With an economy that's normalizing with improving fundamentals, the Atlanta retail market is on the right track for sustained growth. Throughout 2013, Atlanta experienced a drop in vacancy rates along with the unemployment rate. In addition, retail sales rose nearly 3.5 percent over last year, provoking a rise in consumer confidence. The unemployment rate in Georgia fell from 9 percent in 2012 to 8.3 percent in 2013. This is still a full point below the national average. For 2014, the unemployment rate in Georgia is expected to reach well under 8 percent. During the last 12 months, Atlanta has experienced job growth of 2.5 percent. Retail payrolls are also expected to continue improving in 2014, pushing a near 3 percent gain as a result of both increasing existing stores sales as well as modest new store opening growth. Vacancy Rates, Rent Growth Since the beginning of the year, overall metro retail vacancy rates have dropped below 11 percent, which is a 50 basis point decrease over last year. Neighborhood and community retail centers still maintain the highest vacancy of just under 15 percent. Power centers have experienced a strong year-over-year recovery, averaging a 7.5 percent vacancy across the region. Tenant …
Market Reports
The Inland Empire’s commercial real estate market is seeing large big box industrial buildings of 300,000 square feet or more being built on a speculative basis — and they are being absorbed by a healthy market. There is nearly 10.4 million square feet of industrial space currently under construction in this region. Once completed, this new space will increase the total inventory of industrial properties by 2 percent, or from 509 million square feet to 520 million square feet. At the same time, unemployment is above 7 percent for the nation and almost 9 percent in California, with many questioning the strength of the economy. If it seems like a big gamble for developers of these big projects to be building in such uncertain times, think again. This money will likely fare better than it would in the bank. These large projects are being leased and sold. Since 1982 — when only 3.5 million square feet was constructed for the year — the Inland Empire has seen average construction levels of about 13 million square feet annually. Some years it seemed like construction could not keep up with demand. This was the case in 1989, when 34.3 million square feet …
The famous Kansas City song — first recorded by Wilbert Harrison in 1959 — says, “I’m going to Kansas City, Kansas City here I come.” Well, in 2013, the retailers did come to Kansas City, which was beautiful music to the ears of developers and landlords throughout the area. Some of the most notable new additions to the Kansas City retail scene include IKEA, The Container Store, Academy Sports + Outdoors, Scheels Sporting Goods, REI, Fresh Market, Rock & Brews, Cinetopia, Eileen Fisher, Freebirds World Burrito, Chuy’s and Hallmark’s new store concept called “HMK.” Still other retail additions include Pinstripes, an upscale entertainment and dining venue featuring bocce and bowling, as well as Sprouts and Corner Bakery. Geographic proximity to other established markets for these retailers led to a natural migration pattern to Kansas City. However, the following factors created new inventory opportunities and supplied the key ingredients for an active retail climate in 2013 that should continue in 2014: • the metro’s declining unemployment rate to 6.3 percent from a recent high of 8.4 percent in 2010; • the buoyant housing market, with an estimated 5,960 new residential and apartment units added during 2013 versus 2,342 units in 2010; …
Looking back five years ago to the outset of 2009, new construction was the hot topic in the San Antonio office market. In 2008, 12 new office buildings were completed, adding approximately 1.5 million square feet to the market. That equated to a 6 percent increase in existing office inventory, with the new product concentrated in the key Northwest and North Central office submarkets. Of course, new development slowed considerably as the recession set in and wore on. Fast-forward to 2013, and as of press time the San Antonio office market only added 166,630 square feet of new product. The good news, though, is that San Antonio metro employment suffered much shorter and shallower losses than other metro areas as a result of the Great Recession. What’s more, the recovery from these losses has been sharp, with nearly 58,000 jobs added since local employment hit its lowest point in 2009, or approximately three new jobs for every one lost in the local downturn. One-third of these new jobs (or about 19,000) were created in office-using sectors such as finance, insurance and engineering. As a result, the office market is recovering, led by Class A space. The rapid decline in Class …
The Raleigh-Durham-Chapel Hill market, known as the Triangle, has long been viewed as a market favorable for investors, due to very strong demand metrics. The state capital’s thriving economy and excellent demand drivers have made it a prime renter destination and the new darling for yield-chasing institutional investors. A skilled workforce, transitional student renter pool and national trend of millennials “de-nesting” have continued to keep the apartment market strong and attract institutional investors such as Redwood Capital Group, Guardian Life Insurance and Heitman. As one of the most active firms in the Carolinas, Cassidy Turley has witnessed the transition firsthand as the Triangle has transformed from a regional player into a national powerhouse that has attracted some of the world’s most savvy institutional groups. According to Reis, the apartment vacancy rate in the third quarter of 2013 stood at 3.9 percent, well below the greater South Atlantic region’s average of 4.9 percent. Furthermore, the vacancy rate has actually decreased 20 basis points since last quarter, demonstrating the strong momentum of the local market and the appeal to institutional investors. Contributing factors include: • A 20 percent population growth in the Triangle over the last decade • The area boasts a …
