Population and employment growth are providing a substantial boost to the Austin apartment market. Metro-wide vacancy is hovering in the mid-4 percent range and is 150 basis points below the average historical rate. Rents also increased measurably. In addition to rising job and resident totals, limited new apartment product in recent years supported an average quarterly rent growth of 1.2 percent, compared to three-month gains of roughly 1 percent in the year prior to the recession. The most notable economic news in the metro is Apple Inc.’s substantial expansion. Over the next eight years, the company will construct and staff a 1 million-square-foot, 39-acre development in Austin’s Far Northwest submarket. Day-to-day operations will yield more than 3,600 new hires, doubling the metro’s number of Apple employees. In the near-term, LegalZoom Inc. plans to add 600 new employees before the end of the year. Additionally, Accenture and General Motors hired a combined 700 workers during the first half of 2013. Beyond the large job announcements, both small and large businesses are hiring, attracting new residents and fueling apartment demand. In the 12-month period ending in the second quarter of this year, total nonfarm employment in Austin increased by 28,900 positions, a …
Market Reports
Retail is looking up in Richmond. Following a recession characterized by a dearth of new retail development, the Richmond retail market is once again poised for growth. Decreases in the overall vacancy rate, positive employment growth, increases in retail rents and an upswing in overall retail construction suggest that the market is amidst a retail recovery. Historically, these economic factors have driven robust expansions. While “robust” might be a bit dramatic for 2013, several retail projects are in the pre-development and development phases, coupled with a number of significant retail transactions. Those are encouraging signs that point to recovery. Several noteworthy retail developments fill the pipeline. Walmart recently acquired a 10-acre site at Reynolds Crossing, a 90-acre, mixed-use development in Richmond’s established “near west end” suburb, with plans to build a 90,000-square-foot store with a garden center. Expected to open in spring 2014, Walmart is set to anchor the development that includes small shop and restaurant space in addition to outparcels. Likewise, Kroger is under construction with its third Kroger Marketplace in the Richmond MSA. This 124,000-square-foot grocery concept anchors Staples Mill Marketplace, which will also include outparcels and small shop and restaurant space. After 10 years of planning, Gumenick …
Kansas City is best known for its beer, barbecue and jazz, and an economy inextricably linked to railroads and cattle. It’s not unusual for an Easterner flying over Kansas City on his way to Los Angeles to remark, “I hear I can get a great steak down there.” You can indeed find a great steak down here, but most importantly the economy is more about the steak than the sizzle. The truth is that the local economy is so broad-based that it is difficult to define. Kansas City’s economic growth today is driven by life sciences, architecture and engineering, information technology as well as financial services. All of these industries feature homegrown companies and institutions that began with entrepreneurial roots such as telecommunications giant Sprint, a company that traces its roots to a small utility company west of Kansas City. The world’s power plants and sports stadiums are designed in Kansas City, and a cure for cancer is ongoing driven by The Stowers Institute for Medical Research and the University of Kansas in conjunction with the Kansas City Area Life Sciences Institute. Cerner, the second largest health care technology company in the world with more than 8,000 employees, announced in …
Amazon, Zulily, Real Networks, Intel, eBay, Attachmate, PATH, Omeros, F5 Networks, Microsoft. Collectively, these technology companies have dominated Seattle’s office leasing landscape over the past 12 months. This period has seen an eye-popping absorption of more than 1.9 million square feet. That would be astonishing growth in nearly any city, but with a Class A and B base of 63 million square feet, this number is even more impressive. The vacancy rate has dropped and now stands at 11.5 percent, while correspondingly rental rates rose more than $4 per square foot, cresting above the $30 per square foot, full service, for the first time in more than a decade. In addition, both rental abatement and discretionary tenant improvement allowances have diminished. What’s noteworthy is that none of these companies made commitments in the Central Business District. Instead, each opted for an urban campus style as opposed to a traditional stacked, high-rise presence. These companies either backfilled Class A properties immediately south of Downtown in Pioneer Square or relocated into first-generation space just north of the core in the South Lake Union submarket. Despite this current trend, Seattle’s core is very healthy. It’s even listed as a top-three investment market on …
When Clint Eastwood’s “Halftime in America” ad aired during the 2012 Super Bowl, the much-discussed spot displayed a kind of gritty optimism about Detroit’s economic prospects. Lines like the “Motor City is fighting again” and “Detroit’s showing us it can be done” resonated not just with Southeast Michigan residents, but a nation hungry for optimism in the wake of an extended recessionary cycle. Despite the recent announcement that Detroit has become the largest U.S. city to file for bankruptcy, a closer look at the broader trends within the Detroit retail market reveals a development landscape that is generally moving in a positive direction. While the bankruptcy filing will affect certain aspects of Detroit’s immediate recovery, the overall theme is one of renewal and revitalization. Motown Momentum Across the Detroit marketplace, retailers are reviewing their existing inventory as leases mature, with a general focus on infill or relocations. There seems to be a widespread understanding that Southeast Michigan has historically been a solid retail market, and that the region’s economic turnaround is opening up new opportunities. The list of positive developments across metro Detroit continues to grow. As Wayne State University continues to transition from a commuter campus to a more …
