Transportation and third-party logistics companies are flocking to fill San Antonio’s industrial space. For example, Tennessee-based logistics company Forward Air recently announced the lease of an 89,600-square-foot Air Cargo Terminal at Port San Antonio. But Forward Air is just the latest among those moving in. Listed among the larger leases inked in the second quarter were companies such as JB Hunt (26,227 SF) and HDR Trucking (11,827 SF) at Woodlake Distribution Center I, CFI Delivery (23,400 SF) at City Park East Distribution Center B, Towne Services Moving Co. (21,964 SF) at Interstate Business Park 3 and the recent renewal and expansion of Hazen Transport (20,000 SF) at Rittiman Industrial Park — all of which are situated in the Northeast sector. The growing oil production in the nearby Eagle Ford shale is the major driving force behind the increased transportation-related activity. The oil industry depends on trucks to haul machinery, equipment, piping and sand to the oil fields, and San Antonio serves as a hub for those services. In addition, growing demand for rail-based logistics has prompted the development of two new rail parks in Southeast Bexar County – Alamo Junction Rail Park and Mission Rail Park. Railroads in and near …
Market Reports
The government shutdown impacted local economies and real estate dynamics in many U.S. markets, but none moreso than the Washington, D.C., region. With anywhere from a quarter to over a third of metro D.C.’s privately owned office leasing tied to the federal government, the inability of the federal government to engage in long-term real estate planning has serious implications for the office sector. Non-federal tenants in the region are impacted as well in that a significant portion of the region’s occupiers are reliant, at least in part, on government contracts and spending. In fiscal 2012 alone, more than $72.6 billion of federal contracting dollars were procured in Washington, D.C., and its suburbs. Possible repercussions in the contracting arena from the shutdown and continued budgetary uncertainty from the federal sector could include contract cancellations, delays in payments and scope reductions. With ongoing questions about government funding and spending, these companies, like the government itself, cannot plan for the future and make decisions in areas that affect their businesses such as staffing, office and facility needs and support infrastructure. The inevitable uncertainty due to the current stop-gap fiscal environment creates questions about where funding for fit out, technology and equipment will come …
Performance prospects for the Philadelphia apartment sector remain positive. At mid-year, vacancy was in the low five percent range despite only modest job growth in the first two quarters. Since then, a steady flow of residents moving into apartments has enabled owners to reduce or maintain vacancy and improve asset values. By the end of the year, rental property completions will have risen after several years of limited construction. The current upswing in development will minimally affect market-wide vacancy and rents, and the impact of the new units will be contained to local areas. In Center City, for example, minor vacancy swings and more frequent concession use will occur as new projects are leased up. Generally, strong conditions in the market are encouraging developers and building will progress at a steady pace in the next two years. Nonetheless, the new construction cycle hardly looks forbidding, as the units permitted over the past year would expand multifamily stock only 1.1 percent if all those projects were built. Year to date, 879 new rental units have been placed in service in Philadelphia and it looks like developers will complete 2,600 apartments in 2013, which is up 1,238 units over last year, but …
The Las Vegas market, one of the hardest hit by the recession in the nation, is showing continued signs of economic recovery. Visitor volume is exceeding peak levels, hotel occupancy rates are averaging ±90 percent, unemployment levels continue their decline (9.5 percent in June 2013) and numerous renovations and new resort development projects continue to be announced. As recently as a year ago, experts were predicting that there would not be another major resort project in Las Vegas for at least 10 years. Then came the announcement by Malaysia-based Genting Group of its plans to construct a $7-billion, 3,500-room, Chinese-themed resort project on the Strip, and suddenly that prediction was put to rest. In similar fashion, the industrial market, which currently contains 103 million square feet, continues to show consistent signs of recovery. More than 1.6 million square feet of positive net absorption was reported as of the second quarter of 2013. This is more than we’ve seen in the past five years combined. Vacancy rates stand at 14 percent, a 1 percent decrease from the second quarter of 2012. Average asking rates for warehouse distribution product across the MSA are $4.68 per square foot, down about 50 percent from …
During the past several years, Laredo’s retail sector has experienced tremendous growth. With the continued development of the Bob Bullock Loop (Loop 20) that connects I-35 to South Laredo, retail stores and restaurants are finding this major roadway to be an attractive alternative to the existing I-35 corridor. Up to this point, the major retail corridor in Laredo has been I-35, which serves the Mexican shoppers as they visit Laredo from Nuevo Laredo and Monterrey. However, since the development of Loop 20, a shift in retail clusters along the loop has brought in local shoppers and growing number of Mexican shoppers. • Weingarten Real Estate Investment Trust now owns and operates three shopping centers in Laredo, all anchored by HEB. Its third and most recent acquisition, Independence Plaza, was purchased from San Isidro Ranch. The property, designed by Madeline Slay Architecture, has the only HEB plus! in Laredo as well as Ross Dress for Less and other junior anchor retailers. • The City of Laredo recently sold 79 acres across from Laredo International Airport off Loop 20 to Laredo Town Center LP. The property will be developed into a shopping center. • To help revitalize downtown, a public-private partnership between …