A few things happened recently that may have long-term impacts on the Northern New Jersey office market: • Regional employment continues to improve. • Facebook is more than doubling its occupancy in Manhattan. • Merck made it official and is listing its 1-million-square-foot campus for sale. • Governor Chris Christie signed into law the Economic Opportunity Act of 2013. Regional employment continues to improve. Northern New Jersey falls within an MSA that includes New York City, Long Island and a portion of Pennsylvania. The unemployment rate for this MSA stood at 8 percent in August this year compared with 9.5 percent in July 2012, according to the Federal Reserve Bank of St. Louis. Using the theory that a rising tide floats all boats, the more people at work in the region, the better our economy performs. And everyone who works in real estate knows that real estate absorption is connected to one thing and one thing only: jobs. Facebook recently inked an office lease at 770 Broadway in Manhattan for one floor of 85,000 square feet and a portion of a second floor, which more than doubles the approximately 40,000 square feet the social networking company currently occupies in New …
Southern New Mexico's industrial market, particularly Dona Ana County, has remained stable through 2013. We project solid growth in this arena for 2014. A majority of the growth will be in the Santa Teresa area where Union Pacific is in the middle of a massive investment that will create the largest intermodal inland port in the United States. This project has already brought jobs and more than $40 million to New Mexico contractors so far. It is expected to create more than 600 permanent jobs in mechanical, electrical, architectural, utilities, track and civil engineering. Santa Teresa’s intermodal station has started to generate significant conversations with major companies for distribution and warehouse properties. Growth in Santa Teresa is further fueled by the proximity to the Mexican border where many of these same companies operate maquiladora plants on the Mexican side. We continue to struggle to meet demands for large-box users in Santa Teresa due to the limited availability of space in the area. This problem is compounded by the tight lending market, where little equity is available to developers looking to bring new speculative space on line. Additionally, many of the users looking in the Santa Teresa area typically do not …
Strong occupancy throughout the Minneapolis metro area is driving construction activity, and developers are hurrying to get projects off the ground ahead of competitors. Leasing activity is underway for a number of luxury high-rise projects coming on line in the city, heightening competition for renters who desire and can afford top-end amenities. Projects in vibrant locations, such as the Mill & Main Apartments across the river from downtown Minneapolis, have been well received. The Mill & Main building, which is nearly 70 percent leased, has views of the Mississippi River and downtown. New luxury apartments are attracting many nontraditional first-time renters, such as empty nesters. This trend is likely to expand the renter pool across the area as recovering housing prices give the large baby boom cohort more options when selling and downsizing. The higher rents that luxury properties command have reset the bar for Class A rents. Existing Class A properties near top-tier apartments will likely benefit because they can raise rents and remain more affordable than the newer units. Development Pipeline Nearly 3,000 apartments have been delivered in the metro area during the past 12 months, including 2,100 market-rate units. So far in 2013, approximately 1,000 rentals have …
A report t on the Houston retail real estate market reads somewhat like a 1960s newspaper headline: Low vacancy rates! Rising rent for retailers! Bidding wars and a soaring housing market! Together, these factors make the greater Houston area one of the most dynamic retail markets in North America. A Landlord’s Market Conditions clearly favor the landlords. Quality space that was renting in the low $20s per square foot during the downturn now commands rents in the $30s and in some cases the low $40s. Fierce competition for quality space is particularly intense within the range of 1,500 to 3,500 square feet. This has been forcing brokers and Realtors to get creative in discovering and closing on any available quality space for their tenants. Some are pressing landlords about space that’s set to roll over or asking which tenants may be willing to relocate. Rents are increasing largely because of high retail occupancy, which edged up from 93.3 percent to 93.5 in the Houston MSA during second quarter 2013, according to CoStar. At mid-year, net retail space absorption stood at a healthy 980,185 square feet. Yet, despite these positive signs, the Houston area’s older Class B and Class C retail …
South Jersey has room to grow, with several proposed ground-up centers taking center stage in the seven-county region as developers capitalize on residential growth tied to the market’s relative affordability. Meanwhile, “redevelopment” is the operative word for the 14 counties in the state’s more densely populated north and central regions, where industrial sites are being converted into mixed-use centers. Fueled by big-box absorption, the vacancy rate for open-air and freestanding retail in the northern counties inched down to 8.1 percent in mid-2013 from 8.2 percent a year ago. Central Jersey’s vacancies rose to 9.8 percent from 9.1 percent a year earlier, driven by small-shop closures. In the south, the average is 9 percent. Rents in the north crept up 0.1 percent in the first three quarters of 2013, with a median of $20 to $26 per square foot in top markets; central counties crept up 0.3 percent to a median of $15.50 to $16. South Jersey rents increased just 0.1 percent in the first two quarters of 2013, with a median of $13. For regional malls, one continuing trend is the move by owners to take interior spaces and turn them outward for more of a lifestyle feel. This began …