The Austin industrial market is comprised of 37.2 million square feet, representing investment-grade buildings that are not owner-occupied and larger than 20,000 square feet. While that may seem like a smaller tertiary market in terms of square footage, Austin has proven to be a dynamic market, attracting interest and commitments from both creditworthy tenants and high-profile investors. As of mid-year 2013, Austin’s industrial market is 12 percent vacant and trending in the right direction with positive absorption of 215,000 square feet, according to NAI REOC. There was no new notable construction from 2010 to 2012, which helped vacancy rates decrease as existing tenants expanded and new tenants entered the market. The recovery was highlighted by positive absorption of more than 2 million square feet during 2012. While some of the absorption was associated with short-term warehousing needs for Samsung’s $3.6 billion expansion of its semiconductor fabrication plant in northeast Austin, the market reached a state of equilibrium. As the market stabilized, investment sales activity increased with institutional capital acting as a major player. In the past 18 months, several noteworthy transactions took place including: – Karlin Real Estate purchased three former Dell facilities totaling more than 900,000 square feet; 297.9 …
In just one generation, the Orlando market and its surrounding area became one of the premier vacation destinations in the United States and the world. With a room inventory second only to Las Vegas, this tourist hot spot strongly felt the financial market meltdown of 2008. However, the last two years have seen the hotel market undergo a strong recovery. In fact, the rate of recovery in the region’s hotel segment is stronger than for hotels nationwide. This trend and the lean operations many hotels adopted during the downturn should produce excellent operating returns for hotels in the region for the foreseeable future, assuming no overbuilding. Improving Vital Signs With a 2008 total room inventory in the metro Orlando region of 111,551 rooms and 437 properties, hoteliers could demand an average daily rate of $106.25. According to STR, in 2009 that daily rate dropped a very painful 11.8 percent to $93.70. This corresponded to a drop in occupancy from 65.2 percent to 60 percent. Between 2008 and 2012, the total inventory of both rooms and properties increased. This growth saw the number of properties rise to 456 and total room inventory to 117,396 in 2012. The permanent and temporary closing …
The multifamily market in the Phoenix metropolitan area remains, as it was in 2012, the most popular property sector for investment and new construction. Post-recession job creation, coupled with echo-boomers leaving the nest, has created a leveraged demand for multifamily product. Years of near-zero construction, followed by a rapid increase in demand, has created a landlord’s market throughout most of the valley. Vacancy across the Phoenix metro area is now less than 7 percent. It is expected to fall to less than 6 percent by the end of the year. Rental rates are up 3 percent to 5 percent valley-wide, with some submarkets fairing much better than others. Scottsdale, North Tempe and South Phoenix are some of the areas where rents are up significantly and vacancies are down. Concessions are waning in most regions, though a few remain in parts of the West Valley and Central Black Canyon. This surge in demand is spurring new apartment development catering to Generation Y (echo-boomer) tenants. Many in this demographic subset are choosing apartment living. They are doing so for two reasons: either to avoid the hurdles of qualifying for a home mortgage or to enjoy higher-end finishes and amenities that are found …
Consumer spending in St. Louis is up, according to the latest Federal Reserve Beige Book. Likewise, the Fed reports that residential real estate activity is increasing at a moderate to strong pace with escalating home sales and prices. All around, there is a sense of optimism that has jump-started retail activity. The vital signs are just starting to reflect this surge in activity and are expected to continue improving for the foreseeable future. Asking rates, averaged across all retail sectors, have remained near $12 per square foot triple net over the last three quarters, while vacancy rates have fallen from 9 percent to 8.5 percent during that same period. Net absorption has seen positive gains over the last three quarters with the delivery of a few new fully occupied projects. These positive changes in absorption and vacancy rates should result in higher asking rates going forward. Competitive Landscape An example of a successful project is in Chesterfield Valley, where two outlet mall developers have created more than 660,000 square feet of new retail space within a two-mile radius. The two projects, headed by Taubman Prestige Outlets and Simon Property Group, will open this month in time for back-to-school shopping. The …
At the mid-year mark, CoStar reported industrial occupancy in Richmond was approaching 90 percent for industrial product of all sizes, excluding flex space. Buyers looking to purchase single-user Class A facilities of 40,000 square foot or greater are experiencing an acute shortage of said product. These larger free-standing, single-occupant facilities are now in shorter supply in the suburban areas of all four quadrants, though multiple opportunities remain in the city of Richmond, both north and south of the river, generally class B/C type product, but functional and reasonably priced. There are also several free-standing purchase opportunities under 40,000 square feet available in the suburban sector of the northwest quadrant. The second quarter ended with four large facilities (two in the city of Richmond and two in Henrico County) going under contract to users, which further impacted the availability of freestanding facilities for owner/users looking to relocate into facilities with a minimum of 40,000 square feet. Local expansion has comprised approximately 78 percent of large industrial sales since the third quarter of 2012, with 14 of the last 18 major transfers (totaling approximately 1 million square feet). The majority of these acquisitions involved end users purchasing Class B facilities for manufacturing/warehousing …