of 2007 to the second quarter of 2011, increasing from 12.2 percent to 24.5 percent. Since then, a gradual increase in demand and a lack of new construction has brought the vacancy rate down to 21.2 percent. Right-sizing by office users through the consolidation of space, and by using more efficient floor plates, has slowed the overall decline in vacancy. To draw a parallel to the 2001 recession, demand for office space in Metro Phoenix was weak in the first three years of recovery, averaging 1.7 million square feet of annual net absorption. The office sector took off in 2005, 2006 and 2007, averaging 2.8 million square feet of annual net absorption. Due to the recent increase in demand, build-to-suit and speculative construction announcements made the news in …
After years of trailing cities such as Dallas, Memphis and Indianapolis as major bulk distribution centers, Kansas City has emerged as a significant and large hub for the development of Class A industrial logistics centers whose development is backed by institutional money. The trend is transformational for our market and here to stay for three primary reasons: (1) Institutional money — namely life insurance companies — has always allocated a portion of its funds for real estate. That money has found Kansas City. (2) Local Kansas City developers, brokers and property managers are well-suited and eager to accommodate non-operating entities like life insurance companies to buy land, build projects on a speculative basis, lease up and manage the new developments, and sell them when the financial backers decide to cash in on their investments. Kansas City has traditionally been a family-owned real estate development community comprised of five or six major players. None of these families has sold its portfolios to industrial REITs. Thus, there is a niche for institutional-backed, Class A development that is financed with deep pockets and brought to market by local developers. (3) The biggest reason for large-scale Class A industrial development in Kansas City is …