In 2013, Washington’s office market has been characterized by tenant-favorable conditions, lower-than-average deal volume and absorption reliant on a handful of major transactions. The metropolitan area has recovered its pre-recession employment levels; however, with the federal government being the region’s major economic driver, there has been considerable impact on the office market from BRAC (Base Realignment and Closure), sequestration, the recent government shutdown and the failure of Congress and the President to permanently resolve budget and debt-ceiling issues. And while sequestration technically took effect in 2013, many major tenants, in anticipation of cutbacks, began right-sizing their occupancy well in advance. Obviously any tenant whose revenues depend on government contracts led the charge in this proactive right-sizing movement. At the same time, federal tenants face a mandated reduction in their utilization rate, and private-sector tenants are looking for more densely packed, open-workspace floor plans as demonstrated by tenants leasing less space as they relocate. Notwithstanding the apparent economic headwinds, it is a remarkable time for confident tenants to lock in favorable terms. Concession packages, which comprise improvement allowances and rent abatement periods, are at all-time market highs, and landlords have demonstrated a willingness to restructure leases considerably in advance of expirations. …
Revitalization efforts in Detroit are underway and drawing residents and businesses back to the city. These measures aim to improve downtown Detroit’s streets and parks, enhance outdoor activities to increase foot traffic and attract new retailers, jobs and residents. In addition, construction will begin later this year on 3.3 miles of the M-1 light rail line, which will run mainly down Detroit’s Woodward Avenue between downtown and the New Center neighborhood, attracting redevelopment along the route. These efforts, coupled with a growing desire of many young professionals and downsizing baby boomers to live in an urban setting, have led to tightening vacancy rates in the downtown core. Although there is no hard data collected on apartment vacancies in the downtown market, developers claim vacancy in some pockets is below 4 percent. The vacancy rate across the metro area currently stands at 4.4 percent. As a result, some vacant buildings such as the former Broderick Tower, Detroit Savings Bank and the David Whitney office building are being put to new use as apartments. Older apartments are also being renovated, some of which are being converted to luxury units, such as the Griswold Apartments. As renters in these properties are relocated, occupancy …
The North Texas industrial real estate market is hot, both in terms of development and leasing. The Dallas/Fort Worth Metroplex has seen a reduction in vacancy rates to just under 8 percent (which is an historic low), approximately 3.55 million square feet of positive net absorption and 6.4 million square feet of industrial space under construction as of the end of the second quarter of 2013. Add to these encouraging numbers the Bureau of Economic Analysis’ estimates of annualized U.S. GDP growth of approximately 2.4 percent for 2013, and the outlook is even sunnier. According to the Census Bureau, Dallas/Fort Worth is the largest metropolitan statistical area in Texas and fourth largest in the U.S. Demographics remain strong regarding a skilled labor pool and explosive population growth in the coming years, and at an unemployment rate of 6 percent, the Dallas/Fort Worth Metroplex is below both the U.S. and Texas average unemployment rate. Such statistics have Dallas/Fort Worth poised to continue to be an attractive location for industrial users and tenants. E-tailing is Here to Stay One key macroeconomic trend affecting industrial real estate in the Dallas/Fort Worth market — as well as that of the nation — is the …
Hampton Roads, the grouping of cities clustered around the meeting of the Atlantic Ocean, the Chesapeake Bay and the Intracoastal Waterway, is long known for its huge and vital military installations, and its tremendous maritime/shipping industries. The Port of Virginia is one of the busiest ports on the Eastern Seaboard, and is about to become even busier. At the end of the second quarter of 2012, the port posted a 7.2 percent year-over-year increase in cargo. Furthermore, with the widening of the Panama Canal, there will be a new breed of container ships carrying vastly more cargo than conventional ships. Only a few ports will be able to handle those ships, and Hampton Roads is the first to be ready. This increase in container shipments through our 55-foot, ice-free harbor will be an economic boon for Hampton Roads. The military has had, and will continue to have, a major impact on the local economy. However, there has been a concerted effort among all the cities of Hampton Roads to diversify the economic base. Technology-driven industries, including healthcare, modeling and simulation and research and development are all growing industries in the region. Seven of the world’s 10 largest aerospace and defense …
While much of the suburbs, as well as pockets in Boston and Cambridge, continue to have a high inventory of office space, rents keep rising as vacancy is dropping in the area’s hottest submarkets — Boston’s Back Bay and East and Mid-Cambridge. Class A vacancy in the Back Bay now averages 6 percent while it’s even lower for Class A space in Mid-Cambridge and East Cambridge (1 percent in Kendall Square and 1.5 percent in Central Square). Average rents for Class A office space in the Back Bay are over $57 per square foot and almost $78 per square foot for high-rise space. In Cambridge, average Class A office and lab space rents are in the high $50s. Other Boston Trends • With demand increasing in the Seaport and even the low-rise tower space, many tenants from Cambridge are looking in other submarkets. In fact, Downtown Crossing has become the new Seaport, and North Station is seeing an uptick of activity as well. Average Class A rents in the Seaport are up to $52 per square foot, with much better value available in Downtown Crossing and North Station, where rents are in the mid-$30 range per square foot. • Demand …